BILL ANALYSIS                                                                                                                                                                                                    



                                                                       



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          |SENATE RULES COMMITTEE            |                  AB 1499|
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                                 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





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          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.








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          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  







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          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  







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          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)







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          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

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