SAN FRANCISCO -- California will double its spending on tourism promotion in the 2007-08 fiscal year to $50 million, a record level that will catapult the state to the No. 2 spot, behind Hawaii, in state allocations for promoting tourism.

"It's a huge improvement for us," said Jennifer Jasper, a spokeswoman for the California Travel and Tourism Commission. "We've not been anywhere close even to the top" among states, in terms of tourism marketing spending. She said the new budget would raise California to No. 2, at least for now.

The boost comes from legislation that went into effect on Jan. 1, allowing car rental companies to collect 2.5% on every dollar spent on rentals at airports and hotels in California for the CTTC's coffers.

That fee already has raised this fiscal year's tourism promotion funding to record levels, giving the CTTC an estimated extra $15 million in the first six months of 2007, for a total budget of $25 million for 2006-2007 (fiscal years in California are July 1 to June 30).

In previous years, the CTTC, a nonprofit organization that handles the state's tourism marketing and is funded by the state and private industry, had a budget of between $14 million and $18 million.

Another reason for this year's increased funding was an October 2005 decision by the CTTC to hike the annual assessments that travel companies pay to the marketing program, from $450 for every $1 million in travel-related revenues to $650 for every $1 million.

That allowed the CTTC to mount a spring and summer national advertising campaign entitled "Fast Lane" that features Gov. Arnold Schwarzenegger and celebrities -- Clint Eastwood, Teri Hatcher and Jeff Gordon among them. Commercials have been shown during top-rated TV shows, including "American Idol." The spot is one part of a $10 million spring and summer campaign that includes TV, print and Internet advertising.

The CTTC is putting the finishing touches on its plans for the 2007-08 fiscal year, when it will receive $35 million to $38 million from the car rental fee, $9 million to $10 million from industry assessments and $1 million from the state government.

The legislation that led to the funding increase, AB 2592, was not sponsored by Schwarzenegger (it was authored by Mark Leno, D-San Francisco), but the governor signed it into law and supports the efforts, according to a spokeswoman, Sabrina Lockhart.

"Tourism is such a huge economic driver for California," she said. "Anything that complements the governor's efforts to increase tourism is something that the administration supports."

"Top priorities include increasing marketing and advertising efforts in new and existing domestic and international markets," said Caroline Beteta, CTTC executive director. "We've also earmarked funds so that California tourism will remain technologically competitive, including enhancing and upgrading Internet-based activities and consumer Web sites."

Some $20 million will be spent on advertising and marketing efforts in international markets, particularly Canada, Japan and the U.K.

"These expanded marketing funds are projected to generate an additional $1.7 billion in overseas visitor spending, directly support 18,000 more jobs and generate $66.7 million in additional state tax revenues," Beteta said.

While California's visitor numbers have been steady over the last few years, the state has been losing market share to destinations in the U.S. and abroad, and it has ranked far below other destinations in marketing dollars it could spend, hampering its ability to compete, said Jasper.

For example, for the 2005-06 fiscal year, the most recent period for which data are available from the Travel Industry Association, California ranked 12th in the list of projected state tourism office budgets. Hawaii was first, with nearly $70 million; California had projected a $16.1 million budget.

"It's been, in a word, embarrassing that California has had such a small budget for so many years," said Laurie Armstrong, vice president of marketing and communications for the San Francisco Convention and Visitors Bureau. "We were falling behind other states. There was a temptation to have an attitude that everyone loves California and always will. But there are a dozen other places that can say something similar, so it's important to keep the attention focused on California. This [funding increase] will go a long way."

To contact reporter Laura Del Rosso, send e-mail to [email protected].

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