Calif. Workers' Comp Take-Out Bill Falls Short

Partisan wrangling in the California State Assembly on the final day of the 2003 legislative session kept an urgency bill mandating a 0.5% increase in the exotic wagering take-out from gaining final approval Sept. 12.

The measure would have diverted an estimated $10 million annually through the increased take-out to a workers' compensation insurance fund to help out a racing industry badly hurt by spiraling medical costs. It was among a group of 30 or so bills similarly snarled, never reaching the Assembly floor.

"It's clearly very disappointing," Ed Halpern, executive director for the California Thoroughbred Trainers, said Saturday. "It was a very important piece of legislation to us. It would keep (owners and trainers) here, help us attract new ones and bring many of those who have left California back."

He said he isn't sure how his membership will react.

"I haven't seen or spoken to a lot of people this morning," Halpern said. "I can only hope they'll be patient. But I can't blame them if they aren't."

Bob Fox, a legislative lobbyist for the California Thoroughbred Breeders' Association, said the Republican leadership -- unhappy with Democrats "for reneging on earlier agreements" -- announced "it was sending a message" to the majority party by refusing to vote "aye" on any bill requiring a two-thirds vote for passage.

Fox said most observers thought the Republicans would relent as the day progressed and the racing take-out bill, which was fully supported by the industry and had passed the Senate on Wednesday by a 31-4 vote, would squeak through before the deadline. As urgency legislation, it required a two-thirds majority.

Although that didn't happen, Fox said he is hopeful that the measure -- AB 900, by Assemblyman Jerome Horton (D-Inglewood) -- would be back on the agenda in the opening week of the new session in January.

"It's bad, but not as bad as it could be," Fox said. "I would say that since there is no opposition to the bill, it could be passed and signed in the first or second week of January."

The Legislature passed major changes in the statewide workers' compensation system Sept. 12 and also approved a measure requiring employers to provide medical insurance to uninsured workers or pay into a state insurance pool set up for the purpose.

The workers' comp package would save employers $5 billion annually, officials say. They hope to accomplish that by cutting payments to doctors and hospitals by 5%; imposing a fee schedule for medical services, outpatient surgery and pharmaceuticals; capping chiropractic and physical therapy visits at 24 per claim; eliminating the vocational rehabilitation program in favor of educational grants for retraining; and establishing medical treatment guidelines.

The Horton bill increases the take-out on exotic bets (in California, all wagers except win, place or show) from 20.18% to 20.58% in Thoroughbred races and from 20.38% to 20.88% in Quarter Horse races. The Standardbred races would increase conventional take-out from 16.43% to 17.43%.

Officials estimated the additional revenue would drop workers' compensation rates on the state's backstretches to an average of about $20 per $100 of payroll and $50 per jockey mount. The average premium for trainers who hold policies with American Insurance Group is $35 per $100 of payroll and $105 per jockey mount. Trainers who are still with the government-backed State Fund pay much more on average.

AIG joined with owners and racing associations to form a captive workers' compensation insurance program last year. It has helped in slowing the cost increases, Halpern said.

"It's not enough," he said. "It's much better than the alternative (State Fund), but it's not enough to keep people here."

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