BILL ANALYSIS Ó
SB 789
Page 1
Date of Hearing: August 13, 2013
ASSEMBLY COMMITTEE ON ARTS, ENTERTAINMENT, SPORTS, TOURISM, AND
INTERNET MEDIA
Ian C. Calderon, Chair
SB 789 (Liu) - As Amended: June 24, 2013
SENATE VOTE : 39-0
SUBJECT : Special interest license plates: California Arts
Council Plate
SUMMARY : This bill would allow the California Arts Council
(CAC) to use specified revenues from the sale of the arts
special interest license plate for administrative expenses.
EXISTING LAW :
1)Establishes the CAC as a state agency. Its mission is to
advance California through the arts and creativity by
encouraging artistic awareness, participation, and expression.
(Government Code Section 8751.)
2)Authorizes vehicle owners to obtain from the Department of
Motor Vehicles (DMV), license plates that include a full-plate
graphic design approved by DMV in consultation with CAC,
depicting a significant feature or quality of the State of
California. Requires the payment of additional fees for the
issuance, renewal, and transfer of those plates. Requires
funds raised by those fees to be used by CAC, upon
appropriation by the Legislature, for arts education and local
arts programming. (Vehicle Code Section 5074.)
3)Prohibits CAC from using additional revenue for its
administrative costs accruing from an increase in the fees for
the CAC's special interest license plates. Requires CAC to
use the revenue derived from these fee increases exclusively
for arts education and local arts programming. [Vehicle Code
Section 5074(c).]
4)Limits to 25% the amount of the revenues from the special
interest license plate fund that an organization may expend on
administrative costs, marketing, or other promotional
SB 789
Page 2
activities associated with encouraging application for, or
renewal of, the special license plates. (Vehicle Code Section
5159.)
FISCAL EFFECT : According to the Senate Appropriations
Committee, "No new state costs to the Graphic Design License
Plate Fund. This bill would clarify that license plate revenues
derived from a fee increase in 2004 may be used as part of CAC
's overall administrative costs. This would provide parity for
CAC 's license plate with other special interest license plate
programs."
COMMENTS :
1)Stated Need for Legislation :
The author introduced this bill at the request of CAC to
address issues raised in a Department of Finance (Finance)
review of CAC's use of its Arts Plate revenue. Finance
asserts in its review that CAC may expend no more than 25% of
all revenue on general administrative costs. Historically
DMV, Transportation Committee staff, and others have read that
25% restriction to be on administrative costs associated with
the license plate program itself. CAC reports that it spends
less than five percent of its plate revenues on these costs.
SB 1213 (Scott), Chapter 393, Statutes of 2004, which
increased additional fees for the Arts Plate, clearly
prohibits CAC from using the revenues its fee increases
generated for any administrative purposes. Finance is
claiming that CAC may spend only 25% of the
pre-SB 1213 Arts Plates revenues on its administrative
expenses and that CAC actually spends more like 60% (see
Comment below for Legislative history of CAC Arts Plate). CAC
is pursuing this bill in order to access up to 25% of all
revenues derived from the Arts Plate to pay administrative
expenses of the agency. By expanding the revenues against
which Finance calculates the 25%, CAC would address Finance's
concern about its spending Arts Plate revenues on
administrative expenses.
SB 789
Page 3
According to CAC, "SB 789 brings the use of funds and
reporting of the Arts Plate in parity with other specialty
plates, by amending Vehicle Code Section 5074, striking, 'the
council shall not use that revenue for its administrative
costs'."
2)Background :
a) California Arts Funding and Program Levels :
The CAC was created in 1975 under then Governor Jerry Brown
to increase access to the arts for all Californians. The
CAC budget had grown from its first full year of funding in
fiscal year 1976-77 at $1,917,000 to $32,224,000 in fiscal
year 2001-02, when 1,590 grants were awarded to non-profit
arts organizations. In 2003, appropriations to the CAC
were cut by 97%, and GF appropriation from the Legislature
has remained essentially flat at $1,000,000 over the past
decade. Since 2003, California has ranked last or next to
last among the states in terms of per capita investment in
the arts.
Current funding levels for CAC in the fiscal year 2011-12
were just over $5,000,000 broken down by source as follows:
General Fund $1,027,202.70
Graphic Design License Plate Account
$2,794,355.96
National Endowment for the Arts (NEA)
$1,158,493.86
Reimbursements $ 26,500.00
Special Deposit: Donations
$ 125,710.00
Total $5,132,262.52
According to their annual report for 2011, the CAC, "Provided
$3.4 million in grants and initiatives to the non-profit arts
sector, putting artists in schools and underserved
communities, providing support for local arts councils in 50
counties and two major cities, providing support for statewide
arts service and multicultural networks, organized Poetry Out
Loud recitation contest for over 40,000 students statewide,
providing arts programs for kids and communities in every
county in the state, and supporting over 2,795 California
jobs.
SB 789
Page 4
b) Specialized License Plates - The Major Source for CAC
Funding :
Pursuant to AB 3632 (Polanco), Chapter 1282, Statutes of 1992,
CAC 's special interest license plate program was created
along with others such as the Yosemite Foundation plate, the
Kids plate, the Veterans Services plate, and the State
Heritage Network plate. Initially, fees for the issuance of
the original plate were set at $20, while annual renewal fees
were $10. These fees were later increased to $30 for issuance
and $15 for renewal. The fee revenues are deposited into the
Graphic Design License Plate Account for support of arts
education and local arts programs administered by CAC.
Furthermore, the special interest license program law allows a
sponsoring state agency to use no more than 25% of license
plate fee revenues on administrative costs, marketing, or
other activities associated with ensuring application for, or
renewal of, its special interest license plates.
Subsequently, SB 1213 increased the original fees for the Arts
Plate from $30 to $50 for issuance and from $15 to $40 for
renewal, but specifically prohibited CAC from using the
revenues derived from the increase for administrative costs.
Of the $3 million the arts special interest plates generates
today, about $2 million results from the SB 1213 fee
increases.
This bill repeals SB 1213's prohibition on CAC 's use of the
revenues for administrative purposes , thus allowing CAC to
use the portion of its license plate revenues attributable to
SB 1213's fee increases to cover its administrative costs.
This provides parity for CAC 's license plate program with
other special interest license plate programs that cap
administrative costs at 25%.
1)Department of Finances' Narrow Reading of Arts Council Plate
Administration Language :
As mentioned above, CAC receives about $5.2 million annually
in funding with about $1.1 million coming from the state's
General Fund, $1.1 million from federal funds, and $3 million
from the Arts Plate.
Last year after concerns arose in press stories about the use
SB 789
Page 5
of revenues derived from special interest license plates, the
Governor's Office directed Finance to review all ten special
interest license plates programs. In August 6, 2012, Finance
issued its review of the Arts Plate fund (officially known as
the Graphic Design License Plate Account). Finance found in
that review that "the Council has ensured (SB 1213 fee
increase) revenues are used exclusively for arts education and
programming." It also found that CAC exceeded the
25% cap on administrative expenses from the fees for the Arts
Plate that existed before
SB 1213, attributing over 60% of charges as administrative.
According to the Senate Transportation Committee analysis of
this bill, "In no place does the special interest license
plate statute restrict the expenditure of the funds on other
administrative costs. It is unclear, therefore, why the
Department of Finance is asserting that there is a 25% cap on
using the revenues to support general administration of an
agency. In the case of the Arts Plate, its specific
authorizing statute says that the revenues from the Arts Plate
shall be used for 'arts education and local arts
programming'."
2)Prior Related Legislation :
AB 84 (Leslie), Chapter 454, Statutes of 2006, established the
current specialized license plate program to provide a forum
for government speech that promotes California's state
policies.
SB 1213 (Scott), Chapter 393, Statues of 2004, increased the
additional fees from $30 to $50 for issuance of an arts plate
and from $15 to $40 for renewal.
AB 3632 (Polanco), Chapter 1282, Statutes of 1993 directed CAC
to participate in what was then the state's special interest
license plate program, which that bill also created. Specific
to the Arts Plate, AB 3632 set the additional fees for that
plate at $20 for issuance and $10 for renewal.
REGISTERED SUPPORT / OPPOSITION :
Support
California Arts Council (Sponsor)
SB 789
Page 6
Arts Orange County
Opposition
None on file
Analysis Prepared by : Dana Mitchell / A.,E.,S.,T. & I.M. /
(916) 319-3450