BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                            



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                                 UNFINISHED BUSINESS


          Bill No:  SB 777
          Author:   Hernandez (D), et al.
          Amended:  2/25/14
          Vote:     27 - Urgency


          PRIOR VOTES NOT RELEVANT

           ASSEMBLY FLOOR  :  73-0, 3/13/14 - See last page for vote


           SUBJECT  :    Horse racing:  workers' compensation

           SOURCE  :     California Authority of Racing Fairs
                      California Thoroughbred Breeders Association
                      California Thoroughbred Trainers
                      Del Mar Thoroughbred Club
                      Los Angeles Turf Club, Inc.
                      Oak Tree Racing Association
                      Santa Anita Park
                      Thoroughbred Owners of California


           DIGEST  :    This bill reestablishes provisions in Horse Racing  
          Law which sunsetted on January 1, 2014.  The provisions required  
          a Thoroughbred racing association, racing fair, quarter horse  
          racing association or harness racing association that conducts a  
          racing meeting to deduct a specified percentage of the total  
          amount handled in exotic pari-mutuel pools on live races, to be  
          distributed to a specified organization for the purpose of  
          defraying costs of workers' compensation insurance for trainers  
          and owners in connection with live horse racing, as defined.

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           Assembly Amendments  delete the Senate version of the bill  
          relating to fireworks and insert the current language.  The  
          bill's author has also changed from Senator Calderon to Senator  
          Hernandez.

           ANALYSIS  :    

          Existing law:

          1.Authorizes that the California Horse Racing Board (CHRB) to  
            regulate the various forms of horse racing authorized in this  
            state.

          2.Requires a Thoroughbred association, quarter horse  
            association, and racing fairs, until January 1, 2014, to  
            deduct 0.5% of the total amount handled in exotic pari-mutuel  
            pools of thoroughbred races in order to defray the costs of  
            workers' compensation insurance.  This additional deduction  
            shall only be permitted with the approval of the organization  
            representing horsemen and horsewomen at the applicable racing  
            association meeting.

          3.Requires a harness racing association until January 1, 2014,  
            to deduct an additional 1% of the total amount handled in  
            conventional pari-mutuel pools of harness races, as defined.

          4.Provides that these deductions 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,  
            as defined.

          5.Requires that funds not expended on workers' compensation  
            costs to 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.

          6.Requires that the deductions be managed by an organization  
            formed by the Thoroughbred racing association and the owners  
            of thoroughbred horses.  Requires the organization to account  
            annually to CHRB with respect to the expenditure and  

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            distribution of funds received by the organization and obtain  
            an independent audit of funds generated and distributed.

          7.Sunsets the deduction for the horse racing workers'  
            compensation insurance program on December 31, 2013.
          This bill reestablishes provisions in Horse Racing Law which  
          sunsetted on 
          January 1, 2014.  The provisions required a Thoroughbred racing  
          association, racing fair, quarter horse racing association or  
          harness racing association that conducts a racing meeting to  
          deduct a specified percentage of the total amount handled in  
          exotic pari-mutuel pools on live races, to be distributed to a  
          specified organization for the purpose of defraying costs of  
          workers' compensation insurance for trainers and owners in  
          connection with live horse racing, as defined.

           Background
           
          Over the years, the California 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.  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% of the  
          pari-mutuel handle on exotic wagers for Thoroughbred  
          associations and live racing fairs.

          The California Thoroughbred Business League, a group comprised  
          of racing associations, horsemen's organizations and fairs, is  
          responsible for overseeing the funds that are utilized for  
          providing workers' compensation insurance relief to trainers and  
          owners.  In 2013, approximately $8.1 million was deducted from  
          pari-mutuel wagering on horse racing for defraying costs.   
          Industry rates have declined by over 70%, which has helped to  
          prevent the exodus of trainers and horses from California.   
          Generated funds have been used to defray the costs of workers'  
          compensation insurance 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.

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           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes    
          Local:  Yes

          According to the Assembly Appropriations Committee,  
          insignificant General Fund costs to the CHRB in connection with  
          monitoring the programs.  Funds for the programs will come from  
          the pari-mutuel handle.

           SUPPORT  :   (Verified  3/14/14)

          California Authority of Racing Fairs (co-source)
          California Thoroughbred Breeders Association (co-source)
          California Thoroughbred Trainers (co-source)
          Del Mar Thoroughbred Club (co-source)
          Los Angeles Turf Club, Inc. (co-source)
          Oak Tree Racing Association (co-source)
          Santa Anita Park (co-source)
          Thoroughbred Owners of California (co-source)
          Jockeys' Guild
          Los Angeles County Fair, Fairplex

           ARGUMENTS IN SUPPORT  :    According to the author, "SB 777 aims  
          to protect California's horse racing tradition by requiring  
          thoroughbred associations and fairs to deduct 0.5% of the total  
          amount handled in exotic pari-mutuel pools of thoroughbred,  
          quarter horse, and harness races as well as pari-mutuel pools of  
          races of any breed to defray workers' compensation costs.   
          Specifically, SB 777 would reinstate sunsetted B&P codes  
          19605.76, 19605.77 and 19605.78, and prevent 19605.75 from full  
          repeal on January 1, 2015."

          Proponents state, like other businesses, the horse racing  
          industry in California has suffered from the tremendous  
          increases in workers' compensation costs.  As a result, this  
          bill is necessary because it will further help defray the costs  
          borne by trainers and owners in obtaining workers' compensation  
          coverage.  Moreover, it will prevent Thoroughbred racehorses  
          from leaving this state.  Supporters feel this bill will help  
          restore California's racing industry to a level where the best  
          horses race and the best trainers and jockeys compete.

           ASSEMBLY FLOOR  :  73-0, 3/13/14
          AYES:  Achadjian, Alejo, Allen, Ammiano, Atkins, Bigelow,  

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            Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan, Ian  
            Calderon, Campos, Chau, Chávez, Chesbro, Conway, Cooley,  
            Dababneh, Dahle, Daly, Dickinson, Donnelly, Fong, Fox,  
            Frazier, Beth Gaines, Garcia, Gatto, Gomez, Gonzalez, Gordon,  
            Gray, Grove, Hagman, Hall, Harkey, Roger Hernández, Holden,  
            Jones, Jones-Sawyer, Levine, Linder, Logue, Lowenthal,  
            Mansoor, Medina, Melendez, Morrell, Mullin, Muratsuchi,  
            Nazarian, Nestande, Olsen, Pan, Patterson, Perea, Quirk,  
            Quirk-Silva, Rendon, Rodriguez, Salas, Skinner, Stone, Ting,  
            Wagner, Weber, 
          Wieckowski, Wilk, Williams, Yamada, John A. Pérez
          NO VOTE RECORDED:  Bloom, Eggman, Gorell, Maienschein, V. Manuel  
            Pérez, Ridley-Thomas, Waldron

          MW:e  3/14/14   Senate Floor Analyses 

                           SUPPORT/OPPOSITION:  SEE ABOVE

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