BILL ANALYSIS
AB 2258
Page 1
ASSEMBLY THIRD READING
AB 2258 (Evans)
As Amended April 3, 2008
Majority vote
GOVERNMENTAL ORGANIZATION 12-0 APPROPRIATIONS 16-0
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|Ayes:|Torrico, Plescia, Davis, |Ayes:|Leno, Walters, Caballero, |
| |De Leon, Evans, Garcia, | |Davis, DeSaulnier, |
| |Jeffries, Mendoza, | |Emmerson, Furutani, |
| |Portantino, Price, Silva, | |Huffman, Karnette, La |
| |Tran | |Malfa, Lieu, Ma, |
| | | |Nakanishi, Nava, Sharon |
| | | |Runner, Solorio |
|-----+--------------------------+-----+--------------------------|
| | | | |
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SUMMARY : Clarifies language in current horse racing law
relating to the amount of license fees that must be paid to the
state by racing associations and fairs in any calendar year.
Specifically, this bill specifies that if the total amount paid
to the state as license fees by racing associations and fairs is
less than $40 million 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 million as specified.
EXISTING LAW provides that:
1)The California Horse Racing Board (CHRB) regulate the various
forms of horse racing authorized in this state.
2)If the total amount paid to the state by racing associations
and fairs pursuant to this chapter is less than $40 million 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 $40 million. The amounts due, if
any, shall be paid from the amount available for commissions,
AB 2258
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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)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 Exposition Fund
(FEF) 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;
f) Projects that result in a cost savings by more efficient
utilization of existing fair resources; and,
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)From the total revenue received by the CHRB, including
revenues transferred from the SWA, as specified, the sum of
$265,000 plus an amount equal to 63/100 of 1% 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 FEF. Provides if the revenues
paid into FEF, as specified, in excess of $13 million in any
fiscal year, one-half of the amount in excess of the $13
million shall be transferred to the General Fund (GF).
2)The Legislature shall annually appropriate and the CHRB shall
deposit to the credit
of the FEF, such sums as it deems necessary for the following
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purposes: a) for the support of the CHRB, including any costs
and expenses incurred by the Attorney General, as defined; b)
to the California Department of Food and Agriculture (CDFA)
for the oversight of the network of California fairs receiving
money from the fund; c) to CDFA 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, d) to the CDFA for the auditing of all
district agricultural association fairs, county fairs, and
citrus fruit fairs.
FISCAL EFFECT : There are no significant state costs associated
with this bill.
COMMENTS : According to the author, there is confusion within
California's horse racing industry regarding what payments to
the state 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 this bill, the
California Authority of Racing Fairs (CARF), believes that only
license fees paid to the state are to be used in the
calculation.
According to the sponsor, this bill will clarify how CHRB
calculates the money owed to the FEF for the benefit of the
California Fair Network. In addition, this bill represents the
continued discussions from last session involving the
continuation of Advance Deposit Wagering (ADW). AB 765 (Evans)
of 2007, which was signed by the Governor and includes a variety
of changes to the ADW law positively impacting the industry as a
whole.
SB 27 (Maddy), Chapter 335, Statutes of 1998, grants substantial
license fee relief ($40 million annually) to the California
horse racing industry. SB 27 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.
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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
GF or to a special Fund (e.g., the FEF or SWA). Special funds
consist of governmental cost funds used to account for taxes and
revenues, which are restricted by law for particular
functions/activities.
On January 26, 2007, CHRB sent letters to each racing
association and fair regarding the shortfall for calendar years
2005 and 2006. 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 FEF, SWA,
and Equine Research Funds.
SB 1825 (Kelley) of 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 provides for a minimum of $40
million per year in license fees paid to the state by racing
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associations and fairs for support of the Network of California
Fairs, CHRB, and the Kenneth L. Maddy Equine Research Facility
at the University of California, Davis.
SB 27 provides extensive license fee relief ($40 million
annually) to the horse racing industry in California.
Analysis Prepared by : Eric Johnson / G. O. / (916) 319-2531
FN: 0004473