CSP Legislative Updates

The 2007-08 Legislative Session is underway. With all the inaugural festivities out of the way, Governor Schwarzenegger, on a broken leg, kicked off the 2007-08 session last week with the release of his much anticipated health care reform plan, followed by his State of the State speech during which he outlined his policy agenda for the coming year.

True to his promise during the campaign, the Governor is continuing his quest to build bipartisanship and consensus with the Legislature. However, that does not mean he has shied away from challenging the Legislature and attempting to tackle the complex problems facing the state. In addition to health care reform, his policy agenda includes reducing vehicle air emissions, increasing water supply, and enacting legislative redistricting reform.

Health Care Reform
Of Governor Schwarzenegger’s top priorities outlined above, the issue most controversial and of most interest to the California Staffing Professionals is his proposal to provide health coverage to the uninsured. Key components of this proposal is a requirement that employers with more than 10 employees offer health insurance to their workers or pay four percent of their payroll into a new state fund. This state fund would be used to help individuals buy the minimal level of insurance that is required by the proposal.

This “play or pay” scenario is reminiscent of SB 2 and previous legislative attempts to mandate that employers provide health insurance. Interestingly, the Governor led the referendum against SB 2 and has vetoed similar bills in the past.

The difference between those efforts and the Governor’s proposal is his concept of “shared responsibility.” Past efforts, including SB 2, put the full burden of paying for health insurance on employers. The Governor’s proposal spreads the burden beyond employers by taxing doctors and hospitals and requiring all individuals to carry a minimal level of health insurance. The Governor argues his approach will reduce the “hidden tax” that employers and insured individuals are already paying for the ordinary and emergency care of the uninsured.

Now that the Governor’s plan is on the table, he has asked the Legislature and all the interest groups to come to the table to negotiate. It remains to be seen how that will play out. In the near-term, we expect the interested groups to criticize and pick the proposal apart. Many Democrats in the Legislature have their own ideas on how to provide health insurance to the uninsured; it is possible the Democrats will negotiate for a plan that contains many of their ideas. Republican leaders, on the other hand, have stated that they will not “compromise” their opposition to increased taxes to pay for health care for the uninsured.

We have provided CSP with the details of the plan, as provided by the Governor. There has yet to be any legislation sponsored by the Governor introduced yet. The staffing industry has seen “play or pay” proposals in other states. The experience in other states, notably Massachusetts, could serve as a guide to CSP in formulating a position on the Governor’s proposal.

Water Storage
While most Democrats seem willing to work on insuring the uninsured for health care. There does not appear to be a lot of Democrats willing to work with the Governor on new water storage. The Governor’s water infrastructure plan contemplates building two dams to help meet the state’s water supply. On this subject, he has near universal Republican support and some support from Democrats with agricultural concerns.

Vehicle Air Emissions
Governor Schwarzenegger is continuing his push to reduce greenhouse gas (GHG) emissions by creating a Low Carbon Fuel Standard for transportation fuels. The Governor, by Executive Order, has established 2020 the target for reducing the carbon content in transportation fuels by 10 percent. Because transportation accounts for about 40 percent GHG emissions, it is expected that this standard will have significant impact and accompanying controversy. This new fuel standard will be part of the implementation of AB 32, which the Governor signed last year to establish overall greenhouse gas emission limits in California by 2025. Most of the business community and Republican legislators opposed AB 32 because it imposed caps and limits on emissions without a plan or infrastructure in place for fuel alternatives. We expect this opposition to continue.

Redistricting Reform
It is possible that the most controversial proposal put forward by the Governor will be his plan to create a redistricting process that takes the job of drawing the lines for legislative seats away from the Legislature and puts it into the hands of an appointed commission. Because redistricting reform is mostly of interest only to politicians themselves, this proposal does not generate a lot of talk with most citizens, a fact which is supported by the failure of past ballot initiatives on the subject. However, this was one of Governor Schwarzenegger’s original promises when he ran for office, and it is expected that he will invest time and energy into political reform. Because Democrats are in power, they control the redistricting process, and have used that control to draw the safest seats possible for their members. For that reason, it is expected that this issue will shape up to be one of the more interesting policy fights in the coming year.

With the legislative session just getting started, there has been very little legislation introduced to date. Committee memberships are still being filled out and many legislators are waiting to match their legislative ideas to the committees that they will be sitting on. The bill introduction deadline is February 23 and committee hearings will begin in earnest in March and April.