BILL ANALYSIS ------------------------------------------------------------ |SENATE RULES COMMITTEE | AB 1499| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ THIRD READING Bill No: AB 1499 Author: Evans (D) Amended: As introduced Vote: 27 - Urgency SENATE GOVERNMENTAL ORG. COMMITTEE : 9-0, 6/9/09 AYES: Wright, Harman, Benoit, Calderon, Denham, Negrete McLeod, Padilla, Wiggins, Yee NO VOTE RECORDED: Florez, Oropeza, Wyland, Vacancy SENATE APPROPRIATIONS COMMITTEE : 11-0, 6/29/09 AYES: Kehoe, Cox, Corbett, Leno, Oropeza, Price, Runner, Walters, Wolk, Wyland, Yee NO VOTE RECORDED: Denham, Hancock ASSEMBLY FLOOR : 73-0, 5/14/09 - See last page for vote SUBJECT : Horse racing: workers compensation SOURCE : Author DIGEST : This bill reauthorizes a fair to 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, to defray workers' compensation insurance costs for trainers and owners who race at an applicable fair. ANALYSIS : CONTINUED AB 1499 Page 2 Existing law: 1. Provides that the California Horse Racing Board (CHRB) 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, 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 CHRB for a decision. This bill: 1. Authorizes a fair to 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. The 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. AB 1499 Page 3 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, 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. Requires fairs and the organizations representing the horsemen and horsewomen of each breed for which deductions have been approved to 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 distributing these funds to defray the costs of workers' compensation insurance, the matter shall be submitted to the CHRB, as specified. 5. Sunsets the authorization created by the bill on January 1, 2014. 6. Becomes effective immediately upon enactment in order to ensure that trainers and owners of certain horse racing breeds continue to receive assistance in defraying workers' compensation insurance costs, as is currently done for trainers and owners of other horse racing breeds. Comments According to the author's office, AB 2103 (Plescia), Chapter 443, Statutes of 2008, extended the sunset date from January 1, 2009 to January 1, 2014, for the law which AB 1499 Page 4 established an internal workers compensation insurance program for California's Horse Racing Industry. AB 2103 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 percent workers compensation insurance program deduction for non-thoroughbred breeds that race at the fairs. This bill 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's office notes, that a sunset date was added to this bill to stay consistent with AB 2103 (Plescia) of 2008. Background . Over the years, California's horse racing industry has been significantly threatened by the escalating 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 AB 1499 Page 5 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 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 FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes Local: No According to the Senate Appropriations Committee: Fiscal Impact (in thousands) Major Provisions 2009-10 2010-11 2011-12 Fund CHRB admin expenses----------minor, absorbable---------General SUPPORT : (Verified 7/1/09) AB 1499 Page 6 American Mule Association California Authority of Racing Fairs ASSEMBLY FLOOR : AYES: Adams, Anderson, Arambula, Beall, Bill Berryhill, Tom Berryhill, Blakeslee, Block, Blumenfield, Brownley, Buchanan, Caballero, Charles Calderon, Carter, Chesbro, Conway, Cook, Coto, Davis, De La Torre, De Leon, DeVore, Duvall, Emmerson, Eng, Evans, Feuer, Fletcher, Fong, Fuller, Furutani, Galgiani, Gilmore, Hagman, Hall, Harkey, Hayashi, Hernandez, Hill, Huber, Huffman, Jeffries, Jones, Knight, Krekorian, Lieu, Logue, Bonnie Lowenthal, Ma, Mendoza, Miller, Monning, Nava, Nestande, Niello, Nielsen, John A. Perez, V. Manuel Perez, Portantino, Price, Ruskin, Salas, Silva, Skinner, Solorio, Audra Strickland, Swanson, Torlakson, Torres, Torrico, Tran, Villines, Yamada NO VOTE RECORDED: Ammiano, Fuentes, Gaines, Garrick, Saldana, Smyth, Bass TSM:do 7/1/09 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END ****