BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                            



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                                 UNFINISHED BUSINESS


          Bill No:  SB 789
          Author:   Liu (D)
          Amended:  6/24/13
          Vote:     21

           
           SENATE TRANSPORTATION & HOUSING COMMITTEE  :  9-0, 5/7/13
          AYES:  DeSaulnier, Gaines, Beall, Cannella, Galgiani, Hueso,  
            Lara, Pavley, Roth
          NO VOTE RECORDED:  Liu, Wyland

           SENATE APPROPRIATIONS COMMITTEE :  6-0, 5/20/13
          AYES:  De León, Walters, Gaines, Hill, Padilla, Steinberg
          NO VOTE RECORDED:  Lara

           SENATE FLOOR  :  39-0, 5/28/13 (Consent)
          AYES:  Anderson, Beall, Berryhill, Block, Calderon, Cannella,  
            Corbett, Correa, De León, DeSaulnier, Emmerson, Evans, Fuller,  
            Gaines, Galgiani, Hancock, Hernandez, Hill, Hueso, Huff,  
            Jackson, Knight, Lara, Leno, Lieu, Liu, Monning, Nielsen,  
            Padilla, Pavley, Price, Roth, Steinberg, Torres, Walters,  
            Wolk, Wright, Wyland, Yee
          NO VOTE RECORDED:  Vacancy

           ASSEMBLY FLOOR  :  75-0, 8/19/13 - See last page for vote


           SUBJECT  :    Special interest license plates:  Arts Plates

           SOURCE  :     California Arts Council


           DIGEST  :    This bill allows the California Arts Council  
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          (Council) to use specified revenues from the sale of the arts  
          special interest license plate for administrative expenses.

           Assembly Amendments  change the author from Senator Price to  
          Senator Liu, and make a technical change.

           ANALYSIS  :    The Council is a state agency, and state law  
          charges it with:

           1. Encouraging artistic awareness, participation, and  
             expression.

           2. Helping independent local groups develop their own art  
             programs.

           3. Promoting the employment of artists and those skilled in  
             crafts in both the public and private sector.

           4. Providing for the exhibition of artworks in public buildings  
             throughout California.

          The Council 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.

          AB 3632 (Polanco, Chapter 1282, Statutes of 1993) directed the  
          Council to participate in what was then the state's special  
          interest license plate program, which that bill also created.   
          The court has since enjoined the state from issuing new special  
          interest license plates under this program.  

          The special interest license plate program law applies to all  
          ten of the special interest license plates issued prior to the  
          court order in 2004.  It specifies that before the Department of  
          Motor Vehicles (DMV) could issue a special interest license  
          plate, the Legislature had to enact a bill to authorize the  
          specific plate, and the sponsoring organization had to qualify  
          for tax-exempt status, submit a financial plan describing how it  
          would use the resulting revenues, and collect 7,500 paid  
          applications for the plate.  The general special interest  
          license plate law also restricts the sponsoring organization to  
          using no more than 25% of the resulting revenues annually on  
          administrative costs, marketing, or other activities associated  
          with ensuring application for, or renewal of, its special  

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          license plates.

           Specific to the Arts Plate  .  AB 3632 set the additional fees for  
          that plate at $20 for issuance and $10 for renewal.  A vehicle  
          owner pays these fees in addition to the regular fees to  
          register the vehicle.  That bill specified that the Council use  
          the revenues generated for arts education and local arts  
          programming.

          Later legislation increased those additional fees for the Arts  
          Plate.  Most recently that occurred when 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.  Of the $3 million the Arts Plate generates today,  
          about $2 million results from these fee increases.  SB 1213 also  
          prohibited the Council from using the revenue generated from its  
          fee increases for the Council's general administrative costs.

          This bill repeals that prohibition, thus allowing the Council to  
          use the portion of its license plate revenues attributable to SB  
          1213's fee increases to cover the Council's administrative  
          costs.

           Comments  
           
           The author introduced this bill at the request of the Council to  
          address issues raised in a Department of Finance (DOF) review of  
          the Council's use of its Arts Plate revenue.  The DOF asserts in  
          its review that the Council may expend no more than 25% of that  
          revenue on general administrative costs.  Historically DMV,  
          committee staff, and others have read that 25% restriction to be  
          on administrative costs associated with the license plate  
          program itself.  The Council reports that it spends less than 5%  
          of its plate revenues on these costs.  

          SB 1213 of 2004, which increased additional fees for the Arts  
          Plate, clearly prohibits the Council from using the revenues its  
          fee increases generated for any administrative purposes.  DOF is  
          claiming that the Council may spend only 25% of the pre-SB 1213  
          Arts Plates revenues on its administrative expenses and that the  
          Council actually spends more like 60%.  The Council 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 DOF calculates  

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          the 25%, the Council will address the DOF's concern about its  
          spending Arts Plate revenues on administrative expenses.

           DOF review  .  Last year after concerns arose in press stories  
          about the use of revenues derived from special interest license  
          plates, the Governor's Office directed the DOF to review all ten  
          special interest license plates programs.  In August 6, 2012,  
          DOF issued its review of the Arts Plate fund (officially known  
          as the Graphic Design License Plate Account).  DOF 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 the Council 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.  

           Non-plate administrative costs  .  State law governing the special  
          interest license plates states that an organization  
          participating in the program "shall not expend more than 25% of  
          those funds on administrative costs, marketing, or other  
          promotional activities associated with encouraging application  
          for, or renewal of, the special license plates."  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 DOF 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." 

           Court ends special interest license plate program  .  In 2004, a  
          federal court decision, (Women's Resource Network v. Gourley,  
          E.D., Cal 2004, F.Supp.2d, 2004 U.S. Dist.), invalidated the  
          provisions of the Vehicle Code allowing an organization to  
          sponsor a special interest license plate provided it had met  
          certain conditions, including the passage of legislation  
          authorizing the specific plate.  In the Gourley decision, the  
          court declared California's special interest license plate  
          statutes unconstitutional because they violated the First  
          Amendment right to freedom of speech.  The court specifically  
          objected to the Legislature "picking and choosing" special  
          license plates that private organizations propose, in essence  
          promoting the message of some organizations while denying this  
          right to others.  

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          The court did allow the ten special interest license plates  
          existing at the time of its decision -- including the Arts Plate  
          -- to remain in use and available to new applicants, as they are  
          today.

           Buying the plate to support a state agency  .   In response to the  
          court decision, 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.  AB 84 excludes private organizations from  
          seeking specialized license plates as a forum for private  
          speech, and thus addresses the court's objection.  Plates now  
          created and the revenue they generate must publicize or promote  
          a state agency, or the official policy, mission, or work of a  
          state agency.  Under AB 84, the Council could sponsor a new  
          license plate and use the proceeds for "projects and programs  
          that promote the state agency's official policy, mission, or  
          work."  

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  No   Local:  
           No

          According to the Senate Appropriations Committee:

           No new state costs to the Graphic Design License Plate Fund.   
            This bill clarifies that license plate revenues derived from a  
            fee increase in 2004 may be used as part of the Council's  
            overall administrative costs.  This provides parity for the  
            Council license plate with other special interest license  
            plate programs.

           SUPPORT  :   (Verified  8/20/13)

          California Arts Council (source)
          Arts Orange County

           ASSEMBLY FLOOR  :  75-0, 8/19/13
          AYES:  Achadjian, Alejo, Allen, Ammiano, Atkins, Bigelow, Bloom,  
            Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan, Ian  
            Calderon, Campos, Chau, Chávez, Chesbro, Conway, Cooley,  
            Dahle, Daly, Dickinson, Donnelly, Eggman, Fong, Fox, Frazier,  
            Beth Gaines, Garcia, Gatto, Gomez, Gonzalez, Gordon, Gorell,  
            Gray, Grove, Hagman, Hall, Harkey, Roger Hernández, Holden,  

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            Jones, Jones-Sawyer, Levine, Linder, Logue, Lowenthal,  
            Maienschein, Mansoor, Medina, Melendez, Mitchell, Morrell,  
            Mullin, Muratsuchi, Nazarian, Nestande, Pan, Perea, Quirk,  
            Quirk-Silva, Rendon, Salas, Skinner, Stone, Ting, Wagner,  
            Waldron, Weber, Wieckowski, Wilk, Williams, Yamada, John A.  
            Pérez
          NO VOTE RECORDED:  Olsen, Patterson, V. Manuel Pérez, Vacancy,  
            Vacancy


          JJA:d  8/20/13   Senate Floor Analyses 

                           SUPPORT/OPPOSITION:  SEE ABOVE

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