BILL ANALYSIS
AB 2103
Page 1
Date of Hearing: April 16, 2008
ASSEMBLY COMMITTEE ON INSURANCE
Joe Coto, Chair
AB 2103 (Plescia) - As Introduced: February 19, 2008
SUBJECT : Horse Racing and Workers' Compensation
SUMMARY : Extends the sunset date on a deduction from
parimutuel wagering on thoroughbred horse racing in order to pay
for workers' compensation expenses. Specifically,
this bill :
1)Extends until January 1, 2015, a requirement of thoroughbred
associations and fairs to deduct 0.5 percent of the amount of
exotic parimutuel wagering on thoroughbred races to defray the
costs of workers' compensation insurance.
2)Extends until January 1, 2015, the requirement of 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.
EXISTING LAW :
1)Requires thoroughbred associations and fairs to deduct 0.5
percent of the total amount handled in exotic parimutuel pools
of throughbred races in order to defray the costs of workers'
compensation insurance.
2)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.
3)Requires that the deductions be managed by an organization
formed by the thoroughbred racing association and the owners
of thoroughbred horses.
4)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
AB 2103
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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.
FISCAL EFFECT : Undetermined.
COMMENTS :
1)Background. According to the Author, in 2004 the horseracing
industry, legislators, and the Governor developed legislation
to address runaway workers' compensation insurance rates. The
Author further reports that at that time, industry rates had
increased above $44 per $100 of payroll, and many owners and
trainers left the state, which depleted the inventory of
horses and the number of horses competing in horse races. The
industry responded by establishing its own captive insurance
program, referred to as the California Horsemen's Safety
Alliance (CHSA). Soon thereafter the Legislature passed AB
701 in 2004 (Statutes of 2004, Chapter 40) that established
the 0.5 percent deduction from exotic pari-mutuel wagering
pools in order to help provide relief from escalating costs.
2)The Author also reports that since the 2004 law was enacted:
a) Workers' compensation costs have been reduced as much as
70 percent;
b) The exodus of trainers and owners has stopped and new
trainers and owners are bringing horses to California in
large numbers;
c) The CHSA has established industry safety training
programs, treatment oversight programs, return to work
programs, and safety equipment research programs which have
reduced the number of accidents and cost of resulting
claims; and
d) Major 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 July 2006 to June
2007, there were 399 insured participants with premiums of
$8,757,818 and claims paid of $2,830,121.
3)Workers' Compensation Reforms. It should be noted that at the
same time that this horseracing law regarding workers'
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compensation was enacted, that the Legislature and Governor
enacted a major overhaul of the overall workers' compensation
system. Clearly, that major overhaul of the workers'
compensation system also reduced premiums and claims costs.
What is not clear is how much savings can be attributed to the
major overhaul of the workers' compensation system in
comparison to the savings from this specific program directed
at the horseracing industry.
4)Consistency in Base Year? Existing law provides that when the
law sunsets (Jan. 1, 2010) any unexpended funds shall be
distributed based upon the total thoroughbred handle of two
years prior (i.e., 2008). This bill provides that when the
law sunsets (Jan. 1, 2015) any unexpended funds shall be
distributed based upon the total thoroughbred handle from
seven years prior (i.e., 2008). Is it the Author's intent
that the base year be set at two years prior to the sunset of
the law?
REGISTERED SUPPORT / OPPOSITION :
Support
Thoroughbred Owners of California (Sponsor)
Opposition
None received.
Analysis Prepared by : Manny Hernandez / INS. / (916) 319-2086