BILL ANALYSIS
AB 2258
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 2258 (Evans)
As Amended July 2, 2008
2/3 vote. Urgency
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|ASSEMBLY: |75-0 |(May 15, 2008) |SENATE: |35-0 |(July 10, |
| | | | | |2008) |
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Original Committee Reference: G.O.
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.
The Senate amendments add an urgency clause, allowing this bill
to take effect immediately upon enactment.
AS PASSED BY THE ASSEMBLY , this bill is consistent with Assembly
actions except an urgency clause was added in order to ensure
that the California Horse Racing Board (CHRB) can properly
account for and collect all license fees paid to the state by
racing associations and fairs in the 2008 calendar year, and
collect any shortfall due from the 2008 horse racing season by
March 1, 2009, in compliance with current law.
FISCAL EFFECT : According to the Senate Appropriations
Committee, pursuant to Senate Rule 28.8, negligible state costs.
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 the bill believes
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that only license fees paid to the state are to be used in the
calculation.
According to the sponsor, the California Authority of Racing
Fairs, 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),
Chapter 613, Statutes of 2007, includes a variety of changes to
the ADW law positively impacting the industry as a whole.
In 1998, SB 27 (Maddy), Chapter 335, Statutes of 1998 grants
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 (F&E) 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.
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 State 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 CHRB about the dollar
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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) 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 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
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: 0005980