BILL ANALYSIS
AB 2592
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 2592 (Leno)
As Amended August 24, 2006
Majority vote
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|ASSEMBLY: |64-3 |(May 4, 2006) |SENATE: |37-3 |(August 29, 2006) |
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ARTS, SPORTS, ENTERTAINMENT
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|COMMITTEE VOTE: |8-0 |(August 30, 2006) |RECOMMENDATION: |Concur |
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Original Committee Reference: A.,E.,S.,T. & I.M.
SUMMARY : Modifies the conditions and terms of appointees and
elected members of the California Travel and Tourism Commission
(CTTC), broadens industry segments which may voluntary participate
in CTTC programs, and clarifies certain assessment and referendum
procedures. Additionally, the bill makes changes to the way the
passenger car rental industry is assessed by the CTTC which will
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
Tourism Marketing Assessment (assessment) to specified levels,
The Senate amendments :
1)Permit rental car companies to take the following actions if
those companies approve a referendum that increases the
assessment paid by rental car companies to a level sufficient for
the CTTC's budget to be brought up to $25 million in fiscal year
2006-07 and $50 million in fiscal year 2007-08:
a) Advertise rental rates that include the entire charge,
except taxes and customer facility and mileage charges, which
a renter must pay to hire or lease a vehicle.
b) Separately state in a quote or separately charge the rental
rate, taxes, customer facilities charges, airport concession
fees, tourism commission assessments and mileage charges which
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a renter must pay to hire or lease a vehicle.
c) Require additional specified actions at the time a quote is
given, at the time and place the rental commences, or if a
rental is provided by a third party, if customer facility
charges, airport concession fees, or tourism commission
assessments are imposed.
d) Prohibit additional charges for:
i) additional drivers on a car rental agreement;
ii) the period of time which occurs between the time a
vehicle being delivered leaves the rental car facility and
arrives at the location of the customer, or, when the rental
company picks up a vehicle, the interval between the time
the renter notifies the rental company the vehicle is
available for pick up and the time it is picked up; and
iii) transporting a renter to a location where a rented
vehicle will be delivered, unless permitted as part of a
customer facility charge.
e) Permit a car renter to bring a civil action against a
rental car company for specified violations including damage
waivers and disclosure, quote and advertising requirements;
the prevailing party is entitled to recover attorney's fees
and costs.
2)Permit the CTTC to take the following actions if rental car
companies approve a referendum that increases the assessment paid
by those companies to a level sufficient for the CTTC's budget to
be brought up to $25 million in fiscal year 2006-07 and $50
million in fiscal year 2007-08:
a) Establish a separate category of assessment for passenger
rental car companies.
b) Establish differing caps on assessments for each industry
category or segment.
c) Allow commissioners elected from each industry category to
be determined by the weighted percentage of assessment from
that category with a cap of six commissioners from the
passenger rental car category.
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d) Allow the weighted percentage assigned to a business in the
passenger car rental category that pays an assessment greater
than the cap, to be the same as though its assessment were
equal to the highest maximum assessment.
e) Restrict assessments on the passenger car rental category
to rental transactions that commence at an airport, hotel, or
overnight lodging facility.
3)Revert $6.3 million to the General Fund from the CTTC if rental
car companies approve a referendum that increases the assessment
paid by those companies to a level sufficient for the CTTC's
budget to be brought up to $25 million in fiscal year 2006-07 and
$50 million in fiscal year 2007-08.
4)Revise the terms of office for commissioners elected to the CTTC
to July 1 through June 30.
5)Automatically extend the terms of office for elected
commissioners which expire December 31, 2006, to June 30, 2007.
6)Clarify that voluntary assessments shall be "proportionally"
equivalent to the assessment levied from an assessed business.
7)Provide that if the CTTC delivers a resolution to the Secretary
of the Business, Transportation, and Housing Agency (Secretary),
then the Secretary may call a referendum at any time.
8)Require the Secretary to identify, to the extent reasonably
feasible, those businesses that would become newly assessed due
to a change sought in a referendum, and provide those businesses
the opportunity to vote in that referendum.
9)Provide procedures for persons sharing common ownership,
management, or control of more than one assessed business to
calculate, administer, and pay the assessment owed by each
business.
10)Specify that the threshold for small businesses to be exempt
from assessment ($1,000,000 in total California gross annual
revenue) may be lowered by referendum, but is never to be set
lower than $500,000.
11)Make other technical and clarifying changes.
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EXISTING LAW :
1)Requires rental car companies to advertise, quote, and charge a
renter for the entire rental rate a consumer must pay to hire or
lease a vehicle, except for taxes.
2)Permits a car renter to bring a civil action against a rental car
company for specified violations including damage waivers and
disclosure, quote and advertising requirements; the prevailing
party is entitled to recover attorney's fees and costs.
3)Creates the California Tourism Marketing Act of 1995 (Act) and
the California Division of Tourism in the Business,
Transportation and Housing Agency (BTHA) to promote travel and
tourism to and within California.
4)Establishes CTTC, a separate, independent, nonprofit corporation
consisting of 37 members (BTHA Secretary, 12 members appointed by
the Governor, and 24 commissioners elected by industry category
in a referendum).
5)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: a)
advertising; b) visitor publications; and, c) cooperative
programs.
6)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.
7)Exempts persons or businesses with less than $1 million in
California gross annual revenue from assessment.
AS PASSED BY THE ASSEMBLY , this bill modified the conditions and
terms of appointees and elected members to the CTTC, and broadened
industry segments which may voluntary participate in the program.
FISCAL EFFECT : According to the Assembly Appropriations Committee
COMMENTS :
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1)Purpose . According to the author, this bill is necessary to
update and make clarifying changes to the Act with respect to the
CTTC including the parameters for serving as a commissioner and
allowing gaming interests to participate in the program on a
voluntary basis. More critically, the author reports that
"California now stands at 37th in the nation in overall state
public spending/investment to promote tourism and attract
visitors. It falls behind Illinois, West Virginia and Arkansas.
It has been proven that the level of tourism funding is reflected
in market share. For example, from 1998-2002 when the tourism
budget was fully funded by the CTTC and the State of California,
California's market share increased from 9.7 percent to 11.5
percent. This resulted in an additional $8.7 billion in visitor
spending, 120,833 jobs and approximately $539 million in direct
tax revenues. Conversely, when funding was either eliminated or
inconsistent during the late 1980s and early 1990s, California
experienced a dramatic decline of domestic and international
market share amongst competing states and destinations. This
resulted in approximately $2.5 billion less spending,
approximately $100 million less tax revenue, and approximately
35,000 less jobs."
The author opines that "AB 2592 would - for the first time ever -
assure a stable funding source that would produce $25 million in
FY 2006-2007 and $50 million in FY 2007-2008. AB 2592 would
also save the General Fund money since the enactment of the bill
would reduce the state's General Fund appropriation from $7.3
million to $1 million."
2)California Travel & Tourism Commission . The Legislature adopted
the Act to allow the self-imposition of an assessment by
businesses that benefit from travel and tourism. It also
authorized the establishment of a non-profit, public benefit
corporation, CTTC, to oversee the promotion of California as a
premier travel destination. The primary focus of CTTC is to
develop and implement a marketing plan that promotes travel to
and within California. In support of this purpose, the plan is
divided into four program areas: 1) Research and Rural Tourism
Marketing; 2) Communications and Visitor Information (i.e., media
relations, web site, welcome centers, and collateral and
fulfillment); 3) National Advertising and Cooperative Marketing
Activities; and, 4) International Travel, Trade Development and
Marketing.
In 2001, assessed businesses voted to continue industry assessments
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by an 84% margin and will subsequently be renewable by industry
vote every six years. The act intended that the state would
match industry assessments, but budget limitations have severely
reduced the state's participation.
3)Passenger Rental Car Industry . This measure affects the rental
car industry in two significant ways. First, it modifies
disclosure requirements for the advertising, quoting and charging
of rental cars. Industry representatives indicate that the
companies are not currently required to disclose, as part of a
telephonic or Internet quote a total out-the-door price for the
rental and that these changes will bring California's disclosure
statutes into conformity with those of other states.
Significantly, this "rebundling" will allow the industry to
separate the CTTC assessment and airport concession fees from the
rental car charge.
This bill will also result in a referendum to the rental car
industry to substantially increase its CTTC assessment. The new
industry assessment would significantly increase current funding
for tourism marketing and supplant much of the CTTC's General
Fund support. As originally crafted, the Act called for a match
of general fund support with the industry assessments. Since the
deterioration of the state's fiscal condition, the state's match
has declined dramatically, even though support from the travel
and tourism industry has remained constant.
Analysis Prepared by : Kellie Smith / A.,E.,S.,T. & I.M. / (916)
319-3450
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