LEXINGTON, Ky. -- ARTA accused California of engaging in unfair competition by allowing its Office of Tourism to take hotel bookings from consumers on its toll-free telephone line and Web home page.

In a letter to California Gov. Pete Wilson, ARTA president John Hawks protested the program, calling it "a classic example of unfair competition, where tax-funded public agencies engage in commercial activities that duplicate similar services provided by for-profit small businesses that pay those taxes."

In addition to writing Wilson, ARTA sent letters objecting to the Office of Tourism's subcontract with the BASS call center and WorldRes Internet service to John Poimiroo, state tourism director, and to state legislators.

The association also said it will inform the National Federation of Independent Business and other groups that are fighting against unfair competition from the public sector.

"We expect state governments to focus on those things that taxpayers can't usually do on their own, like operating school systems and building roads. When states cross those lines and start businesses that do the very same thing that for-profit small businesses do already, that's called unfair competition."

Under the state's contract with BASS, consumers who call the state's toll-free lines for general travel information are connected to reservations agents who offer to book the California properties that sign up for the free program. The hotels pay BASS a 10% commission; 1.5 percentage points go to the state's marketing fund.

In the letter to Wilson, ARTA's Hawks said the service "will cause agents to lose millions of dollars in potential sales because they will never get the opportunity to inform consumers of the services they provide, since they will never receive even an initial phone call."

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