BILL ANALYSIS �
SB 1119
Page 1
Date of Hearing: June 24, 2014
ASSEMBLY COMMITTEE ON ARTS, ENTERTAINMENT, SPORTS, TOURISM, AND
INTERNET MEDIA
Ian C. Calderon, Chair
SB 1119 (Leno) - As Amended: April 2, 2014
SENATE VOTE : 36-0
SUBJECT : California Travel and Tourism Commission.
SUMMARY : Establishes a limit on the assessment of the
passenger car rental industry to fund the California Travel and
Tourism Commission (Commission) of no more than 70% of the
funding necessary to fund the Commission's approved marketing
plan and all administrative costs. Raises and limits the
marketing plan and administrative costs to $70 million per
fiscal year. Specifically, this bill :
1)Provides that the proposed assessment for the passenger rental
car industry rate shall be set at a level determined by the
Commission that will generate no more than 70% of the total
funding that will be sufficient, when aggregated together with
other funding for the Commission, to fund the approved
marketing plan and all administrative costs.
2)Raises and caps the contribution of the passenger rental car
industry to no more than $70 million per fiscal year.
EXISTING LAW :
1) Establishes the Governor's Office of Business and Economic
Development (GO-Biz) within the Governor's Office for the
purpose of serving as the lead state entity for economic
strategy and marketing of California on issues relating to
business development, private sector investment and economic
growth. (Government Code Section 12096 et. seq)
2) Establishes the California Tourism Marketing Act (Act).
(Government Code Section 13995 et seq.)
3) Makes various findings and declarations regarding the
importance of California's tourism industry, need for
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marketing of the industry and importance in funding the
marketing of the industry, including: (Government Code
Section 13995.1)
a) An industry-approved assessment provides a
private-sector financing mechanism that, in partnership
with state funding, will provide the amount of marketing
necessary to increase tourism marketing expenditures by
California.
b) The goal of the assessments is to assess the least
amount per business, in the least intrusive manner, spread
across the greatest practical number of tourism industry
segments.
1) Defines the following: (Government Code Section 13995.20)
a) "Assessed business" is a person required to pay an
assessment pursuant to the Act other than a public entity
or a corporation when a majority of the corporation's board
of directors is appointed by a public official or public
entity, or serves on the corporation's board of directors
by virtue of being elected to public office, or both.
b) "Industry category" means the following classifications
within the tourism industry: accommodations, restaurants
and retail, attractions and recreation, transportation and
travel services, other than passenger car rental and
passenger car rental.
c) "Maximum assessment" is a dollar amount, adopted by the
Commission, over which an assessed business shall not be
required to pay. The Commission may adopt differing
amounts of maximum assessment for each industry category or
industry segment.
1) Requires the Governor to appoint a Tourism Selection
Committee (Committee) based upon recommendations from
established industry association comprised of 25
representatives, with no fewer than six from each industry
category. Requires the Committee to issue a report listing
industry segments that will be included in the initial
referendum, the target assessment level for the initial
referendum, the percentage of funds to be levied against each
industry category and segment based upon, to the extent
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possible, quantifiable industry data, assessment methodology
and rate of assessment within each industry segment, that may
include a percentage of gross revenue or a per transaction
charge. (Government Code Section 13995.30)
2) Requires the Office of Tourism within GO-Biz to establish a
non-profit Commission consisting of 37 members, including
representatives of the tourism industry and travel agencies
or tour operators, whose mission is to increase the number of
persons traveling to and within California. Provides that
the Commission be administered by an executive director who
shall be a tourism industry marketing professional,
recommended by a vote of the commissioners and approved by
the Governor. (Government Code Sections 13995.40, 13995.41
and 13995.43)
3) Requires the Commission to annually provide to all assessed
businesses a report on the activities and budget of the
Commission. Provides that the Commission's annual budget is
subject to the review and approval of the Director of GO-Biz,
but specifies that any decision of the Director related to
the budget may be overridden by a vote of three-fifths or
more of the commissioners then in office. Requires the
Commission to maintain a report, updated when assessments are
amended and to be made available to any assessed business, on
the percentage assessment allocation between industry
categories and industry segments including the reasons and
methodology used for the allocations. (Government Code
Section 13995.44)
4) Requires the Commission to annually prepare a written
marketing plan and specifies that any expenditures by the
commission shall be consistent with the marketing plan.
Requires the marketing plan to promote travel to and within
California and to include, but not be limited to, an
evaluation of the previous year's budget and activities; a
review of California tourism trends, conditions, and
opportunities; target audiences for tourism marketing
expenditures; marketing strategies, objectives, and targets;
and a budget for the current year.
(Government Code Section 13995.45)
5) Provides that if an assessed business within the passenger
car rental category pays an assessment greater than the
maximum assessment, as determined by the Commission for other
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industry categories, the weighted percentage assigned to that
assessed business shall be the same as though its assessment
were equal to the highest maximum assessment. (Government
Code Section 13995.64.5)
6) Provides that an assessed business may pass on some or all of
its assessment to customers and may identify or itemize the
assessment on any document provided to a customer.
[Government Code Section 13995.65 (f).]
7) Specifies that funding for the Commission is a cooperative
venture and establishes Legislative intent that the state
shall be responsible for appropriating a minimum of $7.3
million each fiscal year for travel and tourism. Requires
the assessment level to ultimately reach at least $25 million
and authorizes the industry to terminate the Commission by
referendum at any time if the state fails to appropriate $7.3
million in any fiscal year and provides that the state may
decide not to appropriate funding in the event that the
Commission fails in any fiscal year to target its annual
assessment level at or above the level set for the initial
referendum. (Government Code Section 13995.70)
8) Provides that the proposed assessment for the passenger
rental car industry shall be set at a level determined by the
Commission that will generate funding that will be
sufficient, when aggregated together with other funding for
the Commission for an amount sufficient to fund the approved
marketing plan of no less than $50 million per fiscal year.
(Government Code Section 13995.92)
FISCAL EFFECT : Unknown
COMMENTS :
1)Author and Sponsor's Stated Need for Legislation: Fairness in
Visit California Contributing Industries : According to the
sponsors, "The California Tourism Marketing Act (Government
Code Sections 13995 et. seq.) has successfully increased
California's share of the travel and tourism market. The
legislation authorized the self-imposition of an assessment by
businesses that benefit from travel and tourism. Over the
last three years, California has moved from 28th to 2nd among
state tourism marketing budgets. In recent years, this
program has raised $60 million annually, allowing California
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to greatly expand its tourism marketing programs.
"Funding for the program is split across a variety of industry
segments (Accommodations, Restaurants and Retail, Attractions
and Recreation, Transportation and Travel Services, and
Passenger Car Rental), with funds raised from the passenger
rental car industry accounting for about 74% ($43 million) of
Visit California's annual budget.
"Visit California and the Visit California Board are currently
undertaking an effort to increase the Visit California
marketing budget on an ongoing basis. Those discussions
include Visit California, the Governor's Office of Business
and Economic Development and representatives of the various
industry segments that contribute to the program's budget.
SB 1119 is meant to facilitate opportunities for the tourism
industry to enhance its support of Visit California and ensure
that assessments are shared by all segments of the industry. "
The author states, the bill is "an effort to create measured
growth in the demonstrably successful Visit California program
in a manner that does not disproportionately place the burden
on the rental car industry." The author contends that under
current budgeting practice by the Visit California program,
once an annual budget amount is established, estimates are
made as to the amount anticipated to be collected from all
industries except for the rental car industry, claiming, "once
that amount is set, the assessment percentage on rental cars
is set to then fill the gap in the budget." The author notes
that while the current budgeting approach has been widely
accepted by the participants of this successful program, Visit
California and the Visit California Board are currently
undertaking an effort to increase the Visit California
marketing budget on an ongoing basis, including a proposal to
increase the program to $105 million annually. The author
intends for this bill to "facilitate opportunities for the
tourism industry to enhance its support of Visit California
and ensure that assessments are shared by all segments of the
industry."
2)Background: The California Tourism Marketing Act and Visit
California Structure : The Act grew out of efforts to reverse
a multi-year decline in California's tourism industry. During
the 1970s, Governor Brown closed the Office of Tourism and
withdrew funding from many tourism promotion efforts. During
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Governor Deukmejian's tenure, the Office of Tourism was
reactivated. In February 1993, Governor Wilson created the
Governor's Task Force on Tourism Funding (Executive Order
W-41-93) for the purpose of "investigating various tourism
funding methods and making policy recommendations regarding a
new, "non-tax" method of providing stable financing for
statewide tourism promotion." The Task Force, which was
composed of representatives from various California
businesses, developed the concept that was ultimately enacted
by SB 256 (Johnston) Chapter 871, Statutes of 1995, as the
California Tourism and Marketing Act.
The Act authorized the establishment of a non-profit, public
benefit corporation, Visit California, to oversee the
promotion of California as a premier travel destination. The
statute became operative upon industry wide approval in 1997
and the assessment program was initiated in 1998. In 2001,
the program was renewed by industry referendum with an
84% margin, while in 2007 it was renewed by a 91% margin. The
first full year of assessment funding occurred during the
1998-99 fiscal year and between 1998 and 2002, the marketing
budget was fully funded by the Commission and the state at
approximately
$14 million annually.
Visit California is comprised of 37 Commission members,
representing each industry segment (Accommodations,
Restaurants and Retail, Attractions and Recreation,
Transportation and Travel Services, and Passenger Car Rental).
The Commission meets three times a year and directs and
approves the marketing plan, expenditures and the overall
strategic course for California tourism. The assessment
program is administered by the Office of Tourism, Tourism
Assessment Program which is housed in GO-Biz.
In 2006, AB 2592 (Leno), Chapter 790, Statutes of 2006,
established a new tourism assessment program for the passenger
car rental industry. This passenger car rental industry
assessment program is limited to companies that have business
locations renting passenger vehicles at either airports or
accommodation locations, such as hotels and requires an
industry-specific assessment rate, adjusted annually. Numbers
provided at a recent Visit California meeting show that for
the 2012-13 fiscal year, the passenger rental car industry
accounted for about seven percent (about $1.5 million) of the
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tourism revenue generated in the state and contributed 76%
(over $43 million) of the assessments to fund the program.
In March 2013, assessed businesses voted to approve the
California Tourism Assessment Program and as a result, the
program and Visit California efforts will continue to operate
for an additional six years, pursuant to referendum results,
with $300 million intended for marketing and as a means of
allowing Visit California to greatly expand the depth and
scope of its marketing programs during that time. At a recent
Visit California meeting, materials were presented outlining
some of the upcoming efforts related to the new "Dream Big"
slogan and brand, including a chart outlining what increased
budgets could mean for the program. Specifically, projections
show that the current $50 million budget would have no
additional impact, a $150 million budget could result in an
additional $6.8 billion impact and a $147 million budget could
result in an additional $7.7 billion impact to tourism in the
state. While no budget above $50 million has been approved
thus far, it is entirely possible that the program's budget
numbers double in the near future, as stakeholder outreach
results indicate that this is the right time to be considering
an increased budget, which would then result in a need for
Visit California to secure funding. Conversations are still
ongoing as to where money beyond the current $50 million would
come from, with a particular focus on the need for parity in
assessments across the industry. Given the ability under
current law for assessments to be passed onto consumers, it is
likely that any increased budget for Visit California will
result in increased fees consumers see when renting a car or
staying at a hotel in order to fund the industry's
assessments.
3)Oversight Hearing, CTTC: Spinning Gold: Marketing Travel and
Tourism in California : In 2011, this Committee held an
Oversight Hearing into the (then titled) California Travel and
Tourism Commission. At that hearing, the Committee learned
about the unique public/private partnership funding for the
Commission, and of its success in making California the number
one travel destination in the U.S. According to an industry
White Paper, in 2009, approximately 200 million visitors
generated $87.7 billion in spending on goods and services in
the state. Visitor spending directly supported jobs for eight
hundred and 880,000 Californians and resulted in $5.3 billion
in direct state and local tax revenues. (Current figures show
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California Tourism continues to grow and now generates $6
billion in state and local taxes, and directly supports almost
1 million jobs in our communities.)
The 2011 White Paper on California Tourism highlighted the
role of a statewide tourism program, noting a number of other
states with substantial budgets to market themselves to
potential travelers and that without the coordinating efforts
of a California tourism program, California's travel
destinations and tourism industry would be at a competitive
disadvantage.
According to Visit California, since its inception more than a
decade ago, it has become one of the nation's premier state
marketing agencies - promoting the California brand and
helping to increase tourism and travel-related spending.
Visit California states that as an industry-led public-private
partnership, it is leading successful marketing campaigns that
are having a profound effect, citing that over the last three
years, California has moved from 28th to 2nd among state
tourism marketing budgets.
4)Prior Related Legislation :
a) SB 820 (Committee on Governmental Organization), Chapter
353, Statutes of 2013, enacted the statutory changes to
reflect the assignment and reorganization of the functions
of state government as outlined in the Governor's
Reorganization Plan No. 2 of 2012, effective on July 3,
2012, and operative on July 1, 2013, which included
transferring responsibilities for the Commission to GO-Biz
and set the current proposed assessment for the passenger
rental car industry to fund an approved marketing plan of
no less than $50 million.
b) AB 29 (John A. P�rez), Chapter 475, Statutes of 2011,
established GO-Biz within the Governor's Office for the
purpose of serving as the lead entity for economic strategy
and marketing of California on issues relating to business
development, private sector investment and economic growth.
c) SB 1175 (Price) of 2010, would have required the
Secretary of Business, Transportation and Housing to direct
the California Travel and Tourism Commission to conduct a
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review of its principal mission and core competencies in
order to determine if the Commission should include trade
promotion in its strategic marketing plan or other future
plans of the Commission and provide a report to the
Legislature. SB 1175 was held in the Senate Committee on
Rules.
d) AB 2592 (Leno), Chapter 790, Statutes of 2006, modified
the conditions and terms of appointees and elected members
of the Commission, broadened industry segments which may
voluntary participate in Commission programs, and clarified
certain assessment and referendum procedures. AB 2592 also
made changes to the way the passenger car rental industry
is assessed by the Commission to permit rental car
companies to separately state specified fees in
advertising, quotes and charges for rental cars which
become operational only if the rental car industry agrees
to increase its assessment to specified levels.
e) SB 1390 (Speier), of 2004, would have appropriated $1
million from the General Fund to the Commission. SB 1390
was held under submission in the Assembly Committee on
Appropriations.
f) AB 487 (Firebaugh), Chapter 204, Statutes of 2003,
required the Commission to consult with certain entities
and recommend strategies and a timeline for revising the
annual tourism marketing plan to income promoting the
state's artistic, cultural, historical and ethnic
resources.
g) AB 1757 (Committee on Budget), Chapter 229, Statutes of
2003, eliminated TTCA and transferred responsibilities of
certain programs to BTH, including the Commission.
h) SB 1900 (McPherson), Chapter 474, Statutes of 2002,
extended the term between referendums to every six years,
provided that only 10 percent of assessed businesses are
required to call for a referendum to terminate the
Commission and allowed the Commission to be terminated at
any time by a referendum called by a weighted 10 percent of
the assessed businesses.
i) SB 1398 (Johnston), Chapter 795, Statutes of 1996, made
technical and substantive changes in the Act and made the
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Deputy Secretary of the then Division of Tourism, within
the Trade and Commerce Agency, the executive director and
secretary of the Commission.
j) SB 256 (Johnston), Chapter 871, Statutes of 1995,
enacted the California Tourism Marketing Act of 1995 to
establish the framework for an industry-wide referendum on
self-assessment of the tourism industry to competitively
promote travel to and within California.
aa) SB 1983 (Rosenthal), Chapter 830, Statutes of 1994,
required the Office of Tourism to perform various functions
and activities for the purpose of establishing and
enhancing a statewide network of visitor information
centers.
REGISTERED SUPPORT / OPPOSITION :
Support
Avis
Enterprise Rent-A-Car
Hertz
Opposition
None on file
Analysis Prepared by : Dana Mitchell / A.,E.,S.,T. & I.M. /
(916) 319-3450