BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 2592|
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THIRD READING
Bill No: AB 2592
Author: Leno (D)
Amended: 8/23/06 in Senate
Vote: 21
SENATE BUS., PROF. & ECON. DEV. COMMITTEE : 5-0, 06/12/06
AYES: Figueroa, Aanestad, Florez, Morrow, Simitian
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 64-3, 5/4/06 - See last page for vote
SUBJECT : California Travel and Tourism Commission
SOURCE : California and Lodging Association
DIGEST : This bill modifies the conditions and terms of
appointees and elected members of the California Travel and
Tourism Commission, broadens industry segments which may
voluntary participate, and clarifies certain assessment and
referendum procedures.
Senate Floor Amendments of 8/23/06 makes changes to the way
the passenger car rental industry is assessed by the
California Travel and Tourism Commission. These amendments
will permit rental car companies to separately state
specified charges provided those charges are fully
disclosed, re-bundled to show the total estimated cost for
an entire rental transaction, and specify the re-bundled
price must be given at the time a quote is provided and
CONTINUED
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when a rental commences. Finally, these amendments become
operational only if the rental car industry agrees to
increase its Tourism Marketing Assessment to a level
sufficient for the Travel and Tourism Commission's budget
to be brought up to $25 million in FY 2006-07 and $50
million in FY 2007-08.
ANALYSIS :
Existing Law
1.Establishes the California Tourism Marketing Act of 1995
(Act) which provides for the California Travel and
Tourism Commission (CTTC), an independent, nonprofit
corporation consisting of 37 members. (The Commission
consists of the 12 members appointed by the Governor, and
24 commissioners elected according to tourism industry
category in a referendum, and the Secretary of the
Business, Transportation and Housing Agency who serves as
the chairperson and secretary of the CTTC).
2.Requires that the 12 appointed commissioners be
professionally active in the tourism industry and
represent the 12 officially designated tourism regions.
3.Provides that the 24 elected commissioners be elected
according to industry categories including:
accommodations, restaurants and retail, attractions and
recreation, transportation and travel services.
4.Provides that all commissioners will serve four-year
terms and that, with exception of the Secretary, no
commissioner shall serve for more than two consecutive
terms.
5.Authorizes the CTTC to levy assessments on specified
businesses which benefit from travel and tourism spending
according to referendum of the "assessed businesses" for
the purpose of producing a variety of marketing
activities.
6.Allows for persons or businesses with less than
$1,000,000 in California gross annual revenue to be
exempt from assessment.
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7.Allows the CTTC to accept, by written contract, a
voluntary assessment from any person in a travel and
tourism related business that is not an assessed
business.
8.Requires the contract to provide that the voluntary
assessment will be equivalent to the assessment that
would be levied if the person were an assessed business.
9.Provides that businesses that enter into a contract for
voluntary assessment are also allowed to vote on
referendums.
10.Prohibits the CTTC from entering into any contract for
voluntary assessment with a person whose primary business
is gaming, as defined in Chapter 10 of Title 9, Part 1 of
the Penal Code.
11.Provides that, commencing January 1, 2003, a referendum
shall be called every two years to determine candidates
for commissioners and assessment levels.
12.Provides that, commencing in 2007, a referendum shall be
called every six years to determine the termination or
continuation of the CTTC.
This bill:
1.Modifies the conditions of office for appointed CTTC
commissioners as follows:
A. Requires the primary business, trade or
profession of appointed commissioners to be directly
related to the tourism industry.
B. Requires that each appointed commissioner
represent only one of the 12 designated tourism
regions.
C. Provides that if an appointed commissioner ceases
to be professionally active in the tourism industry
or his or her primary business, trade or profession
ceases to be directly related to the tourism
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industry, then he or she will automatically cease to
be an appointed commissioner after 90 days following
the date of the change, unless he or she is able to
meet the criteria within that timeframe.
2.Modifies the conditions of office for elected CTTC
commissioners as follows:
A. Provides that elected commissioners will serve
for fiscal year terms (July 1 through June 30).
B. Allows for those commissioners whose term would
have expired on December 31 to automatically be
extended until June 30 of the following year.
C. Provides that if an elected commissioner ceases
to be employed by or with an assessed business, in
the category and segment which he she was
representing, then he or she will automatically
cease to be an elected commissioner after 90 days
following the date of the change, unless he or she
is able to meet the criteria within that timeframe.
3.Clarifies that the phrase "two consecutive terms" shall
not include partial terms.
4.Makes the following changes only if rental car companies
approve a referendum asking them to agree to increase
their Tourism Marketing Assessment to a level sufficient
for the Travel and Tourism Commission's budget to be
brought up to $25 million in fiscal year 2006-07 and $50
million in fiscal year 2007-08 (The Secretary of
Business, Transportation and Housing [BT&H] must provide
notice to the Legislature and the Secretary of State and
post notice on its website that the assessment has been
approved):
A. Defines the terms "Airport Concession Fee,"
"Quote," and "Tourism commission assessment".
B. Adds the airport concession fee, if any, and the
tourism commission assessment, if any, to the list of
items which may be stated separately. Currently
rental companies may separately state the rental rate,
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taxes, customer facility charge, if any, and a mileage
charge, if any, provided that such items are disclosed
both at the time of the quote and when the rental
commences.
C. Adds the airport concession fee, if any, tourism
commission assessment, if any, to the list of
separately stated charges that must be provided to the
customer at the time of the quote. Current law states
that if a rental company chooses to separately state
enumerated charges, it MUST at the time the quote is
given, provide the customer with a good faith estimate
of the rental rate, taxes, customer facility charge,
if any, as well as the total charges for the entire
rental period.
D. Clarifies that when providing quotes on the
internet, the company must display the total estimated
charges in a typeface at least as big as the displayed
base rental rate and that the total estimated charges
cannot be more than two internet pages from the
displayed base rate.
E. Specifies that third parties providing quotes to
consumers must follow the same protocol established
for the rental company, as best they can.
F. Designates the passenger car rental industry as a
separate industry category.
G. Defines the term "maximum assessment" as the dollar
amount, adopted by the commission, over which an
assessed business shall not be required to pay. The
commission may adopt differing amounts of maximum
assessment for each industry.
H. Stipulates that the number of commissioners elected
from each industry category is to be determined by the
weighted percentage of assessments from that category,
although there shall be no more than six from the
passenger car rental category. Existing law states
that 24 commissioners are to be elected according to
tourism industry category in a referendum.
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I. Provides a process for changing the assessment
formula when the actual assessment level is
significantly different from what was projected.
J. Stipulates that if an assessed business within the
passenger car rental category pays an assessment
greater than the maximum assessment, the weighted
percentage assigned to that assessed business shall be
the same as though its assessment were equal to the
highest maximum assessment.
K. Stipulates that assessments will only be collected
on each rental transaction that commences at an
airport, hotel, or overnight lodging facility.
L. The $6,300,000 made available to the commission
under the current Budget Act reverts back to the
General Fund.
5.Eliminates the restriction on contracts for voluntary
assessments from the gaming industry.
6.Clarifies that voluntary assessments shall be
"proportionally" equivalent to the assessment levied from
an assessed business.
7.Provides procedures for persons sharing common
ownership, management, or control of more than one
assessed business to calculate, administer, and pay the
assessment owed by each business.
8.Specifies that the threshold for small businesses to be
exempt from assessment ($1,000,000 in total California
gross annual revenue) may be lowered by referendum, but
is never to be set lower than $500,000.
9.Clarifies that any exempted business may enter into
contract for voluntary assessments. This change will
become inoperative on the date the Secretary BT&H
provides notice to the Legislature and Secretary of
State, and posts notice on its website that the passenger
car rental industry has approved, by referendum to be
assessed and the assessment rate.
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10. Provides that if the CTTC delivers a resolution to the
Secretary, then the Secretary may call a referendum at
any time. This change will become inoperative on the
date the Secretary BT&H provides notice to the
Legislature and Secretary of State, and posts notice on
its website that the passenger car rental industry has
approved, by referendum to be assessed and the assessment
rate.
11.Requires the Secretary to identify, to the extent
reasonably feasible, those businesses that would become
newly assessed due to a change sought in a referendum,
and provide those businesses the opportunity to vote in
that referendum.
12.Requires the California Travel and Tourism Commission to
submit a referendum to the passenger rental car industry
(no later than March 31, 2007) which will propose an
assessment level determined by the commission to yield
sufficient funds for a specific spending plan.
13.Provides that if the commission finds that the
referendum allows the commission to meet the funding
goals specified, the authorization to terminate the
commission by referendum shall be suspended until the end
of the 2007-08 FY. Currently, the industry may terminate
the commission by referendum at any time, if the state
fails to appropriate $7,300,000.00 in any fiscal year.
14.Makes other technical and clarifying changes.
Background
The California Tourism Act grew out of efforts to reverse a
multi-year decline in California's tourism industry.
During the 1970s, Governor Brown closed the Office of
Tourism and withdrew funding from many tourism promotion
efforts. During Governor Deukmejian's tenure, the Office
of Tourism was reactivated.
In February of 1993, Governor Wilson created the Governor's
Task Force on Tourism Funding for the purpose of
"investigating various tourism funding methods and making
policy recommendations regarding a new, "non-tax" method of
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providing stable financing for statewide tourism
promotion." The Task Force which was composed of
representatives from various California businesses
developed the concept that was ultimately enacted by SB 256
(Johnston), 1995-96 Session, as the California Tourism and
Marketing Act.
The California Tourism and Marketing Act established the
Office of Tourism in the State Technology, Trade and
Commerce Agency (TTCA) and authorized California's tourism
industry to conduct an industry-wide referendum of
California businesses that benefit from travel and tourism
spending. The referendum passed in October 1997, and it
established the CTTC and a statewide marketing fund derived
from mandatory assessments on travel and tourism
businesses. The CTTC was created to be a "nonprofit"
corporation consisting of 37-members, for the purpose of
conducting marketing and managing assessed funds.
In January 2004, the programmatic responsibilities of the
CTTC were transferred to the State Business, Transportation
and Housing Agency (BT&H). The first full year of
assessment funding occurred during the Fiscal Year
1998-1999 and between 1998 to 2002, the California Tourism
marketing budget was fully funded by the CTTC and the State
of California at approximately $14 million annually. The
state has contributed each year except for FY 2003-2004 and
FY 2004-2005.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 8/23/06)
California Hotel and Lodging Association (source)
Alamo Car Rental
Avis Car Rental
Budget Car Rental
California Attractions & Parks Association
California Chamber of Commerce
California Parks Company
California Restaurant Association
California Ski Industry Association
California Travel Industry Association
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Dollar Car Rental
Enterprise Car Rental
Hertz Corporation
National Car Rental
Thrifty Car Rental
Walt Disney Company
ARGUMENTS IN SUPPORT : According to the author's office,
this bill is necessary to update and make clarifying
changes to the Tourism Marketing Act with respect to the
CTTC. Currently the Act fails to clearly state the
parameters for serving as a commissioner. This bill
establishes or clarifies such parameters. The Act
currently prohibits voluntary assessments from persons in
the gaming industry. There is no existing justification
for this prohibition and the gaming industry has expressed
interest in participating in tourism funding; thus, this
bill eliminates this provision so that gaming interests may
participate on a voluntary basis
ASSEMBLY FLOOR :
AYES: Aghazarian, Arambula, Baca, Bass, Berg, Bermudez,
Bogh, Calderon, Canciamilla, Chavez, Chu, Cohn, Coto,
Daucher, De La Torre, Dymally, Emmerson, Evans, Frommer,
Hancock, Harman, Jerome Horton, Shirley Horton, Houston,
Huff, Jones, Karnette, Keene, Klehs, Koretz, La Malfa, La
Suer, Laird, Leno, Leslie, Levine, Lieber, Lieu, Liu,
Matthews, McCarthy, Montanez, Mullin, Nakanishi, Nation,
Nava, Negrete McLeod, Niello, Oropeza, Parra, Pavley,
Plescia, Richman, Ridley-Thomas, Ruskin, Saldana,
Salinas, Torrico, Tran, Umberg, Vargas, Wyland, Yee,
Nunez
NOES: DeVore, Mountjoy, Strickland
NO VOTE RECORDED: Benoit, Blakeslee, Chan, Cogdill,
Garcia, Goldberg, Haynes, Maze, Sharon Runner, Spitzer,
Villines, Walters, Wolk
JJA:do 8/23/06 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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