BILL ANALYSIS
AB 1778
Page 1
Date of Hearing: April 6, 2010
ASSEMBLY COMMITTEE ON ARTS, ENTERTAINMENT, SPORTS, TOURISM, AND
INTERNET MEDIA
Mike Davis, Chair
AB 1778 (Lieu) - As Introduced: February 9, 2010
SUBJECT : State agency promotions: commercials
SUMMARY : Requires state promotional commercials to be filmed
in California. Specifically, this bill provides that any
department, commission, office, agency, or other administrative
entity of the state that produces, or contracts for the
production of, a promotional commercial for the state or a
product of the state, and finances that commercial in whole or
in part with public funds, shall require that commercial be
filmed in this state
EXISTING LAW :
1)Contains the California Tourism Marketing Act (CTMA) and
creates the California Division of Tourism in the Business,
Transportation and Housing Agency (BTHA) to promote travel and
tourism to and within California. (Government Code Sections
13995, et seq.)
The CTMA further establishes the California Travel and Tourism
Commission (CTTC), a separate, independent, non-profit
corporation, and authorizes the CTTC to levy assessments on
specified businesses which benefit from travel and tourism
spending, according to referendum of the assessed businesses
for the purpose of producing a variety of marketing
activities, including: advertising; visitor publications; and
cooperative programs. (Government Code Section 13995.40.)
2)Contains The California Marketing Act, the purpose of which
is, in part, to enable producers of this state, with the aid
of the state, to correlate more effectively the marketing of
their commodities with market demands for those commodities.
These marketing efforts are funded by the levying and
collection of assessments. (Food & Agriculture Code Sections
58601, et seq.)
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3)Contains a public and private collaboration known as the "Buy
California Program." The purposes of the program are to
encourage consumer nutritional and food awareness and to
foster purchases of high-quality California agricultural
products. (Food & Agriculture Code Section 13995)
FISCAL EFFECT : Unknown
COMMENTS :
1)Author's Statement : According to the author, "The purpose of
this bill is to ensure that all commercials made on behalf of
the State of California, and paid for with state funds, are
actually filmed in California. When California taxpayers
finance the filming of a commercial that promotes California
or its products, they expect the money will be spent in
California, using the talents of California workers to support
our economy. This is particularly important because
California is in the midst of the worst recession since the
Great Depression. State unemployment reached 12.4% in
December 2009, and this high level of unemployment could last
for much longer. A lot of money is spent on promotional
commercial productions every year, and those dollars should be
used for local filming and to support jobs in California."
The California Labor Federation adds the following in support,
"At a time of budget shortfall, there is little the state can
do directly to create jobs. One important tool we have is the
use of public dollars. Taxpayer funds can and should be
directed to creating good jobs here in California.
"AB 1778 will require that state agencies making promotional
commercials for California keep those productions in
California. A recent commercial promoting California's dairy
industry was filmed in Australia. Trying to promote one local
industry by abandoning another local industry makes no
economic sense.
"Investing in jobs here does more than just reduce
unemployment. For every good job created, there is a
multiplier effect, as another family is able to put money back
into the economy again. In addition, there is a general fund
savings as fewer working families are forced to rely on the
safety net."
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2)Production of Commercial Advertising in California is a
Shrinking Industry : According to the Association of
Independent Commercial Producers (AICP), an industry
organization which represents the interests of United States
companies that specialize in producing commercials in various
media - film, video, digital - for advertisers and agencies,
"commercial work is increasingly flowing outside of
California, reflecting a similar trend in feature films and
television."
In a recent survey of its members, AICP found that while,
"Southern California remains by far the most frequent location
for member shoots. ? In 2008, the proportion of all shoot
days based in California decreased from a 2007 recorded high."
The survey found some good news, for instance, about half
(48%) of all domestic shoot days take place in Southern
California, with about 15% in New York and 20% elsewhere in
the U.S, however a troubling trend is seen in firms fleeing
the state. Companies located in New York or California are
more likely than other companies located elsewhere to shoot
overseas: 66% of California members and 63% of New York
members shoot overseas, compared to 29% of members located
elsewhere.
Nationwide, AICP members spent about $2.5 billion on
production during the study period of January 1, 2008 through
December 31, 2008. California-based companies reported
production expenditures totaling $1.46 billion in 2008.
3)Background: Happy Cows Come From New Zealand? : According to
the author, one of the reasons for this bill is that the
California Milk Advisory Board recently brought a production
crew to Auckland, New Zealand to shoot a series of 10
commercials claiming that California cows are happier. "The
Board stated that this particular filming was a 'minor portion
of production' and that any cows identified as Californian in
the ads will be actual California cows." The Board further
said that in this particular case, "They were not actually
shooting Happy California Cows commercials in New Zealand;
they were shooting unhappy cows from all over the world
auditioning to become California cows. Regardless, it makes
sense to clarify in the law that an ad promoting a California
product should actually be filmed in the State of California."
In a recent LA Times article, the Milk board defended its
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actions based upon the economics of filming in New Zealand,
saying, "We have a fiduciary responsibility to spend their
(the dairy industry) hard earned dollars as efficiently as we
can. In this particular case, we found significant cost
savings by shooting a portion of this product overseas."
4)State Programs Which Appear to be Covered Under AB 1778 : The
language of this bill would require, "any department,
commission, office, agency, or other administrative entity of
the state that produces, or contracts for the production of, a
promotional commercial for the state or a product of the
state, and finances that commercial in whole or in part with
public funds, shall require that commercial to be filmed in
this state." While this language may at first glance seem
quite broad, this analyst could only find two programs
operating in the state which clearly fall under its terms.
They are described below.
a) California Tourism Marketing Act . From its website comes
the following information: CTTC is responsible for
promoting California's image worldwide in order to increase
travel to the state. Since 1998, CTTC has had a direct
impact on increasing tourism to California through:
i) Advertising
ii) Visitor publications
iii) Cooperative programs
iv) California Welcome Centers (Statewide)
v) International travel and trade programs
vi) Media outreach
vii) New media/web site tools
(www.visitcalifornia.com)
Since its inception in 1998, CTTC's funding levels were
tied to the state budget and therefore vulnerable to cuts
on the state level. In 2006, Governor Arnold
Schwarzenegger signed AB 2592 (Leno) Chapter 790, Statutes
of 2006, a tourism assessment program for the passenger car
rental industry, into law. In addition to assessment
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collections, this landmark legislation allocated $50
million for tourism marketing beginning Fiscal Year
2007-08. In 2007, the California Tourism Marketing Act
referendum was passed with 91% approval, cementing the $50
million in funding for California tourism through 2013.
The budget for the next year includes: BTHA's Office of
Tourism for 2010-11, $934,000 from the General Fund,
$842,000 from reimbursements. California Welcome Centers
(total of 12 statewide) for 2010-11, $103,000 from the
General Fund (also receive assistance from the CTTC). CTTC
operates as a separate non-profit mutual benefit
corporation.
b) Department of Food and Agriculture Buy California
Campaign :
On July 28, 2001, the Buy California campaign began with a
$5 million state contribution to the program. This program
created a partnership between government and industry to
promote consumption of California-grown agricultural
products to California consumers, benefiting both public
health and the state's economy.
Also in 2001, Congress approved a farm assistance package
which included a block grant to states for assistance to
specialty crop producers. Specialty crops are defined as,
"any agricultural crop, except wheat, feed grains,
oilseeds, cotton, rice, peanuts, and tobacco." CDFA
received these funds in the form of a Specialty Crop Block
Grant from the United States Department of Agriculture
through the Commodity Credit Corporation in September of
2001.
Today, according to CDFA, the state contribution for the
Buy California campaign has dropped to essentially zero.
However, the federal farm bill continues to provide states
with grant support for marketing of specialty products.
The Buy California campaign operates to distribute these
federal grant dollars, and the costs of administration are
borne by industry recipients through industry assessment
fees.
In Fiscal Year 2009-10, the program anticipates
expenditures of $739,570 for domestic marketing and another
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$824,325 for international marketing of California grown
products.
5)This bill may not cover its intended target, CDFA Marketing
Act participants, a clarifying amendment is suggested :
The California Marketing Act allows for the collection of a
fee upon the producers of commodities in 56 different
marketing programs, to be used for the collective benefit of
that particular program. These include: the Beef, Dairy and
Salmon Councils; Commissions which range from Apples,
Asparagus, and Avocados, to Sonoma Winegrapes; commodity
specific marketing orders, such as for Cherry, Dried Figs, and
Tree Fruits. It was the California Milk Advisory Board, a
division of the Dairy Council, which filmed the commercial
discussed in comment 3 above, which gave rise to this proposed
legislation.
While the state through its Department of Food and Agriculture
collects and remits the fees authorized under its marketing
order programs, each of these programs is also governed by the
provisions in the F&A Code which state:
"Each marketing order which is issued pursuant to this
chapter shall provide for the levying and collection of
assessments in sufficient amounts to defray the necessary
expenses which are incurred by the director in the
formulation, issuance, administration, and enforcement of
the marketing order. If the marketing order authorizes the
carrying out of advertising and sales promotion plans, it
shall also provide for the levying and collection of
assessments in sufficient amounts to defray the expenses of
such activities?" (Food & Agriculture Code Section 58921.)
Therefore, it is not clear as to whether these marketing
programs operate using "public funds," which is the threshold
requirement for coverage under the bill's terms. An argument
could be made that market programs are funded through a
self-imposed fee placed upon private business, by private
cooperative agreement amongst affected producers, collected
for the promotion of that private industry. Yet market orders
are collected by public officials, operating under the
authority of a public agency.
The author may wish to amend the bill, to clarify that its
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terms apply to those enumerated state entities which finance
their promotional commercial with public funds and those which
use public resources in collection of funds used for financing
their promotional commercial campaigns.
REGISTERED SUPPORT / OPPOSITION :
Support
California Conference Board of the Amalgamated Transit Union
California Conference of Machinists
California Labor Federation
Engineers and Scientists of California, IFPTE Local 20
International Longshore and Warehouse Union
Jockeys' Guild
Professional and Technical Engineers, IFPTE Local 21
Teamsters
United Food and Commercial Workers Region 7 States Council
UNITE-HERE!
Opposition
None on file
Analysis Prepared by : Dana Mitchell / A.,E.,S.,T. & I.M. /
(916) 319-3450