BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
SB 1227 (Negrete McLeod) - Horse racing: parimutuel pool funds.
Amended: As Introduced Policy Vote: GO 10-0
Urgency: No Mandate: No
Hearing Date: April 30, 2012
Consultant: Maureen Ortiz
This bill meets the criteria for referral to the Suspense File.
Bill Summary: SB 1227 deletes an existing requirement that 1% of
the total amount handled in daily conventional and exotic
parimutuel pools be distributed to the Fair and Exposition Fund,
and instead requires those funds to be equally distributed as
commissions and purses.
Fiscal Impact: Loss of revenue to the Fair and Exposition Fund
of approximately $350,000 to $400,000 annually.
Background: Existing law requires every racing association that
conducts a racing meeting to deduct 15% of the total amount
handled in conventional parimutuel pools and 16.75% of the total
amount handled in exotic parimutuel pools and requires those
funds to be distributed to various interests including breeders'
programs, backstretch welfare, vanning and stabling. Existing
law requires any fair racing association to deduct an additional
1% from the total amount handled in its daily conventional and
exotic parimutuel pools, and provides for the deposit of the
moneys in the Fairs &Exposition Fund for expenditure for the
construction or operation of recreational and cultural
facilities of general public interest at fairs throughout the
state.
After payments to fund the California Horse Racing Board at
approximately $11.5 million annually, and the equine drug
testing program at the Equine Analytical Chemistry Lab located
in the Kenneth L. Maddy Lab at U. C. Davis of about $1 million
per year, the remainder is distributed 50% to the association as
commissions, and 50% to the horsemen as purses.
Proposed Law: SB 1227 will eliminate the 1% deduction in daily
conventional and exotic parimutuel pools that is currently
SB 1227 (Negrete McLeod)
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distributed to the Fair and Exposition Fund (F&E), and will
redirect those funds of approximately $400,000 annually to be
distributed as purses and commissions.
Related Legislation: SB 16xx (Ashburn), Chapter 12/2009, Second
Extraordinary Session. That measure eliminated a $40 million
guaranteed horse racing license fee distribution to the F&E Fund
as a means of helping the struggling horse racing industry and
instead required a $32 million annual General Fund appropriation
for the support of the fair network. SB 16xx did not, however,
eliminate the 1% fee paid by fairs. In the 2011-12 Budget Act,
the General Fund appropriation of $32 million to fund the fairs
was eliminated.
Staff Comments: According to the Department of Food and
Agriculture, the loss of the 1% allocation in license fees from
horse racing will greatly impact the fiscal operations of the
Department. The $32 million General Fund support for the Network
of California fairs deposited into the Fair and Exposition Fund
was eliminated in the 2011-2012 Budget, and the existing 1%
allocation from live racing makes up nearly 30% of the
division's current budget that is needed to provide state
mandated oversight of the fairs. According to the department,
this allocation is the only funding source for the Division of
Fairs and Exposition that does not have an end date as the loan
and racing deferred payments do.