BILL ANALYSIS
AB 2258
Page 1
Date of Hearing: April 16, 2008
ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION
Alberto Torrico, Chairman
AB 2258 (Evans) - As Amended: April 3, 2008
SUBJECT : Horse racing: license fees: shortfalls: pro rata
assessment.
SUMMARY : Clarifies language in current horse racing law
relating to the amount of licensee fees that must be paid to the
state by racing associations and fairs in any calendar year.
Specifically, this bill.
1)Specifies that if the total amount paid to the state as
license fees by racing associations and fairs is less than
$40,000,000 in any calendar year, all associations and fairs
that conducted live racing during the year of the shortfall
shall remit to the state, on a pro rata basis according to the
amount paid as license fees by each association or fair, the
amount necessary to bring the total amount paid to the state
as license fees to $40,000,000, as specified.
EXISTING LAW :
1)Provides the CHRB regulate the various forms of horse racing
authorized in this state.
2)Provides if the total amount paid to the state by racing
associations and fairs pursuant to this chapter is less than
forty million dollars ($40,000,000) in any calendar year,
beginning January 1, 2001, and thereafter, all associations
and fairs that conducted live racing during the year of
shortfall shall remit to the state, on a pro rata basis
according to the amount handled in-state by each association
or fair, the amount necessary to bring the total amount paid
to the state to forty million dollars ($40,000,000). The
amounts due, if any, shall be paid from the amount available
for commissions, purses, and breeder awards, and shall be paid
to the board prior to March 1 of the year following the year
of the shortfall.
3)Provides that all revenues distributed to the state as license
fees from satellite wagering facilities are deposited in the
Satellite Wagering Account (SWA) within the Fairs and
AB 2258
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Exposition Fund (F&E) and are continuously appropriated and
prioritized as follows:
a) Paying bond obligations at $2.6 million;
b) Paying for specified infrastructure projects;
c) Pari-mutuel projects for establishing, maintaining and
operating satellite wagering and live racing facilities;
d) Operations of a consolidated California signal at
satellite wagering facilities;
e) Spending for health and safety improvements; and,
f) Projects that result in a cost savings by more efficient
utilization of existing fair resources.
g) Provides that the amount of funds to be spent on items
(#3-6) above be decided by the Joint Committee on Fairs
Allocation and Classification.
1)Provides from the total revenue received by the CHRB,
including revenues transferred from the SWA, as specified, the
sum of two hundred sixty-five thousand dollars ($265,000) plus
an amount equal to 63/100 of 1 percent of the gross amount of
money handled in the annual pari-mutuel pool generated within
this state, or the maximum amount received by the state from
the pari-mutuel pool of a racing meeting held in this state,
whichever is less, shall be paid into the State Treasury to
the credit of the Fair and Exposition Fund (F/E Fund).
Provides if the revenues paid into F/E Fund, as specified, in
excess of thirteen million dollars ($13,000,000) in any fiscal
year, one-half of the amount in excess of the thirteen million
dollars ($13,000,000) shall be transferred to the GF.
2)Provides the Legislature shall annually appropriate and the
CHRB shall deposit to the credit
of the F/E Fund, such sums as it deems necessary for the
following purposes: (1) For the support of the CHRB, including
any costs and expenses incurred by the Attorney General, as
defined; (2) To the Department of Food and Agriculture (Food &
Ag) for the oversight of the network of California fairs
receiving money from the fund; (3) to Food & Ag for the
contributions, or the cost of benefits in lieu of
contributions, payable to the Unemployment Fund by the network
of California fairs, as specified; and (4) to the Food & Ag
for the auditing of all district agricultural association
fairs, county fairs, and citrus fruit fairs.
FISCAL EFFECT : Unknown
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COMMENTS :
According to the author, there is confusion within California's
Horse Racing Industry regarding what payments to the state are
shall be used to meet the requirements of current law for the
financial support of California's Network of Fairs. Some
parties within the racing industry believe that current statute
stipulates that all monies collected by the State be used in the
calculation while the sponsor of the bill believes that only
license fees paid to the state are to be used in the
calculation. AB 2258 clarifies the issue.
According to the sponsor, the California Authority of Racing
Fairs, of Racing Fairs (CARF), this bill will clarify how the
CHRB calculates the money owed to the Fairs and Exposition Fund
for the benefit of the California Fair Network. In addition, AB
2258 represents the continued discussions from last session
involving the continuation of Advance Deposit Wagering (ADW).
AB 765 (Evans) which was signed by the Governor and included a
variety of changes to the ADW law positively impacting the
industry as a whole.
In 1998, SB 27 (Maddy) of 1998 was chaptered which granted
substantial license fee relief ($40 million annually) to the
California horse racing industry. The bill was negotiated with
the notion that the bill would result in significant license fee
relief for California's horse racing industry while guaranteeing
funding for the California Fair Network. Unfortunately, the
language of that agreement has recently been called into
question. The purpose of AB 2258 is to clarify the intent of
the original agreement by stating that license fees paid to the
state are to be used to fund the guarantee to the fairs.
Background .
State Revenue . Horse racing revenue comes primarily from
license fees imposed on the amount wagered by the public. The
state's share of horse racing revenue is deposited either to the
state General Fund or to a special Fund (e.g., the Fairs and
Exposition Fund or Satellite Wagering Account). Special funds
consist of governmental cost funds used to account for taxes and
revenues, which are restricted by law for particular
functions/activities.
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On January 26, 2007, the CHRB sent letters to each racing
association and fair regarding the shortfall for calendar years
2005 and 2006. The CHRB stated, "that pursuant to Section
19616.51 of the Business and Professions Code, cash receipts for
calendar years 2005 and 2006 to the Sate of California fell
short of the $40 million by a combined total of $1,528,187.
Each racing association and fair was requested to submit to the
CHRB their pro rata share of the shortfall.
As of March 1, 2007, the CHRB received six remittances totaling
$101,367. Some associations questioned the CHRB about the
dollar amounts reported. They cited the CHRB Annual Reports
show amounts above the $40 million baseline. Those reports
include receipts other than amounts deposited to the F&E,
Satellite Wagering Account, and Equine Research Funds.
SB 1825 (Kelley) in 2000 . In 2000, the California Authority of
Racing Fairs sponsored SB 1825 (Kelley) Chapter 342, Statutes of
2000. The sponsor stated, "that a key part of the continuing
success and public benefit of the California fairs is the
relationship it shares with the state's horse racing industry.
The California Horse Racing Act of 1933 promised that the
state's revenue from license fees paid by racing associations
would be pledged to create a self-supporting network of
agricultural fairs. This bill places into law the necessary
guarantee to ensure the economic future of these fairs." The
author's office reported, "that as part of the negotiations
regarding SB 27 (Maddy), Chapter 335, Statutes of 1998, the
fairs consented to the removal of language from Chapter 335 that
would have guaranteed a specified minimum annual funding level
for the Network of California Fairs, CHRB, and the U.C. Davis
Center for Equine Health."
Prior legislation .
SB 1825 (Kelley) Chapter 342, Statutes of 2000, provides for a
minimum of $40 million per year in license fees paid to the
state by racing associations and fairs for support of the
Network of California Fairs, CHRB, and the Kenneth L. Maddy
Equine Research Facility at U.C. Davis.
SB 27 (Maddy), Chapter 335, Statutes of 1998. provided extensive
license fee relief ($40 million annually) to the horse racing
industry in California.
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REGISTERED SUPPORT / OPPOSITION :
Support
California Authority of Racing Fairs (Sponsor)
Golden Gate Fields
Santa Anita Park
Western Fairs Association
Opposition
None on file
Analysis Prepared by : Eric Johnson / G. O. / (916) 319-2531