BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 1777
                                                                  Page  1

          Date of Hearing:   April 28, 2010

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Felipe Fuentes, Chair

                  AB 1777 (Portantino) - As Amended:  April 5, 2010 

          Policy Committee:                              Revenue and  
          Taxation     Vote:                            6-3
                       A.E.S.T & I.                           6-1

          Urgency:     No                   State Mandated Local Program:  
          No     Reimbursable:              

           SUMMARY  

          This bill diverts about $24 million in revenues from General  
          Fund programs, such as education, health care, and public  
          safety, to a new local grant program for the arts. Specifically,  
          the bill:

          1)Requires that about 16% of revenues attributable to General  
            Fund sales and use taxes currently derived from certain  
            art-related sales be diverted to a newly created special fund  
            called the Creative Industries and Community Economic  
            Revitalization Fund.

          2)Specifies that revenues received by the fund can, upon annual  
            appropriation by the Legislature, be allocated by the  
            California Arts Council for purposes specified in current law,  
            such as encouraging art awareness, promoting the employment of  
            artists, providing for the exhibition of art works in public  
            buildings, and awarding prizes or direct grants to individuals  
            or organizations.

          3)Requires the Council to submit an annual report to the  
            Legislature that includes the status of each grant made.  
                     
           FISCAL EFFECT
                     
          General Fund revenue losses of $11 million in 2010-11 and $24  
          million annually thereafter.
               
           COMMENTS
                     








                                                                  AB 1777
                                                                  Page  2

           1)Rationale.   This bill is intended to secure a stable revenue  
            source for grant programs administered by the Arts Council.  
            The author notes that the budget for the California Arts  
            Council was cut by 97% in 2003. Proponents of the bill  
            (including numerous arts organizations) state that California  
            is in its seventh year of spending just three cents per capita  
            from the General Fund on the arts, and it remains last in the  
            nation for state spending.

           2)Opponents  (California Tax Reform Association) assert that  
            creating an inflexible earmark for the Arts Council, this bill  
            is the legislative equivalent of ballot-box budgeting, which  
            is a step in the wrong direction for the financial health of  
            California. 

           3)Previous legislation  . This bill is similar to AB 1365  
            (Karnette) of 2007, AB 2728 (Karnette) of 2008, and AB 700  
            (Krekorian) of 2009, all of which died in this committee. 
           Analysis Prepared by  :    Brad Williams / APPR. / (916) 319-2081