BILL ANALYSIS
AB 1777
Page 1
Date of Hearing: April 6, 2010
ASSEMBLY COMMITTEE ON ARTS, ENTERTAINMENT, SPORTS, TOURISM, AND
INTERNET MEDIA
Mike Davis, Chair
AB 1777 (Portantino) - As Amended: April 5, 2010
SUBJECT : Creative Industries and Community Economic
Revitalization Act of 2010
SUMMARY : Establishes the Creative Industries and Community
Economic Revitalization Fund in the State Treasury, and requires
that 20% of all revenues derived from the payment of sales and
use taxes that are remitted to the State Board of Equalization
by the taxpayers engaged in specified lines of business, as
provided, be deposited in the fund. The California Arts Council
(CAC) would be authorized to expend the moneys in the fund, upon
appropriation by the Legislature, to issue grants pursuant to
the act, as specified. Specifically, this bill :
1)Establishes the Creative Industries and Community Economic
Revitalization Act of 2010.
2)Makes the following Legislative declarations and findings:
a) Life in this state is enriched by art, innovation, and
creativity.
b) The source of art is in the natural flow of the human
mind, but realizing craft and beauty is demanding, and the
people of the state desire to encourage and nourish these
skills wherever they occur, to the intrinsic and extrinsic
benefit of all.
c) Every dollar in state support for the arts leverages
seven dollars ($7) in earned and contributed revenue.
d) This state's cultural enterprises provide nearly 500,891
jobs for its residents, accounting for 7.6 percent of total
employment.
e) Nonprofit arts organizations contribute $5,000,400,000
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to this state's economy and generate $300,000,000 in state
and local taxes.
f) Nonprofit arts organizations help the state meet its
obligations in the field of education by serving
schoolchildren, college and university students, teachers,
and adults through fieldtrips, assemblies, training, and
outreach programs that enhance and strengthen instruction
provided by the public sector.
g) Nonprofit arts organizations are a partner to the
creative industries, and play a key role in the 21st
Century workforce and the global economy, including in the
fields of architecture, advertising, consulting, education,
performing arts, museums, and other cultural industries,
design, including electronic design, software development,
film, games, including computer games, historic
preservation, music, new media, publishing, radio and
television, and tourism.
h) An investment in the arts and the creative economy
industries can revitalize a neighborhood or area by
accomplishing all of the following: stimulating the
economy; engaging residents; drawing tourists; providing a
sense of community; serving as a gathering place;
encouraging creativity; strengthening community
partnerships; promoting the arts and supporting artists;
developing a positive image for the area; enhancing
property values; capitalizing on local cultural, economic,
and social assets; creating jobs.
3)Provides that the definition of "Council" means the California
Arts Council, established pursuant to Government Code Section
8751.
4)Provides that the definition of "Fund" means the Creative
Industries and Community Economic Revitalization Fund,
established pursuant to Government Code Section 8758.1, which
this bill would create.
5)Requires 20% of state sales and use tax revenues derived from
the sales of art dealers, art auctioneers, and certain other
business entities shall be deposited in the Creative
Industries and Community Economic Revitalization Fund.
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6)Authorizes, notwithstanding Government Code Section 8753.5,
the money in the fund may be expended by the Council, upon
appropriation by the Legislature, to issue grants pursuant to
this chapter.
7)Allows any city, county, district, including, but not limited
to, a regional park district, a joint powers authority, or a
nonprofit arts organization deemed eligible by the council, to
apply to the Council for a local assistance program grant for
organizational support.
8)Provides that the Council, when issuing a grant pursuant to
this chapter, to encourage joint partnerships between
applicants to enhance investment of public resources to enable
the growth of the creative economy in communities throughout
the state.
9)Requires the CAC to submit an annual report to the Legislature
that includes the status of each grant made pursuant to this
chapter.
EXISTING LAW :
1)Imposes Sales and Use Tax (SUT) on the gross receipts from the
sale, storage, use, or their consumption in California of
tangible personal property.
2)Defines "work of art" as a work of visual art, including, but
not limited to, a drawing, painting, mural, fresco, sculpture,
mosaic, film, photograph, a work of calligraphy, a work of
graphic art, crafts, costume, dress, clothing, personal
adornment, jewelry, or mixed media.
3)Provides an SUT exemption for sales of original works of art,
as specified; items which have value as museum pieces, as
specified; and certain purchases of public art by the state or
any local government entity for display to the public, as
specified.
4)Exempts from the SUT original works of art leased for 35 years
or more from one nonprofit organization to another, or leased
by a state or local government.
5)Requires the Department of Motor Vehicles (DMV) to issue, for
fees in specified amounts, a special interest license plate
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bearing a full-plate graphic design that depicts a significant
feature or quality of the State of California and is approved
by the DMV in consultation with CAC.
6)Creates the CAC, consisting of 11-members who serve four-year,
staggered terms. Nine members are appointed by the Governor,
subject to Senate confirmation, the Speaker of the Assembly
and the Senate Committee on Rules each appoints one member.
7)Directs CAC to encourage artistic awareness, participation,
and expression; to help independent local groups develop their
own arts programs; to promote employment of artists and those
skilled in crafts in the public and private sector; to provide
for exhibition of artistic works in public buildings; and, to
enlist the aid of all state agencies in the task of ensuring
the fullest expression of artistic potential.
FISCAL EFFECT : Unknown
COMMENTS :
1)Background : According to the author, "Since 2003, California
has been 50th in the nation in public investment for the arts,
spending three cents per capita for the arts from the state's
General Fund. The CAC budget had grown from its first full
year of funding in fiscal year 1976-77 at $1,917,000 to
$32,224,000 in fiscal year 2001-02, when 1,590 grants were
awarded to nonprofit arts organizations.
"In 2003, the CAC's grant programs included, Arts in
Education, Organizational Support, State-Local Partnership,
Multicultural Entry, Multicultural Advancement, Multicultural
Next Generation, Traditional Folk Arts, Artists in Residence,
Performing Arts Touring & Presenting, Artists Fellowship,
Infrastructure Support Initiative, Disability Program, Arts
Marketing Institute and International Efforts. Today, in
2010, the CAC has four grants programs: Artists in Schools,
Creating Public Value, State-Local Partnership and Statewide
Networks.
"AB 1777 will help secure a stable revenue source for the CAC.
This bill will transfer 20% of the sales tax generated on
arts related items to a fund that would go directly to the CAC
for arts programs serving California. Providing a designated
funding stream for the CAC can help grow programs that help
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non-profit arts organizations and the artists that serve 37
million Californians and the millions of people who visit
California every day. By providing a stable revenue source
for the CAC and its programs, the arts can continue to be a
significant contributor to California's economic recovery
through tourism, jobs, social services and education outreach.
AB 1777 proposes a sound investment for arts in California to
revitalize our communities and enhance the quality of life for
our citizens."
2)Economic impact of the arts : Supporters note that CAC's
nurturing of nonprofit arts programs through the state has
been an economic driver for California's economy and tax base.
A 2004 study commissioned by CAC (with support from The
William and Flora Hewlett Foundation and others) focused on
the economic impact of nonprofit arts on the state's economy.
The Arts: A Competitive Advantage for California II found that
"nonprofit arts organizations attract an audience of 71.2
million and bring a $5.4 billion impact to the state's
economy, including 66,300 full-time and 95,100 part-time jobs,
(40,000 arts-related plus 26,300 having an impact on the
arts), and generate nearly $300 million in state and local
taxes."
3)Board of Equalization (BOE) : The BOE collects and allocates
all SUT revenues. Last session, a similar measure, AB 1365,
was introduced by Assemblymember Karnette, which the BOE
analyzed. At the time, BOE reported minor "absorbable" costs
associated with implementation, and estimated revenue of $33.2
million dollars transferred annually from the state's General
Fund to the California Arts Council.
4)North American Industry Classification System (NAICS) : The
NAICS is the industry classification system of the United
States, developed by the Economic Classification Policy
Committee on behalf of the Office of Management and Budget.
It is currently used by the United States, Canada, and
Mexico's federal governments, state agencies and private
industries to identify a business' principal activity within
the retail, wholesale and service categories. The BOE has
recently implemented the use of the NAICS code in registering
new sales and use tax accounts. The BOE business codes
referenced in the bill are: Business Code 11, which covers
art goods and gift stores, bric-a-brac stores, ceramic stores,
imported gift merchandise and novelty and souvenir stores;
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and, Business Code 15, which includes music stores, musical
instrument stores, piano stores, phonographic record stores
and retail sheet music stores.
5)This bill expands the scope of the CAC grant authority :
Government Code Section 8750, et seq., establishes the CAC,
and grants it authority to accept funds, set grant criteria
and issue grants to fund the arts. Government Code Section
8753.5, provides that the Council shall not make any grants or
fund any program which has not been established pursuant to
the powers granted by "this chapter". The instant bill would
create a second chapter, and a new funding stream, through
which the CAC could establish and fund grants. The creation
of a new chapter in law necessitates the notwithstanding
Government Code Section 8753.5 provision, as it would expand
the scope of the CAC authority - although completely within
the parameters of the original intent of the
Dixon-Zenovich-Maddy California Arts Act of 1975.
6)Prior Legislation :
AB 700 (Krekorian) of 2009, was substantially similar to AB
1777, with slight differences in the legislative findings.
Status: Held in Assembly Appropriations Committee.
AB 2728 (Karnette) of 2008, would have required 20% of state
sales and use tax revenues derived from the sales of specified
art-related goods be deposited in the State Treasury for
allocation to the California Arts Council once the state
General Fund achieves structural balance. Status: Held in
Assembly Appropriations Committee.
AB 1365 (Karnette) of 2007, was a substantially similar
measure to AB 2728, without the balanced budget trigger
requirement. Status: Held in Assembly Appropriations
Committee.
AB 655 (Leno) of 2005, proposed a 1% surcharge on the price of
admission to specified arts and entertainment venues. Status:
Held in this committee.
7)Double-referral : Should this bill pass this committee, it
should be re-referred to the Assembly Committee on Revenue and
Taxation.
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REGISTERED SUPPORT / OPPOSITION :
Support :
Alliance for California Traditional Arts
Arts Orange County
Arts for LA
AXIS Dance Company
Balboa Park Cultural Partnership
Balboa Performing Arts Theater Foundation
California Alliance for Arts Education
California Arts Advocates
California Association of Museums
Highland Art Center
Laguna Art Museum
Laguna Playhouse
LA Stage Alliance
Mainly Mozart
Mingei International Museum
Mission San Juan Capistrano
Muckenthaler Cultural Center
Museum of Contemporary Art San Diego
Musicians Union Local 6,
American Federation of Museums
NTC Foundation
Orange County Children's Therapeutic Arts Center
Orchestra Nova San Diego
Playwrights Project
Pacific Chorale
San Diego Youth Symphony and Conservatory
San Francisco Musical Fund Society
South Coast Repertory
Theatre Bay Area
Theatre West
Willows Theatre Company
The Wooden Floor
2 private citizens
Opposition :
None on file
Analysis Prepared by : Dana Mitchell / A.,E.,S.,T. & I.M. /
(916) 319-3450