BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 1499
                                                                  Page  1

          Date of Hearing:   April 22, 2009

                   ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION
                               Curren Price, Chairman
                 AB 1499 (Evans) - As Introduced:  February 27, 2009
           
          SUBJECT  :   Horse racing: workers' compensation.

           SUMMARY  :   Allows a fair to deduct an additional 0.5% of the  
          total amount handled in exotic pari-mutuel pools of races for  
          any breed, other than races solely for thoroughbreds to defray  
          workers' compensation insurance costs for trainers and owners  
          who race at an applicable fair.  This authorization would expire  
          on January 1, 2014.  Specifically,  this bill  :  

          1)Provides a fair may deduct an additional 0.5 percent of the  
            total amount handled in exotic pari-mutuel pools of races for  
            any breed, other than races solely for thoroughbreds. This  
            additional deduction shall only be permitted for a breed's  
            races with the approval of the organization representing the  
            horsemen and horsewomen of that breed at the fair.

          2)Provides the amounts distributed to the organization, as  
            described, and shall be deposited in a separate account to  
            defray workers' compensation insurance costs for trainers and  
            owners who are racing breeds other than thoroughbreds at the  
            applicable fair.  Any funds not expended for this purpose in  
            the calendar year in which they are collected may either be  
            used for the following year's workers' compensation costs, as  
            specified above, or to benefit the purse pool of each breed at  
            the particular fair where the funds are generated in the same  
            proportions as each breed generated at that fair in the year  
            the funds are collected.

          3)Provides the fairs and the organizations representing the  
            horsemen and horsewomen of each breed for which deductions  
            have been approved shall form an organization to which any  
            funds deducted, as defined, shall be distributed.  The fairs  
            collectively shall have representation equal to the collective  
            representation of the organizations representing horsemen and  
            horsewomen on the governing board of the organization formed  
            pursuant to this subdivision.

          4)Provides that if the fairs and the organizations representing  
            horsemen and horsewomen cannot agree on the manner for  








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            distributing these funds to defray the costs of workers'  
            compensation insurance, the matter shall be submitted to the  
            CHRB, as specified.

          5)Contains a "sunset date" of January 1, 2014.

          6)Contains an urgency clause.

           EXISTING LAW  :

          1)Provides CHRB shall regulate the various forms of horse racing  
            authorized in this state.

          2)Requires various deductions and distributions to be made from  
            pari-mutuel pools as specified.

          3)Provides that until January 1, 2014, a thoroughbred  
            associations or fairs may deduct 0.5 percent of the amount of  
            exotic pari-mutuel wagering on thoroughbred races to defray  
            the costs of workers' compensation insurance. Provides that  
            this deduction shall pay for supplemental premiums that reduce  
            rates, pay for benefits of trainers and owners of thoroughbred  
            horses, and to reimburse these trainers and owners for the  
            costs of workers' compensation insurance.

          4)Provides that funds not expended for workers' compensation  
            costs shall be carried forward to the subsequent year, or used  
            for the cost of health and safety programs, research or safety  
            equipment, or to make capital improvements to prevent  
            workplace accidents and to increase the safety of jockeys,  
            exercise riders, backstretch employees, and other racetrack  
            personnel.

          5)Provides that if the racing association and the organization  
            representing horsemen and horsewomen cannot agree on the  
            manner of distribution of these funds to defray the costs of  
            workers' compensation insurance, the matter is required to be  
            submitted to the CHRB for a decision.

           FISCAL EFFECT  :   Unknown

           COMMENTS  :   
           
          Background  .  Over the years, the California's horse racing  
          industry has been significantly threatened by the escalating  








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          cost of workers' compensation insurance, in that the costs are  
          not only causing horses and trainers to leave this state, but  
          also discouraging owners and trainers from bringing horses into  
          California to race.  In 2004, AB 701 (J. Horton), Chapter 40,  
          Statutes of 2004 was enacted to provide the horse racing  
          industry with some workers' compensation relief through the  
          redistribution of 0.5 percent of the pari-mutuel handle on  
          exotic wagers for thoroughbred associations and live racing  
          fairs.  The bill passed with the industry in agreement that a  
          trial period was in order and therefore a January 1, 2009 sunset  
          provision was included in the bill.

          Last year, the provisions of AB 701 relating to thoroughbreds  
          were extended until January 1, 2014 in AB 2103 (Plescia),  
          Chapter 443, Statutes of 2008.   

          The funds generated from the two bills have been used to defray  
          the costs of workers' compensation insurance incurred in  
          connection with horses that race in this state through the  
          payment of supplemental premiums that reduce rates, payment to  
          or for the benefit of trainers and owners of such horses, based  
          on the number of such horses they start, in order to reimburse  
          them for the costs of workers' compensation insurance directly  
          or indirectly incurred by them, and other appropriate payments.   
           

           Impact of workers' compensation relief bills.   After the passage  
          of AB 701 in 2004, the industry established its own captive  
          insurance program, referred to as the California Horsemen's  
          Safety Alliance (CHSA).  According to various segments within  
          the horse racing industry, the CHSA has produced the following  
          results:

          1)Workers' compensation costs have been reduced.

          2)The exodus of trainers and owners has decreased and new  
            trainers and owners are bringing horses into California.

          3)The CHSA established industry safety training programs,  
            treatment oversight programs, return to work programs, and  
            safety equipment research programs, which reduced the number  
            of accidents and cost of resulting claims.

          4)Reductions of premiums and claim costs have occurred.  In a  
            six month period (12/02 -7/03) prior to the law, there were  








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            123 insured participants with total premiums of $2,929,585 and  
            claims paid of $2,617,716.  In contrast, in the 12-month  
            policy period between July 2006 to June 2007, there were 399  
            insured participants with premiums of $8,757,818 and claims  
            paid of $2,830,121.

           Purpose of the bill  .  According to the author, AB 2103 (Plescia)  
          of 2008, extended the sunset date from January 1, 2009 to  
          January 1, 2014, for the law which established an internal  
          workers compensation insurance program for California's Horse  
          Racing Industry.  The bill allowed a fair race meet to deduct  
          0.5 percent from the exotic wagering pools to help cover the  
          costs of workers' compensation for thoroughbreds but not the  
          other breeds (mules, appaloosas, quarter horses, and Arabians)  
          that race on the northern California Summer Fair Circuit.  Those  
          specific breeds were inadvertently omitted from AB 2103  
          (Plescia).

          This bill reinstates the 0.5% workers compensation insurance  
          program deduction for non-thoroughbred breeds that race at the  
          fairs.  AB 1499 contains an urgency clause to prevent adverse  
          affects on the non-thoroughbred owners and trainers who race on  
          the northern California Fair Racing Circuit when racing  
          commences in June.  The author notes, that a sunset date was  
          added to this bill to stay consistent with AB 2103 (Plescia) of  
          2008. 

           Prior legislation  .  AB 2103 (Plescia), Chapter 443, Statutes of  
          2008.  Extended the sunset date, from January 1, 2009 to January  
          1, 2014, on a deduction from pari-mutuel wagering on  
          thoroughbred horse racing in order to defray the costs of pay or  
          workers' compensation insurance. 

          AB 701 (J. Horton), Chapter 40, Statutes of 2004.  Provided a  
          framework for the deduction from the pari-mutuel pools in order  
          to address increased costs in workers compensation insurance in  
          the horse racing industry. 

           REGISTERED SUPPORT / OPPOSITION  :   

           Support 
           
          American Mule Association
          California Authority of Racing Fairs









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           Opposition 
           
          None on file
           

          Analysis Prepared by  :    Eric Johnson / G. O. / (916) 319-2531