BILL ANALYSIS
AB 864
Page 1
Date of Hearing: April 22, 2009
ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION
Curren Price, Chairman
AB 864 (Price) - As Introduced: February 26, 2009
SUBJECT : Horse racing: racetrack improvement contracting:
small business and disabled veteran business enterprises.
SUMMARY : Requires at least 10 percent of the total amount of
all state contracts for the infrastructure improvement of any
racetrack grounds in the state shall be let to small business or
disabled veteran business enterprises, as defined.
EXISTING LAW :
1)Provides that the California Horse Racing Board (CHRB)
regulate the various forms of horse racing authorized in this
state.
2)Empowers CHRB to adopt regulations necessary for the
protection of the public and control of horse racing and
pari-mutuel wagering.
3)Declares state policy that small businesses, receive a fair
portion of the total purchases and contracts or subcontracts
for state goods and services.
4)Defines a "small business", for the purpose of being eligible
for state small business procurement contract bid preferences,
as independently owned, not dominant in its field of
operation, domiciled in California, employing 100 or fewer
employees, and earning $10 million or less in gross revenues
for each of the three previous years. Designates DGS to
administer the Small Business Certification Program.
5)Maintains a 3% participation goal for disabled veteran
business enterprises in specified contracts issued by state
agencies and local agencies expending state funds, including
school districts, as a measure of the total monies these
agencies expend through contracts.
FISCAL EFFECT : Unknown
COMMENTS :
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Background . California's horse racing industry is struggling to
generate new fans and horse owners. The industry is also being
threatened by the escalating costs of doing business in
California, including, but not limited to, workers' compensation
insurance costs and declining foal crops.
There has been a general decline in the number of people
attending and wagering at live horse racetracks in California
due to a number of factors, including increased competition from
other forms of gaming, unwillingness of customers to travel a
significant distance to racetracks and the availability of
off-track wagering and phone/Internet wagering.
The recent closure of Bay Meadows Racetrack in 2008 and the
possible closure of Hollywood Park Racetrack in the future could
accelerate the need to improve California's racing associations
and fair facilities for the additional stabling and training of
racehorses. Many of California's racing facilities are in need
of maintenance and improvement in order to provide a high
quality product for its fans and racing participants.
In 2008, segments within the horse racing industry supported
legislation (SB 1635 - Negrete McLeod of 2008), which would have
increased the takeout on the pari-mutuel handle on wagers to
fund such improvements. The additional revenues from the
increase would be used primarily for the financing of capital
improvements to provide adequate stabling and training
facilities for thoroughbred horses in California, and
secondarily to supplement the costs of workers' compensation
insurance incurred in connection with thoroughbred horse racing.
Industry officials stated that approximately $80 to $120
million would need to be generated from the takeout increase to
fund stabling and backstretch improvements at racetracks and
state and county fairs in northern and southern California. SB
1635 died on the Assembly Appropriations Committee suspense
file.
There are large questions that need to be answered in
California's racing industry relating to its future. The
industry is in the process of identifying what the possibilities
are and deciding which ones are realistic and which ones are
unrealistic.
The role of small business in the California economy . Small
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businesses and micro businesses form the core of the California
economy. More than 90% of business enterprise falls into these
categories. Small businesses and micro businesses employ more
than 50% of all working Californians, and account for 70% of all
new jobs created in this state.
Purpose of the bill . According to the author, the intent of
this bill is to ensure that small and emerging contractors
obtain a fair portion of infrastructure construction contracts
by requiring that at least 10 percent of the total amount of all
state contracts for the infrastructure improvement of any
racetrack grounds which conducts horse racing in the state for
small business or disabled veteran business enterprises. This
bill takes into consideration the current economic factors that
the horse racing industry faces relating to racetrack ownership
and the stabling and training of racehorses throughout the
state.
The author states, this bill will foster greater participation
in the bidding for and obtaining of state contracts for
small businesses or disabled veteran business enterprises. The
author believes that small businesses are the core of the
state's economy and retaining greater opportunities for small
business will ultimately strengthen California's economy. The
author maintains a strong small business sector is required to
act as suppliers and subcontractors to large businesses and
small businesses fulfill a role not always adequately addressed
by other sectors.
The author states, Californians have been activated through the
National Guard/Reserves, and unfortunately, with the scope of
hostilities overseas many may suffer disabilities as a result of
defending our Country. Many veterans when returning home are
finding it harder and harder to obtain decent paying jobs and
decide to go into business to support themselves and their
families. This bill provides them an opportunity to do just
that; to provide a service and/or product to the state at a fair
market price.
Related legislation .
SB 1635 (Negrete McLeod) of 2008, contained intent language to
enact legislation to deduct an additional percentage
of the total amount handled in all pari-mutuel pools of
thoroughbred races run in California, to be used primarily to
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finance capital improvements to provide adequate stabling and
training facilities for thoroughbred horses, and secondarily to
supplement the costs of workers' compensation insurance incurred
in connection with thoroughbred horse racing. (Died on Assembly
Appropriations Committee suspense file).
AB 765 (Evans), Chapter 613, Statutes of 2007. provides that a
fair, combination of fairs, or an association
conducting racing at a fair, may, with CHRB approval, deduct an
additional 1% from its handle, to be used for maintenance and
improvements at a fair's racetrack inclosure, as specified.
SB 1227 (Soto), Chapter 918, Statutes of 2004. Allows the Los
Angeles County Fair Association (LACFA/Fairplex) to retain any
increases above the 2004 level of the license fees for payment
of a capital expense loan. Any portion of the license fees in
excess of the loan payment amount will be deposited into the
Fair and Exposition Fund for CHRB administrative costs.
REGISTERED SUPPORT / OPPOSITION :
Support
None on file
Opposition
None on file
Analysis Prepared by : Eric Johnson / G. O. / (916) 319-2531