Summary of the
2003 Legislative Session

By Brooks Ellison, The Wilson Group, CDTOA Lobbyist

The 2003 Session of the California Legislature will be remembered as one of the most contentious and unproductive sessions of the Legislature in recent memory.
The session ended in the wee hours of the morning on Saturday morning, September 13th after a hectic week during which more than 200 bills were the subject of last minute amendments. Many were so-called “gut and amend” bills where the previous contents of the bill were stricken and replaced with entirely new language. Sometimes, even the author was new. In some cases, with a “gut and amend” bill, or last minute amendment, a proposal can be debated on the floor that is not even in print yet. Hearings are held with little or no notice and the public’s opportunity for input is minimal. Unless you are there, you don’t have a chance to affect the outcome.

The big issues this year were the budget, workers compensation and health care. On each, the Legislature passed solutions that were distasteful to Democrats and bitterly opposed by Republicans. Each will be back as major issues in 2004 and beyond and so too will be the partisanship and rancor that made finding common ground uncommonly difficult this year.
With respect to our bill, AB 1238 by Assembly Majority Leader Firebaugh we did well. After a late night hearing on September 9th to hear the recent Senate amendments, the bill passed the Assembly the next day by a vote of 58-19 and is now on the Governor’s desk awaiting signature. We also did well in sending to the Governor SB 1055, a proposal to increase the weight fees 20 percent instead of the 62 percent increase that was originally requested.
We have set out below in more detail a number of the bills we followed and then a brief discussion on the other three topics—the budget, Workers Compensation reform and Health Insurance. It is important to keep in mind that even the defeated bills can come up again in January or even as last minute “gut and amend” proposals near the end of the next session. It seems nothing is every truly dead in Sacramento until the Legislative session is finally adjourned next September.

The Budget
The Session started in January with the release of a budget that required major tax increases and major cuts to achieve balance. Those who accused the Governor of exaggerating the extent of the shortfall when he released his budget ended up accusing him of “hiding” the true extent of the deficit when it became clearer that it was by far the largest budget deficit in California history. Over the next six months, there emerged no clear consensus on dealing with the situation. The republicans opposed all tax increases (except the restoration of the car tax without which even their budget plans wouldn’t pencil out) and the democrats refused to accept the massive cuts to education that would have been required to balance the budget by cuts alone.

Ultimately, both sides agreed to borrow much of the deficit by means of deficit bonds to be backed up by a portion of the sales tax that is traditionally used to fund local government. They also made significant cuts in state programs and higher education and held K-12 education to the absolute minimum required by Proposition 98. The remaining balance of the deficit was papered over with accounting gimmicks and deferrals of various state obligations such as pension payments for teachers and state workers.

Those deferrals will have to be paid in the future and the structural deficit (the gap between income and obligations) remains at about $8-10 billion. The 2004-05 budget is being assembled now and will be released in early January.

Workers’ Comp Reform
In addition to the State Budget crisis, the Legislature recognized early on that the extraordinary increases in workers compensation insurance premiums demanded that action be taken to reform the workers comp system. As with the budget problems however, there were strongly partisan views about how to fashion a solution. Democrats focused on the fact that California benefits to workers are among the nations lowest and therefore shouldn’t be cut while republicans noted that businesses pay the highest premiums in the country and needed relief via tighter eligibility and benefits. The two parties were able to find common ground in the recognition that double digit increases in medical costs were the principal cause of increased premiums. The conference committee on workers comp reform produced two major bills (AB 227 (Vargas) and SB 228 (Alarcon) that substantially lower medical fees and medical utilization. For example, workers will be limited to 24 chiropractic visits per injury and out-patient clinics will be limited to charging 120% of the Medicare rate for out-patient surgeries. Democrats estimate that these and other reforms will save the system $5-6 billion. Republicans put the savings at only $3-4 billion. Neither figure will reduce current costs, but the $5-6 billion figure is the estimate of the rate increase that was planned for the second half of the year. Everyone agrees that further reform will be needed and business is likely to sponsor an initiative campaign to try and achieve their agenda on this issue.

Health Insurance
The other major area of concern this year was and is the rising number of Californians who have no health insurance. These uninsured individuals are treated in large numbers by hospitals who shift the cost of their un-reimbursed care to those who have medical insurance or to the government financed programs –Medicare and MediCal. So, we are all paying for it now either in taxes or higher health insurance premiums.

Senator Burton proposed SB 2, a so-called “play or pay” plan that would require some employers to provide health insurance for their workers or to pay into a pool to provide it. The bill would not take effect until 2006. Employers with over 50 employees would have to pay up to 80% of the cost of health insurance for the worker only. Employers with 200 or more employees would have to offer health insurance that covered workers and their families.

The bill passed and is on the Governor’s desk. He has not indicated whether or not he will sign it. It has lots of problems and is not well drafted. One problem is it may conflict with the federal ERISA law. Another problem is that it doesn’t really help many of the uninsured. Estimates are that 95% of employers with 200 or more employees already provide this coverage as do most employers with 50-199 employees. Smaller employers are exempt. There was general agreement that smaller employers (those with less than 20 for sure and maybe those with less than 50 employees) could not afford this kind of law unless there was some government financing or support for small employers. Since there was no funding mechanism for such support, the supporters of the bill raised the threshold from 20 employees to 50 and put off for two years implementation of the bill. It is quite likely that there will be further amendments to this law before it goes into effect, if it is signed.

Conclusion
As we said at the outset, it has been quite a year and that was without mentioning the potential RECALL of the Governor. This year’s session was overshadowed throughout by the potential for a recall election and that became a reality in August when the election was qualified and set for October 7th. Every action after that date was strongly influenced each party’s perception of how such a step would impact the recall.

As of this writing, the recall has been delayed by a three-judge court. If the delay holds up and is not overruled by the U.S. Supreme Court, then we can expect the next session to be a holding action from January until the March election. If the Ninth Circuit en banc or U.S. Supreme Court overturns the current ruling and the election goes ahead, then we could have a special session of the Legislature meeting before the end of October. In either event, it will be a most interesting year.

LEGISLATION
AB 1238 (Firebaugh) Status: Governor Signs Bill on October 8th, 2003
Topic: Commercial Vehicles: Regulation.
CDTOA Sponsored Legislation

1. Existing law provides that where two or more personal policies affording liability insurance that apply to the same motor vehicle in an occurrence out of which a loss arises, and one policy is primary and one or more policies are excess, then each insurer shall pay for the cost of defense in proportion to the percentage of total damages paid by that insurer. This bill, for purposes of those provisions, would revise the definition of commercial vehicle as it is applied to trailing equipment to fix the problem caused by the passage of SB 2084 in 2000, that inadvertently changed the conclusive presumption, established by the legislature in 1970, that a power unit was primary and a leased or rented trailer was excess.
   
   
2. Existing law requires the Department of the California Highway Patrol to inspect, at least every 25 months, every terminal of a motor carrier, as defined, that directs the operation of or maintains a commercial vehicle in this state, as specified. Existing law requires each motor carrier to submit an application to the department and either a $400 (trucking companies with more than one truck) or a $100 (companies with no more than one truck) fee per terminal, as specified, in connection with this inspection program. This bill would increase the amount of the fee for an initial enrollment into the program to $650 and $400, respectively, per terminal.
   
   
3. Existing law prohibits a motor carrier of property to operation of a commercial motor vehicle on any public highway unless it complies with motor carrier identification number requirements. This bill would additionally require a motor carrier to hold a valid motor carrier permit issued by the department. By creating a new crime with respect to vehicle requirements, this bill would impose a state-mandated local program. Simply stated, the bill now requires a motor carrier to hold a valid motor carrier permit. It is now a crime if a motor carrier does not comply with this new section.
   
   
4. Existing law requires an application for an original or a renewal motor carrier permit to include specified information. This bill, additionally would require an application to include certification of enrollment in the Biennial Inspection of Terminals (BIT) program, unless exempted, and certification of enrollment in a controlled substance and alcohol use and testing (CSAT) program as required under existing law, unless exempted.
   
   
5. Existing law does not formally tie the acronym BIT to the Biennial Inspection of Terminals within the California Vehicle Code. This bill more clearly ties the informal and widely utilized acronym BIT to the program formally referred to as the Biennial Inspection of Terminals.
   
   
6. Existing law, until January 1, 2004, requires the Department of Transportation, in consultation with the Department of the California Highway Patrol, to develop specified pilot projects to designate and identify certain highway portions as “Safety Enhancement-Double Fine Zones” which results in increased fines for traffic violations occurring within the zones. Under existing law, the portion of State Highway Route 101 between the Eureka Slough Bridge and the Gannon Slough Bridge in Arcata is designated as a zone. This bill would extend until January 1, 2006, this particular portion of State Highway Route 101 as a “Safety Enhancement-Double Fine Zone”.

SB 1055 (Committee on Budget and Fiscal)
Status: Govenor signs bill on October 10th
Topic: Vehicles: fees: funding: weight fees.
As a result of intense trucking industry lobbying, Assembly Bill AB 1767 was held up in committee and this bill with the help of Assembly member Jenny Oropeza became the main vehicle to raise commercial vehicle weight fees only 20 percent. This bill would increase the weight fees on commercial vehicles by 20 percent beginning January 1, 2004. This bill reduces the proposed 62 percent and than 42 percent fee increase in the state’s Commercial Vehicle Weight Fee Program to 20 percent, and requires each commercial vehicle registered in the International Registration Program to display the gross operating weight of the vehicle to allow the CHP to effectively enforce this program. The bill also provides authority to increase the Truck Weight Fees up to 33 percent or 13 percent more should final revenues for 2003-04 not meet the projected revenue level of $789. Incidentally, the new compromised revenue neutral funding projection is 6 percent or $50 million less than the DOF originally projected in earlier studies. The Dept. of Finance still won’t explain how they projected the $839 million for this fund

AB 582 (Cogdill) Status: Govenor signs bill on October 12th
Topic: Vehicle weight limits: local ordinance: Tuolumne County:
Existing law authorizes a county board of supervisors by ordinance to reduce the permissible weight of vehicles and loads upon unimproved county highways or county bridges, and, upon improved highways that are subject to deterioration, for a period of 90 days unless actual repair of the highway is begun within the 90 days and is continuously carried on to completion. This bill would authorize the County of Tuolumne to prohibit, by ordinance, the use of the Old Priest Grade by a vehicle or combination of vehicles that exceeds a weight limit of 7,500 pounds or more, except as specified.

SB 127 (Chesbro) Status: Signed by the Governor
Topic: Vehicles: limitations of access.
Existing law exempts from established limitations of access, licensed carriers of livestock when engaged in travel necessary and incidental to the shipment of livestock on specified portions of State Highway Route 101. This bill would delete certain obsolete language; would require the Department of the California Highway Patrol to undertake a specified study and to report its findings to the Legislature, on or before January 1, 2006; and would extend the January 1, 2004, repeal date to January 1, 2007.

AB 276 (Koretz) Status: Signed by the Governor
Topic: Penalties for Labor Code violations.
Under existing law, if an employer fails to pay wages or unlawfully withholds wages, the penalty for a first violation is $50, and the penalty for subsequent or willful or intentional violations is $100 and the penalty recovered is placed in the General Fund.
This bill would increase the penalties to $100 for the first violation and $200 for subsequent or willful or intentional violations.

SB 966 (Alarcon) Status: Govenor signs bill on October 12th
Topic: Public works and prevailing wages:
contractor’s costs. Existing law generally requires the payment of the prevailing rate of per diem wages and the prevailing rate for holiday and overtime work to employees employed on public works projects that cost more than $1,000. This bill would authorize a contractor
to bring an action in a court of competent jurisdiction to recover from an awarding body specified labor costs, penalties, and legal fees if certain conditions are met. Of course CalTrans is exempt.

AB 852 (Lieber) Status: Signed by the Governor
Topic: Prevailing rate of per diem wages:
determinations. Existing law generally requires the payment of the prevailing rate of per diem wages and the prevailing rate for holiday and overtime work to employees employed on public works projects that cost more than $1,000. This bill would require the director, upon a request by the state or a political subdivision of the state, to determine and provide these wage rates to the state or a political subdivision that agrees by contract with a private entity that that private entity’s employees, in performing the contract, receive the general prevailing rate of per diem wages and the general prevailing rate for holiday and overtime work.

SB 868 (Dunn) Status: Govenor signs bill on October 12th
Topic: Prevailing wages.
Existing law governing the obligations of contractors and subcontractors involved in public works projects requires that employees be paid the general prevailing rate of per diem wages. This bill would provide that per diem wages shall additionally be deemed to include worker protection and assistance programs or committees, and industry advancement and collective bargaining agreements administrative fees, as provided.

AB 1418 (Laird) Status: Govenor signs bill on October 12th
Topic: Labor: violations:
Existing law requires various boards in the Department of Consumer Affairs to provide information concerning the status of licensees on the Internet. This bill would additionally require the Contractors’ State License Board to disclose information regarding a licensee’s willful or deliberate violation of the Labor Code.

AB 1506 (Negrete McLeod) Status: Govenor signs bill on October 12th
Topic: Public works: projects funded by bonds: prevailing wages.
Existing law, with certain exceptions, requires payment to all workers employed on a public works project of not less than the prevailing wage for work of a similar character in the locality in which a public works project is performed.This bill would require the body awarding any contract for a public works project financed with funds made available by the Safe, Reliable High-Speed Passenger Train Bond Act for the 21st Century, if that bond measure is approved by the voters, to adopt and enforce that above-mentioned labor compliance program for application to the public works project.

AB 1538 (Berg) Status: Signed by Governor
Topic: Construction contractors.
Existing law, the Contractors’ State License Law, creates the Contractors’ State License Board within the Department of Consumer Affairs and provides for the licensure and regulation of contractors. This bill would require a contractor, except those specified above, to display his or her contractor’s license number and business name in or on each commercially registered motor vehicle used in his or her construction business.