Proposal to cut state tourism agency draws industry ire. (On the Homefront - Impact of War).

With the war in Iraq expected to be a further drag on hotels and restaurants, Gov. Gray Davis' proposal to eliminate California's division of tourism is raising howls of industry protest.

As part of his plan to shore up the state's projected $35 billion deficit, Davis pulled $7.5 million slated to fund the division responsible for touting California destinations in magazines, newspapers, Web sites and television spots worldwide.

Leaders of California hotel and restaurant organizations said the division is too important to cut, especially given the weak economy and the subsequent drop-off in travel.

In response, the California Travel Industry Association plans a "massive" legislative push on April 29, when the organization's members plan to descend on Sacramento and cover the capitol with blast faxes and e-mail messages.

"There's a misguided feeling that California sells itself," said John Dunlap, chief executive of the California Restaurant Association. "That is not correct. The California name needs to be out there consistently?

The pending cuts come at an especially difficult time in the travel business. Since the war with Iraq, airline passenger traffic has fallen 10 percent, according to the Air Transport Association, and it is expected to decline further as consumers avoid flying.

Several major carriers, including American and United Airlines, have reduced flight capacity as much as 12 percent as a result of the war. The ATA projects airline losses this year could approach $11 billion and result in 70,000 job cuts. Those losses come on top of cutbacks made after the Sept. 11, 2001 terrorist attacks. Hotel chains have reported similar drop-offs.

State industry leaders credit the tourism division with staving off a much steeper decline in tourism after 9/11. A well-received nationwide advertising campaign featuring Jack Nicholson and other celebrities was launched several months after the attacks and industry executives are pushing for a similar effort now to prevent any further losses stemming from the war in Iraq.

"It's like we've been punched once by an economic downturn, a second time by terrorism, now a war... and on top of that a cut in the state's tourism budget would be devastating to our industry," said Rick Lawrance, president and chief executive of the California Lodging Industry Association.

He cited a 2001 state study concluding that every California marketing dollar resulted in 143 tourist dollars being spent.

"We are an investment, not an expense," said Lawrance, who is also a member of the California Travel and Tourism Committee, a state-appointed group that advises elected officials. "Cutting the tourism budget now seems like the wrong message to send at exactly the worst time."

But Hilary McLean, a Davis spokeswoman, said that while the governor would prefer to provide funding for tourism, he must first balance the budget. And, she said, it would be unthinkable for the governor to leave funding intact for tourism while social service and health care programs for the poor are being dismantled.

"It's like yuck and yuckier' said McLean. "There are no easy choices out there."

Besides, many of the jobs performed by the state's division of tourism could be accomplished by working with tourism industry organizations and the private sector, McLean said.

Half of the tourism department's $14 million budget comes from the state, the other half from industry assessments through the California Travel and Tourism Commission. While the private not-for-profit agency has devised a stopgap plan to assume the tourism department's role if state funding is eliminated, the cut could jeopardize the flow of billions of dollars in direct visitor spending.

Industry officials also say that privatizing the tourism division would allow large cities--such as Los Angeles, San Francisco and San Diego--to dominate smaller municipalities when it comes to advertising and tourism draw.

And during difficult economic times, when cities are strapped for cash, there would likely be less of an emphasis placed on attracting travelers, said Frank Sater, a spokesman for the division, a section of the Technology, Trade and Commerce Agency.

"Whenever we encounter any crisis--whether it's a war overseas or a natural disaster, like an earthquake at home--it's always good to have an umbrella organization to coordinate outreach," he said.

McLean said Davis understands the benefits of having a tourism division, but she said the state "simply can't afford it."

Bloomberg News and the San Diego Business Journal contributed to this story.