HomeMy WebLinkAbout1988DATE : May 23, 1988
TO : Ail Members
FROM : Wayne Killmer
Chairman of the Board
SUBJECT: City/County Ballot
Measures
County Measures:
A, Bena Landfill NO
B. Deep Well Injection NO
C, Bena Landfill YES
City:
D. City Charter Reform NO
The.above vote on measures A and C will allow the County to properly
manage its hazardous waste and toxics program, provide a key com-
ponent to infrastructure needs, which will help support economic
development efforts and, finally, a reverse vote will cause a major
set-back to the County in its efforts to provide dump sites for the
next 60 plus years. Measure B is simply a question of local or state
control - vote no - support local control.
Measure D is a very complex issue facing Bakersfield voters. The
Board continues to take a strong position supporting the concept of
compensating the Mayor's position and department at levels more
commiserate with the position duties and time requirements. Current
compensation levels and staff support are not reflective of the posi-
tion demands nor a modern metropolitan area. However, the Board is
unable to support Measure~D, as it is written, and will encourage the
city's Charter Review Committee to include the above concept in their
recommendations on Charter revision.
VOTE J U N E 7TH
MAYORAL CANDIDATE QUESTIONNAIRE
GREATER BAKERSFIELD CHAMBER OF COMMERCE
COORDINATED BY:
GOVERNMENTAL REVIEW COMMITTEE
MAY 23, 1988
PREFACE
The four City Mayoral Candidates running for office
June 7, 1988, have been asked to respond to nine
questions. It is.our hope that their responses will
give our membership insight as to the pos~ion and
philosophy of each candidate.
The responses are presented unedited. Although the
Chamber cannot endorse candidates, it is our responsi-
bility to provide this kind of information; you be
the judge. Please share this information with your
employees/associates. It is your responsibility to
vote on June 7.
LIST OF MAYORAL
CANDIDATES
(Alphabetical)
DICKERSON, MARK
5404 Krista Street
Bakersfield, CA BuSinessman
MEDDERS, CLARENCE E.
2530 4th Street
Bakersfield, CA School Administrator
PAYNE, THOMAS
3708 Alum Street
Bakersfield, CA Incumbent Mayor
WALLACE, RANELLE
3301 Shiloh Ranch Road
Bakersfield, CA Motivational Speaker
QUESTIONNAIRE RESPONSES
QUESTION 1: What do you see as the five major'issues facing
our City in the next two to three years and how
would you address these issues?
ANSWER 1
Dickerson - 1. Bringing new, clean industry to town. 2. Economic growth and development.
3. Traffic circulation improvement.
4. Air quality improvement.
5. Improving the city's image.
Medders - In no particular order: growth and providing
services, water, provisions for the homeless,
transportation circulation, jobs as related to
industry, and downtown re-development.
All of these are in one way or another related
to finance and in my view are items to be add-
ressed by the City Council and other agencies
both private and public. I feel the Mayor's
responsibility lies in supporting publicly-
sound, sensible proposals as solutions to these
issues and problems. The mayor should work closely
with the Chamber and Board of Trade to attract
industries to the Bakersfield area that are com-
patible with our best interests.
Payne - 1. Pollution 2. Drugs and major crimes of violence
3. Economic development and diversification 4.
Employment and'job training 5. Infrastructure
expansion and improvement. I will continue to
support legislation, reform, programs, and efforts
to improve our quality of life in these areas. I
will continue to advance these issues as budget
priorities, remain involved or active in this organ-
ization or agencies created to deal with these issues
and to lobby and publicly endorses individuals,
problems and groups who share the goal of solving
these problems.
Wallace - 1. Bringing in new growth of diversified businesses. 2. The redevelopment of downtown area.
3. To maintain and better air and water quality.
4. Bring community support and positive image back
to city government.
QUESTION 2: What is your position regarding the June 7th City
Charter ballot issue (Measure D) and what form of
government should the City follow?
ANSWER 2
Dickerson - A. Mayor should have full time pay for full time
service.
B. We do not need an eighth ward'.
C. The Mayor should have a full time aide.
Medders - I am absolutely opposed to Measure D on the ballot.
I am a strong supporter of the Council/Manager form
of government with the Mayor being a public service
in accordance with the current Charter provisions.
A change in structure in my opinion, would be disa-
strous. Not only is it a waste of money (and we
have enough being spent in management already) it
sets the stage for conflict with Council and inter-
ference in departments.
Payne - I strongly support Measure D as the first positive
attempt to restore local government to the people we
are elected to serve in more than 32 years. It is
cost effective, logical, and beneficial to all cit-
izens of Bakersfield. I support the council-manager-
mayoral form of government that provides a much
needed system of checks and balances and provides
fair and equal representation for all the people
in all the issues, at all times.
Wallace - I am in full support of a paid Mayor. I.also feel
that the Mayor needs a vote. I do however have
some reservations on the matter of an eighth. But
I think we should accept it as a whole. I support
it!!
QUESTION 3: Would you support a metropolitan planning concept
(joint City/County planning) for those areas with-
in the County but within the City's sphere of in-
fluence?
ANSWER 3
Dickerson - No.
Medders - It would be a good idea if it could be worked out
with the Board of Supervisors. The reason I say
this is because much of this sphere of influence
area will likely one day be a part of the City and
it would be well'if it were compatible. City-
County cooperation can be accomplished if it is
approached properly.
Payne - Yes.
Wallace - Yes, but only when best served to the community.
QUESTION 4: In order to enhance development of local and re-
gional transportation needs (primarily roads and
highways), would you support a half-cent increase-
to the County's retail sales tax (as a source of
income)?
ANSWER 4
Dickerson - No.
Medders - Yes, I would support a half-cent sales tax with a
'sunset or expiration date, although, it would
seem more feasible to tax gasoline/diesel if it is
legally possible.
Payne - Yes.
Wallace - In don't think we need to be burdened by further tax
increases but. in this case with the growth of this
community, road and highway building and maintenance
have to be met.
QUESTION 5: Do you support Gann overrides?
ANSWER 5
Dickerson - No.
Medders - Not carte blanche - I would have to know the
specifics. Governmental entities sometimes
tend to spend all that is available and look for
more.
Payne - Yes - in most instances.
Wallace - No comment at this time.
QUESTION 6: WQuld you support the continuance of the current
concept/organizations of the Central District
Development Agency? If not, how should the re-
development area be governed/managed?
ANSWER 6
Dickerson - Yes, I would rather see a private staff with the
current Board make up.
Medders - Yes. The very best thing that happened was the day
the City Council gave redevelopment back to non-
elected citizens. I realize that the Council still
has responsibility but I do firmly believe something
good is likely to happen now.
Payne - Yes.
Wallace - Yes, I support it. I am happy to see that it has
fallen into the hands of experts. With the growth
that we have had we need to rely on these people to
best fit the need of development, especially the
downtown area.
QUESTION 7: What posture would you take relative to the pri-
vatization of non-priority City services?
ANSWER 7
Dickerson - Privatization of city services sounds goods, but, may cost the taxpayers more in the long run.
Medders - During the time I served on the City Council this
subject came up now and again and we had finance,
personnel, and management look into the possibilities.
We did not find it to be more economical to change
and it appeared we would have less control. Lawyers
have been mentioned. I believe the City went to a
larger staff of attorneys because of the expense in-
volved in bringing in the."so-called experts."
Payne - I support privatization of certain services that
are now provided or might be provided as growth
continues. However, this applies only to certain
non-critical city services and particularly to
needed services that can not cost effectively be
provided by government. These include child care
programs, specialized litigation, environmental
impact studies, etc.
Wallace - I would support that only until the city would meet the need.
QUESTION 8: What route alternative would you support for the Highway 178 crosstown freeway?
ANSWER 8
Dickerson - Along the railroad tracks, by Bakersfield High and the railroad yard.
Medders - As I understand it the southern route would displace
a lesser amount of people/property which in turn
should make it more feasible - if there is an off
ramp for downtown and 23rd/24th Streets can still
be used.
Payne - I support the route which would parallel the rail-
road tracks, provide off ramp accessibility to the
downtown district, and eventually connect with I-5.
Wallace - The Westside Freeway proposed in the 2010 plan.
QUESTION 9 Filling key City management positions has been
intensely discussed by the public. Should City
Police be broadened and amended to draw from a
wider selection of talent? Briefly elaborate on
your yes/no response.
ANSWER 9
Dickerson - Broadening our poliCe leadership's educational
background should be a city priority.
Medders - I am assuming that City Police means Chief. I
am not opposed to opening this up to people out-
side of Bakersfield if the Council feels we do not
have people who are fully qualified. I feel that
morale plays a large part in retaining police
officers and bringing in someone from outside when
we have capable candidates may be detrimental.
Payne - No. When in-house talent and expertise is avail-
able in-house, we should restrict the selection
process to those who have been loyal, dedicated
city employees and have adequately prepared for
leadership advancement. When we lack that com-
petency or expertise, then and only then should
we recruit from the broadest possible base.
Wallace - Yes, as our city grows so does the need of safety
and protection; we need to meet this need. We
need more detectives and law enforcement officers
and public education.
DATE : May 23, 1988
TO ~. : Ail Members
FROM : Wayne Killmer
Chairman of the Board
SUBJECT : State Ballot Propositions
In order to assist our membership to make decisions on the
State Ballot Propositions, we are providing you.with action
taken on these various issues. As you will note, there are
twelve (12) PropoSitions.
Board action taken includes two (2) positions of support, (5)
positions of opposition, three (3) neutral positions (no con-
census) and two (2) issues were not considered. During the
Board deliberations, there were several underlying principles
that tracked Directors to their respective positions. These
included:
1. A very conservative posture relative to the
State Board measures.
2. Action taken on business issues rather than
social concerns~
3. In some cases, .not enough data was available
to take action.
4. Local jurisdictions should assume fisCal res-
ponsibilities rather than leave funding at
State or'Federal levels.
Action taken is as follows:
Proposition Issue PositiOn
66 Election of County Assessors Support
67 Second Degree Murder Did not
consider
68 campaign Financing Reform (Gerken) Oppose
69 AIDS Did not
consider
page 2
Proposition Issue Position
70 Wildlife, Coastal and Park Land Conser- Oppose
vation Bond Act
71 State and Local Appropriations Limit Neutral (no
Adjustment consensus)
72 Emergency Reserve (Transportation) Neutral (no
consensus)
73 Campaign Financing Reform Montoya/ Support
Johnson/Rose)
74 Transportation Bond Act of 1988 Oppose
75 School Facilities Bond Act of 1988 Oppose
76 Veteran's Bond Act of 1988 NeutYal (no
consensus)
77' California Earthquake.Safety and Oppose
Housing Rehabilitation Bond Act of 1988'
For additional information on these issues, please Contact Doug
Yavanian at the Chamber Office, 327-4421.
A special note of thanks goes out to Mike Coleman and his Legis-
lative Affairs Committee for reviewing and providing input on
these issues.
VOTE - JUNE 7th
BALLOT PAMPHLET
N , 1988
CERTIFICATE OF SECRETARY OF STATE
I, March Fong Eu, Secretary of ,State of the State of California, do hereby certify that the foregoing
measures will be submitted to the electors of the State of California at the GENERAL ELECTION to be
held throughout the State on November 8, 1988, and that this pamphlet has been correctly prepared in
accordance with law.
e witness my hand and the Great Seal of the State in
Sacramento, California, this 18th day of August 1988.
MARCH FONG EU
Secretary o] State
SACRAM E~NTO 95~)14
Dear Fellow Californians:
This is your California Ballot Pamphlet for the November 8,
1988, General Election. It contains the ballot title, a short
summary, the Legislative Analyst's analysis, the pro and con
arguments and rebuttals, and the complete text of each proposi-
tion.' It also contains the legislative vote cast for and against each
measure proposed by the Legislature._ .
This pamphlet also contains a statement from each of Califor-
nia's five 'qualified political parties, summarizing its policles.'and
principles. These are provided in the extra .space available in this
pamphlet to giveyou, the voters, a clearer understanding of the
philosOphies of the parties and-the candidates who repiesent
them.
Many rights and responsibilities go along with citizenship.
Voting is one of the most important, as it is the foundation on
which our democratic system is built. Read carefully all of the
measures and information about them contained in this pam-
phlet. Legislative propositions and citizen-sponsored initiatives
are designed specifically to give you, the electorat4, the oppor-
tunity to influence the laws which regulate us all.
Take advantage of this opportunity and exercise your rights by
voting on November 8, 1988. .
SECRETARY OF STATE
Please note .that Proposition 78 is the first proposition for this election. To avoid confusion with past measures,
Legislature passed a law which requires propositions to be numbered consecutively starting with the next numb¢¥
after those used in the November 1982 General Election. This numbering scheme runs in twenty-year cycles.
2 G.~t
CONTENTS
Proposition , Pages
BOND ACTS
78 Higher Education Facilities Bond Act of 1988 .................................... 4-7
79 1988 School Facilities Bond Act .............................................................. S-Il, 114
80 New Prison Construction Bond Act of 1988 ........................................ 12-15, 114
81 California Safe Drinking Water Bond Law of 1988 ........................... 16-19, 114-116
82 Water Conservation Bond Law of 1988 ........................ .. ....................... 9.0-23, 116-118
83 Clean Water and Water Reclamation Bond Law of 1988 ................ 24-27, 118-120
84 Housing and Homeless Bond Act of 1988 ............................................ 28-31, 120-121
85 Library Construction ahd Renovation Bond Act of 1988 ................. 32-35, 121-122
86 County Correctional Facility Capital Expenditure and Youth
Facility Bond Act of 1988 ..................................................................... 36--39, 122
LEGISLATIVE CONSTITUTIONAL AMENDMENTS
87 Property Tax Revenues. Redevelopment Agencies ........................... 40--41, 122-123
88 Deposit of Public Moneys ......................................................................... 42-43, 123
89 Governor's Parole Review ........................................................................ 44-47
90 Assessed Valuation. Replacement Dwellings ....................................... 48-51
91 J~ustice Courts. Eligibility .................... ~ ...................................................... 52-55
92 Commission on Judicial Performance .................................................... 56-59
93 Veterans' Property Tax Exemption ....................................................... 60-61, 123
94 Judges .................................... : ........................................................................ 62--65
INITIATIVE CONSTITUTIONAL AMENDMENTS AND STATUTES
95 Hunger and Homelessness Funding ............................... i .................... :. 66-69, 123-127
96 Communicable Disease Tests .................................................................. 70-73,
97 'State Occupational Safety andHealth Plan .......................... '. .............. 74-77
98 School Funding ......... i ...................................... ~ ................... ~ ....................... 78--81, 127-128
99 Cigarette and Tobacco Tax. Benefit Fund ........................................... 82-85
100 Insurance Rates, Regulation .................... : ................................................ 86-89, 128-135
101 Automobile Accident Claims and Insurance Rates ............................ 90-93, 135-137
102 Reporting Exposure to AIDS Virus ...................................................... 94-97, 137-139
103 Insurance Rates, Regulation, Commissioner .................................. ...... 98-101, 140-144
104 Automobile and Other Insurance ........................................................... 102-105, 144-157
105 Disclosures to Consumers, Voters, Investors ....................... : ............... 106-109, 157-158
106 Attorney Fees Limit for Tort Claims .................................................... 110-113
.Political Party Statements of Purpose ................................. ' ............................ 159
3
8 Higher .Education Facilities Bond Act of 1988
Official Title and Summary Prepared by the Attorney General
HIGHEB EDUCATION FACILITIES BOND ACT OF 1988. This act provides for a bond issue of six hundred million
dollars ($600,000,000) to provide funds for the construction or improvement of facilities of California's public higher
education institutions, including the University of California's nine campuses, the California State University's 19
campuses, the 70 districts of the California community colleges, and the California Maritime Academy. The use of
funds authorized under this act includes, but is not necessarily limited to, the construction or improvement of
classrooms, laboratories, and libraries, and the implementation of earthquake and other health or safety improve-
ments.
Final Vote Cast by the LegislatUre on SB 703 (Proposition 78)
Assembly: Ayes 66 Senate: Ayes 30
Noes 2 Noes 2
Analysis by the Legislative Analyst
Background interest costs on the bonds. General Fund revenues come
California's system of public higher education consists · primarily from the state corporate and personal income
' of 135 campuses serving about 1.8 million students. This taxes and the state sa]es tax.
system includes the University of California, the Califor- The bond money would be used to purchase building
sites and certain equipment, construct new buildings, and
nia State University, the California community colleges, alter existing buildings. The state also would be autho-
and the California~Maritime Academy. rized to use General Fund money for short-term loans to
The University of California has nine campuses with a community colleges for the purchase of instructional
total enrollment of about 153,000 students. This system equipment.
offers bachelor, master, and doctoral degrees. The uni- The Governor and the Legislature would decide hog' to
versity is also the primary state-supported agency' for spend the bond money. The state's budget for the 198&-89
research, fiscal year would spend about $350 million from this bond
The California State University'system has 19 campuses measure (if approved) for projects at various campus;es.
with an enrollment of about 343,000 students. The system About $500 million.in additional funds will be needed, to
gr .ants bachelor and master degrees, complete these and other previously approved projects.
The California community colleges provide instruction Fiscal Effect
to about 1.3 million students at 106 campuses operated by
70 locally governed districts throughout the state. The Direct Costs of Paying Off the Bonds. For these types
community colleges grant associate degrees and also offer of bonds, the state typically makes principal and interest
payments from the state's General Fund over a period of
a variety of basic .vocational skill courses.
-The California Maritime Academy provides instruction about 20 years. If all of the authorized bonds were sold at
an interest rate of 7.5 percent, the cost would be about
for students who seek to become licensed officers in the $1.1 billion to pay off both the' principal ($600 million)
U.S. Merchant Marine. One of six such schools in the 'and interest (about$475 million). The average payment
country, the academy has an enrollment of about 350 for principal and interest would be about $50 million per
students, year.
The state provides funds for planning, construction, Borrowing Costs for Other Bonds. By increasing the
and alterations for buildings, in the state's system of public amount which the state borrows, this measure may cause
higher education. In recent years, these funds have come the state and local governments to pay more under otlher
from lease-purchase agreements and general obligation bond programs. These costs cannot be estimated.
bonds. State Revenues. The people who buy these bonds do
not have to pay state income tax on the interest they earn.
Proposal Therefore, if California taxpayers buy these bonds instead
This measure authorizes the state to sell $600 million in of making taxable investments, the state would collect
general obligation bonds to fund facilities for California's less taxes. This loss of revenue cannot be estimated.
public higheredueation system. General obligation bonds ' Paying Off Loans to Community Colleges. This mea-
are backed by the state, meaning that the state will use its sure requires that any General Fund money loaned, to
taxing power to assure that enough money is available to community colleges be repaid from future revenue from
pay off the bonds. Revenues deposited in the state's the state's tidelands oil or from money received from the
General Fund would be used to pay the principal and sale of these bonds.
4 ' G88
Text of Proposed Law
This /aw proposed by Senate Bill 703 (Statutes of 1988, Ch. 44) is of California, and the full faith and credit of the State of California is
submitted to the people in accordance with the provisions of Article hereby pledged for the punctual payment Of both principal _of, and
XVI of the Constitution. . interest on, the bonds as the principal and interest become due and
This proposed law adds sections to the Education Code; therefore, payable.
(b) Pursuant to this section, the Treasurer shall sell the bonds
indicatenew provisions that they proposed are new. to be' added are printed in italic type to authorized by the committee at such different times as necessary to
service expenditures required by the apportionments.
PROPOSED LAW 67336. The bonds authorized by this chapter shall be prepared,
SECTION 1. Chapter 14.3 (commencing with Section 67330) is executed, issued, sold, paid, and redeemed as provided in the State
added to Part 40 of the Education Code, to read: General Obligation Bond Law (Chapter 4 (commencing with Section
16720) .of Part 3 of Division 4 of Title 2 of the Government Code), and
CHAPTER 14.3. HIGHER EDUCATION FACILITIES BOND ACT OF 1988 all o_f the provisions of that law apply to the bonds and to this chapter
Article 1. General Provisions and are hereby incorporated in this chapter as though set forth in full
67330. This chapter shall be known and may be cited as the Higher in this chapter. For purposes of the State General Obligation Bond Law,
the State Public Works Board is designated the "board."
6733Z The committee shall authorize the issuance of bonds under
Education Facilities Bond Act qf 1988.
67331. The Legislature find~ and declares all of the following:
(a) California's economic and social prosperity relies on a higher this chapter only to the extent necessary to fund the apportionments
education system that keeps pace with California's growth. In the that a_re expressly quthorized by the Legislature in the annual Budget
coming decades, the state's economic prosperity will depend on increas- Act Fursuant to tidal legislative direction the committee shall deter-
lng the productivity of the work force and on the ability to compete mine whether or not it is necessary o'r desirable to issue bonds
successfully in the world marketplace.
authorized pursuant to this chapter in order to carry out the actions
~ (b) The system of public higher education in this state includes the spe.~fi_e~_ in Section 67334 and, if so, the amount of bonds to be issued
· University of California the California State UniversitY, the California and sold. Successive issues of bonds may be authorized and soM to carry
community colleges, a~ the California Maritime Academy. ~ach of out those actions progressively, and it is not necessary that all of the
these institutions plays a vital rofe in maintaining California's domi- bonds authorized to be issued be sold at any one time.
nance in higher education in the United States. 67338. There shall be collected each year and in the same manner
(c) Over the last several years, studies have been completed by the and at the same time as other state revenue is collected, in addition to
University of California, the California State University, and the the ordinary revenues of the state, a sum in an amount required to pay
California community colleges to assess their long-term andshort-term the principal of,_ and interest on, the bonds each yea~ and it is the duty
capital needs, which studies demonstrate that these needs total, in the of all officers charged b7 law with any duty in rega~l to the collection
of thq. reven, ue to aVo anaf perform each and every act which is necessary
to collect tidal additional sum.
aggregate, several billion dollars.
(d) The purpose of the Higher Education Facilities Bond Act of1988
is to assist in meeting the capital outlay financing needs of California 's .~ 67339. ,No,twithstanding Section 1.3340 of the Government Code,
public higher education system, there is nereoy appropriated from the General Fund in the State
67332. As used in this chapter, the following terms have the Treasury, for the purposes of this chapter, an amount that will equal the
following meanings: ' total of the following:
(a) "Committee" means the Higher Education Facilities Finance (a) The sum annually necessary to pay the principal of, and interest
Committee created pursuant to Section 67353. on, bonds issued and sold pursuant to this chapter, as the principal and
(b) "Fund" means the 1988 Higher Education Capital Outlay Bond interest become due and payable.
Fundcreated pursuant to Section 67333.
(b) The sum which is necessary to carry out the provisions of Section
Article 2. Higher Education Facilities Bond Act Program 67340, appropriated without-regard to fiscal years.
67333. The proceeds _of bonds issued and sold pursuant to this 67340. For the purposes of carrying out this chapter, the Director ~of
Finance mag by executive order, authorize the withdrawal from the
BondChapterFund,Shallwhichbe depositedis herebyin thecreated.1988 Higher Education Capital Outlay General Fund of an amount or amounts not to exceed the amount of the
67334. (a) The committee shall be and is hereby authorized to unsold bonds which have been authorized to be sold for,the purpose of
create a debt or debts, liability or liabilities of the State of California carnding out this chapter. Any amounts withdrawn shall be deposited
pursuant to this chapter for the purpo~'e of funding aid to the in tt~e fund. Any money made available under this section shall be
University of California the California State ~fniversity, the California returned to the General Fund, together with interest at the rate paid on
community colleges~ a-~d the California Maritime Academy for the moneys in the Pooled Money Investment Account, from money received
construction, including the construction of buildings and the acquisi- from the sale of bonds for the purpose of carrg, in~ out this chapter.
rion of related fixtures, renovation, and reconstruction of facilittes, for 67341. All money, deposited in the fu~nd t[iat is derived from
the acquisition of sites upon which these facilities are to b~ construcied, premium and accrued interest on bonds sold shall be reserved in the
for the equip]Mng of new, renovated or reconstructed fqcilities, and to fund and shall be available for transfer to the General Fund as a credit
provide funas for pay'ment of preco'~truction costs, includin~ but not to expenditures for bond interest.
limited to, preliminary plans and working drawings. 67342. The board may request the Pooled Money Investment Board
(b) Moneys made available under Section 67340 or 67342 may be for a loan from the Pooled Money Investment Account, in accordance
used to provide short-term loans to community colleges f, or the purchase ~,'th Section 16312 of the Government Code, and may execute those
of instructional equipment. Those loans shall be repatd from the f!rst aocuments required by the Pooled Money Investment Board to obtain
moneys available in the Capital Outlay 'Fund for Public Higher and repay the loan. The loan shall be deposited in the fund for the
Education beginning in the 1989-9Or, cai year, or from proceeds of the purpose of carrying out the provisions of this chapter. The amount _of
bonds, the loan shall not exceed the amount _of the unsold bonds that the
committee, by resolution, has authorized to be sold for the purposes of
Article 3. Fiscal Provisions this chapter.
67335. (a) Bonds in the total amount of six hundred million
67343. Any bonds issued and sold pursuant to this chapter may be
dollars ($600,000,000), not including the amount of any refunding refunded by the issuance and sale or exchange of refunding bonds in
bonds issued in accordance with Section 67343, or so much thereof as is accordance with Article 6 (commencing with Section 16780) of Chapter
necessary, ma~t be issued and sold to provide a fund to be used for 4 of Part 3 of Division 4 of Title 2 of the Government Code. The
carrying out the purposes expressed in this chapter and to be used to approval by the electors of this state of -the issuance and sale _of bonds
reimburse thee General Obligation Bond Expense Revolving Fund under this chapter includes approval of the issuance and sale or
pursuant to section 167£4.5 of the Government Code. The bonds shal~ exchange of any bonds issued to refundeither those bonds or any
when sold, be and constitute a valid and binding obligation of the State previously issued refunding bonds.
'1 78 Higher Education Facilities Bond Act of 1988 .
Argument in Favor of Proposition 78
California has established one Of the world's most · ADAPT TO NEW TECHNOLOGY. Rapid techno-
respected systems of public higher education. The Uni- logical development, a direct result of our successful
versity of California, the California State University, and higher education system, has increased the need for
the California Community Colleges have combined to state-of-the-art instructional and research laborato-
produce a system that guarantees every high school ties. Such facilities are essential if our students are to
graduate an OpportUnity to 'pursue a college education learn, the very latest in scientific knowledge.
accOrding to the student's preparation and personal goals. · STRENGTHEN THE STATE'S ECONOMY. A rna-
These colleges and universities, with 135 campuses and j0r component of a Strong economy is an educated
more than 1.5 million students, contribute to California's workforce. Far more education is now required
employment especially in the scientific and techno-
continuing prosperity by preparing well-trained individ- logical fields that are of increasing economic impor-
uals for positions in a wide variety of career.s, including
tance in our society. The projects funded by this
teaching, medicine, law, business, science, agriqulture, measure will enable our colleges and universities to
· public service, and the helping professions., train the teachers, scientists,, doctors,' and engineers
The construction of new .facilities at our colleges and who will attract industry and jobs to the state.
universities has not kept pace with-the demands of recent Individual construction projects tO be funded from tlhis
times. Moreover, many existing facilities need major bond measure are reviewed and approved by the Gover-
renovations to meet state safety standards and to increase, nor and the State Legislature. Previously, public higher
handicapped access to campuses. Until recently, the education institutions depended on income Irom tideland
state's total funding for public higher education construc- oil revenues to pay for needed construction projects, The
tion had steadily declined,'leaving our campuses with an recent decline in oil prices has sharply reduced the
enormous backlog of projects, urgently 'needed to main- amount of money available for these needs. Recognizing
this problem, the Governor and the Legislature autho-
· rain the quality of California s public higher education rizedthis bond issue as an alternative wa, y of financin~
programs.
badly needed improuements at the state s colleges aha
Proposition 78 would provide $600 "million, over two
years, for projects needed to: universities.
· ACCOMMODATE INCREASES IN STUDENT EN- Proposition 7~ w!ll maintain and enhance the hi',gh
ROLLMENTS. .New ~tnd renovated classrooms, Ii- quality of California s public colleges and universities.'
braries, and laboratories are urgently needed on Our WE URGE YOU TO VOTE YES ON PROPOSITION
campuses to keep pace with California's.continuing 78.
growth and enrollment increases on our campuses. GARY. K. HART
The state's population is increasing by approximately ~ State Senator, 18th District
600,000 new residents each year; and 150,000 new Chairman, Senate Education Com, mittee
students enter our elementary and secondary schools GEORGE DEUKMEJIAN
each year as well. Without a carefully planned and Governor
cost-effective expansion to .meet rising enrollments, . State of Califor. nia
our colleges and universities will become hopelessly DAVID P. GARDNER-
overcrowded as this growing pool of new students President
moves on to college. University of Califo~.ia
-Rebuttal to Argument in'Favor of .Proposition 78
They're at ii again. The politicians want to raise more Businesses, which also benefit from subsidized educa-
funds for higher education. What this really means is that tion, have long expected taxpayers to pay to train their
a small group--those who will actually use the educa- employees. The time has come for these businesse,,; to
tional system--will benefit, While a large group--Cali- contribute directly to this educational training.
fornia'taxpayers--will foot the bill. We urge you to vote Only two years ago, voters approved $400 million in
NO! ' ' bonds for this same purpose; now the politicians want
Why should taxpayers be forced to subsidize the edu- $600 million more! It is time to stop these unfair subsidies,
cation of a small elite group (teachers, scientists, doctors, which benefit the few at the expense of the many.
engineers,-business people and lawyers). Those who Vote NO on Proposition 78.
benefit from higher education should assume responsibil-
ity for its cost, directly or through voluntary subsidy (such SAM GROVE
as scholarship funds). Currently, all taxpayers, including Libertarian Candidate for U.S. Congress, Sth District
single people, elderly people, and childless couples, are MARK R. PICKENS
forced to pay the bill. Libertarian Candidate for State Senate, 3rd District
6 Arguments printed on this page are the opinions of the authors and have not been checked for accuracy by any official agency ~88
Argument Against Proposition 78
Existing college classrooms sit empty many hours a priorities as they arise, not tie our hands with 9~0-year
week and most of the summer. We wouldn't need'more commitments to pay off bonds.
classrooms if each room was used eight hours a day, five Payments of principal and interest on outstanding
days a week, 48 or 50 weeks a year, the same schedule bonds totaled $515 MILLION in the 1987-88 budget.
most people work. Bonds already authorized but not yet issued will add $372
Bonds are a bad way to buy buildings and equipment. MILLION when sold. The nine bond issues on this ballot
For $600 MILLION worth of classrooms and equipment would add $295 MILLION, for a total of $1.1 BILLION
we will pay over 9.0 years $,4,80 MILLION,in interest, for each year. On a pay-as-yoU-go basis $1.1 BILLION would
a total of over $1 BILLION! Pay as you go would cut the finance all of the projects in the nine bond issue, s, schools,
cost almost in half. prisons, housing, etc., in three years.
There is no surplus in the state budget this year. The By placing capital expenditures on the ballot as bond
$54 MILLION needed to pay off these bonds will have to issues the Legislature postpones major costs to future
come from a tax increase or a cut somewhere else in years, leaving more room in the current budget for
ooondoggles with low priority or lacking popular support.
orfuture raise budgets, taxes? Would you cut health, welfare, or salaries; The Legislature trots out the Sacred cows on the ballot
where the voter can see them, while hiding in the fine
In 1986 the voters approved $400 MILLION in bonds
for similar purposes. The universities and colleges have a print of the budget the white elephants such as the
wish list of several BILLION. If .we approve this bond legislative slush fund.
issue they will be back for more next election. Interest income from state bonds is exempt from
Bond payments must be made for the next 20 years federal and state income taxes, a loophole for wealthy
regardless of other needs or available state revenues 'investors to avoid paying their fair share of taxes, thus
(mostly from the income and sales taxes). If a disaster shifting the tax burden to working people. By voting for
strikes--drought, a major earthquake, a depression--hun- these bonds' you are voting for a higher share of federal
dreds of millions in emergency assistance will be re- and state taxes for you.
quired, at the same time that state revenues from income Vote NO on the Higher Education bonds!
and sales taxes drop because of the disruption of the state WILLIAM McCORD
economy. We need to maintain flexibility to meet new Retired State Administrator ,
Rebuttal to Argument Against Proposition 78
The opponent's argument against Proposition 78 ig- Bond financing is particularly sensible given the low
notes the critical construction needs of California's col- interest rates currently available. California voters have
leges and universities, and the benefits they provide to repeatedly approved bond issues over the years for high-
priority long-term state needs. To argue that the' state
our economy and all Californians. Proposition 78 will help should not use bonds to finance long-term construction
our colleges and universities:'
· Keep pace with increasing student enrollments, projects is like saying that individuals should not use
mortgages to finance their homes
· Renovate existing buildings, build new classrooms Proposition 78 will not diminish California's financial
and libraries, stability. It will fund urgently needed improvements to
· Modernize laboratories to keep up to date with our college campuses and maintain the quality of Califor-
scientific development, nia's higher educa~on programs.
· Make critical earthquake, health and safety improve- VOTE YES ON PROPOSITION 78.
ments. GARY K. HART
The projects to be financed by Proposition 78 were state Senator, 18th District
developed after careful planning and study by not just the Chairman, Senate Education Committee
universities, but also the Governor and the Legislature] w. ANN REYNOLDS
Bond funds will be used to construct buildings which will Chancellor
last well into the 21st century, long after the bonds are' California State University
repaid. DAVID MERTES
Bond funds are commonly used by government and Chancellor
private industry to finance long-term construction needs. California Community Colleges
G88 Arguments printed on this page are the opinions of the authors and have not been checked for accuracy by any official agency 7
Official Title and Summary Prepared by the Attorney General
1988 SCHOOL FACILITIES BOND ACT. This act provides for a bond issue of eight hundred million dollars
($800,000,000) to provide capital outlay for construction or improvement of public schools.
Final Vote Cast by the Legislature on SB 22 (Proposition 79)
Assembly: Ayes 70 Senate: Ayes 33
Noes 1 Noes 0
Analysis by the Legislative Analyst
Background Proposal
The State School Building Lease-Purchase Program This measure .authorizes the state .to sell $800 million in
provides most of the money used by local public school general obligation bonds to pay for (1) the construction,
districts to construct, reconstruct, or modernize school reconstruction, or modernization of elementary and sec-
facilities. In order to receive money under this program, ondary school facilities through the State School Building
school districts must (1) meet specified eligibility re- 'Lease-Purchase Program, (2) abatement of hazardous
quirements, and (2) contribute matching funds, based on asbestos in school facilities, and (3) air-conditioning
the maximum amount of fees which they are allowed to equipment and insulation materials for year-round
collect from developers, as discussed below, schools. General obligation bonds are backed by the state,
School districts also may raise funds for school facilities
meaning that the state will use its taxing power to as~gure
construction and reconstruction in three other ways. that enough money is available to pay off the bonds. The
These are:
1. The Mello-Roos Community Facilities Act of 1982. state would use General Fund revenues to pay the
Since January 1, 1983, school districts have been principal and interest costs of the bonds. General Fund
authorized to form special "community facilities" revenues come primarily from the state corporate and
districts. Subject to the approval of two-thirds of the personal income taxes and the state sales tax.
voters, these special districts can sell bonds to raise At least $580 million raised from the bond sales would
revenue to build new, or rehabilitate existing, school be used for the construction of new school facilities.
facilities. The bonds are paid off by a tax levied upon The remaining $220 million would be allocated initially
the real property located within the special district, as follows:
2. Local General Obligation Bonds. School districts · $100 million could be used for the reconstruction or
are generally authorized to incur bonded indebted- modernization of existing school facilities.
ness for school facilities construction purposes, sub- · $100 million could be used for the identification,
ject to a two-thirds voter approval. However, only assessment, and abatement of hazardous asbestos
majority voter approval is required for bonds issued materials.
for the purpose of repairing, reconstructing, or · $20 million could be used to buy and install air-
replacing public school buildings determined to be conditioning equipment and insulation materials for
structurally unsafe 'for school use. eligible school districts with year-round school pro-
3. Developer Fees. Since January 1, 1987, school dis- grams.
triers have been authorized to impose developer If any of these allocations exceed the amount nece:;sary
fees. The maximum fee is currently $1.53 per square for these purposes, the extra amount may be used for any
foot on new and other construction of residential of the above purposes, including new construction. ,
buildings, and 25 cents per square foot on new Fiscal Effect
construction of commercial or industrial buildings.
These fees Can be used only for construction or This measure will have a fiscal effect whether it is
reconstruction of school facilities, approved or .rejected by the voters.
School Facilities Funding Needs. The total number of A. Fiscal Effect if Approved by the Voters
additional school facilities needed to meet current enroll- · Direct Costs of Paying Off the Bonds. For these
ment in the state is not known. As of May 25, 1988, types of bonds, the state typically would make prin-
however, applications submitted by school districts for cipal and interest payments from the state's General
state funding of new school construction projects totaled Fund over a period of about 20 years. If all of the
approximately $2.9 billion. In addition, applications for bonds were sold at an interest rate of 7.5 percent:, the
state funding to reconstruct or modernize school facilities cost would be about $1.4 billion to pay off both the
totaled approximately $1.1 billion. At the time this anal- principal ($800 million) and interest (about $630
ysis was written, June 1988, there was $800 million in state million). The average, payment for principal and
money available to fund these requests, interest would be about $70 million per year.
8 G88
· Borrowing Costs for Other Bonds. By increasing the B. Fiscal Effect if Not Approved by the Voters
amount which the state borrows, this measure may · Local Matching Contribution Would Be Eliminated.
cause the state and local governments to pay more If this measure is not approved by the voters, existing
under other bond programs. These costs cannot be law provides for termination of the requirement that
estimated, matching contributions be made by School districts
participating in the State School Building Lease-
· State Revenues. The 'people who buy these bonds Purchase Program. The loss'of local matching funds
are not required to pay state income tax on the would result either in (!) fewer schools being con-
interest they earn. Therefore, if California taxpayers strueted under this program, or (2) potential, un-
buy these bonds instead of making taxable invest- known additional state cost to replace the local
ments, the state would Collect less taxes. This loss of matching funds, if the same level of school construe-
revenue cannot be estimated, tion is maintained.
Text of Proposed Law
This law proposed by Senate Bill 22 (Statutes of 1988, Ch. 42) is Treasury, all of the money in the fund exclusive of funds transferred
submitted to the people in accordance with the provisions'of Article pursuant to subdivision (f) of Section 6217 of the Public Resources
XVI of the Constitution.. Code, not in excess of the principal of and interest on the bonds then
due and payable, except as herein provided for the prior redemption of
This proposed law adds sections to the Education Code; therefore, the bonds, and, in the event the money so returned on the dates of
new provisions proposed to be added are printed in italic ,type to maturity is less than the principal and interest then due and payable,
indicate that they are new. then the balance remaining unpaid shall be returned to the General
PROPOSED LAW Fund in the State Treasury out of the fund as soon thereafter as it shall
become available.
SECTION 1. Chapter 21.9 (commencing with Section 17698) is
17698.30. All money deposited in the fund under Section 17732 and
added to Part 10 of the Education Code, to read:
pursuant to Part £ (commencing with Section 16300) of Division 4 of
CHAPTER 21.9. 1988 SCHOOL FACILITIES BOND ACT Title 2 of the Government Code shall be available only for transfer to
17698. This chapter may be cited as the 1988 School Faciliiies Bond the General Fund, as provided in Section 17698.25. When transferred to
Act.. the General Fund, the money shall be applied as a reimbursement of
17698.10. The State General Obligation Bond Law (Chapter 4 the General Fund on account of principal an'd interest due and payable
(commencing with Section 16720) of Part 3 of Division 4 of Title 2 of the or paid from the General Fund on the earliest issue of school building
Government Code) is adopted for the purpose of the issuance, sale, and bonds for which the General Fund has not been fully reimbursed by the
repayment of, and otherwise providing with respect to, the bonds transfer of funds.
authorized to be issued by this chapter, and the provisions of that law 17698.35. There is hereby appropriated from the General Fund in
are included in this chapter as though set out in full in this chapter, All the State Treasury for the purpose of this chapter, an amount that will
references in this chapter to "herein" shall be deemed to refer both to equal the following:
this chapter and that law. (a) The sum annually as will be necessary to pay the principal of
17698.15. As used in this chapter, and for the purposes of this and the interest on the bonds issued and sold pursuant to the provisions
chapter as used in the State General Obligation Bond Law, the of this chapter, as the principal and interest become due and payable.
following words shall have the following meanings: (b) The sum as is necessary to carry out Section 17698.40, which sum
(a) "Committee" means the State School Building Finance Commit- is appropriated without regard to fiscal years.
tee created by Section 15909.
(b) "Board" means the State Allocation Board. 17698.40. For the purposes of carrying out the provisions of this
(c) "Fund" means the State School Building Lease-Purchase Fund. chapter, the Director of Finance may, by written order, authorize the
17698.20. For the purpose of creating a fund to provide aid to school withdrawal from the General Fund of an amount or amounts not to
districts of the state in accordance with the provisions of the Leroy F. exceed the amount of the unsold bonds which the committee has by
Greene State School Building Lease-Purchase Law of 1976 (Chapter 22 resolution authorized to be sold for the purpose of carrying out this
(commencing with Section 17700)), the purposes authorized under chapter. Any amounts withdrawn shall be deposited in the fund to be
Section 17698.98, and of all acts amendatory thereof and supplementary allocated by the board,in accordance with this chapter. Any moneys
thereto, and to provide funds to repay any money advanced or loaned made available under this section to the board shall be returned by the
to the State School Building Lease-purChase Fund under any act of the board to the General Fund, together with interest at the rate paid on
Legislature, together with interest provided for in that act, and to be moneys in the Pooled Money Investment Account, for moneys received
used to reimburse the General Obligation Bond Expense Revolving from the sale of bonds sold for the purpose of carrying out this chapter.
Fund pursuant to Section 16724.5 of the Government Cod~, the commit- 17698.50. Upon request of the board from o'me to time, supported by
tee shall be and is hereby authorized and empowered to create a debt or a statement of the apportionments made and to be made under Chapter
debts, liability or liabilities, of the State of California, in the aggregate 22 (commencing with Section 17700), the committee shall determine
amount of eight hundred million dollars ($800,000,000), not including whether or not it is necessary or desirable to issue any bonds authorized
the amount of any refunding bonds issued in accordance with Section under this chapter in order to fund the apportionments, and, if so, the
17698.93, in the manner provided herein, but not in excess thereof amount of bonds to be issued and sold. The entire amount authorized by
17698.25. All bonds herein authorized, which shall have been duly this chapter shall become available for apportionment on December 1,
sold and delivered as herein provided, shall constitute valid and legally 1988. The Treasurer shall sell the bonds so determined at such different
binding general obligations of the State of California, and the full faith times as necessary to service expenditures required by the apportion-
and credit of the State of California is hereby pledged for the punctual ments.
payment of both principal and interest thereof 17698.55. The board may request the Pooled Money Investment
There shall be collected annually in the same manner and at the Board for a loan from the Pooled Money Investment Account, in
same time as other state revenue is collected such a sum, in addition to accordance with Section 16312 of the Government Code, and may.
the ordinary revenues of the state, as shall be required to pay the execute those documents required by the Pooled Money Investment
principal and interest on the bonds as herein provided, and it is hereby Board to obtain and repay the loan. The loan shall be deposited in the
made the duty of all officers charged by law with any duty in regard fund for the purpose of carrying out the provisions of this chapter. The
to the collection of the revenue, to do and perform each and every act amount of the loan shall not exceed the amount of the unsold bonds
which shall be necessary to collect the additional sum. that the committee, by resolution, has authorized to be sold for the
On the several dates of maturity of the principal and interest in each purposes of this chapter.
fiscal year, there shall be transferred to the General Fund in the State Continued on page 114
G88 9
79 1988 School Facilities, Bond Act
Argument in Favor of Proposition 79
California voters have another opportunity--without asbestos. Asbestos is a major health hazard. Our teachers
raising taxes--to continue the work of meeting the state's and Children spend 6 to 8 hours a day in these schools. The
school facilities crisis by approving this companion mca- asbestos hazard must be corrected to protect their health.
sure to Proposition 75 enacted by the voters in June. Funding for school construction in California is a
California is facing a severe and growing problem in partnership between local communities and the sta*te.
Using bonds to pay for schools is a safe and financially
providing adequate, safe and modern public school faeil- sound California tradition. Your "YES" vote on Proposi-
ities for our children. Some public schools are already tion 79 will not raise taxes! Your "YES" vote will fulfill t'he
overcrowded. Over 140,000 new students are entering state's commitment to safe schools and will help to relieve
Califoi~nia public schools each year. California must add overcrowding in rapidly growing districts.
300 new classrooms each month to house these students, Your "YES" vote on Propos~ition 79 will help build new ·
reduce existing overcrowding and prevent double scs- schools, repair old facilities and reduce the school asbes*tos
sions, health hazard.'
Our public schools are also aging. Well over half of our Please join us in voting "YES" on Prbposition 79.
schools are 25 years old or older. Roofs, heating systems, GEORGE DEUKMEJIAN
electrical systems and other structural repairs are needed Governor
MARIAN BERGESON
to ensure the safety of existing facilities and protect our
State Senator, $7th District
investment in school buildings. JACKIE SPEIER
In addition, many of California's 7,000 schools contain Member of the Assembly, 19th District
Rebuttal to Argument in Favor of Proposition 79
· Asbestos causes cancer. Overcrowding prevents learn- all parents a choice between public and private schools.
ing, incites Classroom misbehavior that. culminates in When public schools do not educate .students, whose
discourteous spectacles at graduation ceremonies, and interest is served by forcing pupils to attend them?
creates an inviting atmosphere for gang violence that Instead of increasing bonded debt to trap more clhil-
makes the mind-numbing consumption of drugs an un- dren in an environment of failure, frustration, and fear,
derstandable--though deplorable--habit, we should offer parents a choice. Available education
These conditions are 'outrageous! Yet educators and our funds average almost $4,700 per student. That is enough
Governor refuse to release children from unsafe schools to buy quality schooling.
desPite State Department of Education figures that show Who benefits from the intellecti~al and financial waste
facility needs will NOT be met during the next five years produced by compUlsory assignment to government
even.with approval'of these bond issues at each election, schools? Children don't..But tenured, tax-supported,
Does someone have a secret plan for restoring lost unionized,, bureaucratically protected, politically power-
years to children's lives? Declaring that public schools ful educators do. And we ignore the consequences.
might be good'somedaY only denies opportunity to Send politicians a message to free children from an
children who need quality education now. unproductive school monopoly. Please vote NO.
A recen~t (Los Angeles) Times Mirror poll revealed that ROGER MAGYAR
' ' by a significant margin voters favor a voucher-plan giving State Director, Parents CARE
Arguments printed on this page are the opinions of the authors and have not been checked for accuracy by any official agency G88
1988 SChool Facilities Bond Act
Argument Againgt Proposition 79
1) Five months ago we charged $2 billion worth of Public school parents said that with $600 in aid they would
purchases. This election we are being urged to sign for $3 remove their children from public school and send them
billion more. Did the bank place a limit on our credit to private school.
card, or can we just go' on imitating the carefree spenders If one out of four pupils accepted $600 to stop using a
in Washington, D:C.? service that costs many times that amount, taxpayers
· 2) Why should taxpayers STATEWIDE pay the costs of could save at least $3 billion eVer~t t/ear# And that is just
constructing LOCAL schools? In June of 1986, voters the beginning.
· ~ (a) Those transfers mean we no longer have crowded
approved a proposition that allows local corhmunities to public school classes: so, we save billions more in con-
authorize bonds for new school construction, struction costs (and bonded indebtedness). (b) Class size
If taxpayers in local communities are not willing to tax decreases. (c) A portion of the billions saved can be used
themselves to build schools, why do our legislators and to enrich programs for those'in public schools or to
Governor insist that someone else should pay for it? increase transfer opportunities for children from low-
Overburdened members of the middle class and senior income families. (d) The remainder can be used for
citizens living in retirement should not be obligated to highway construction, facilities to increase our water
provide schools' in distant parts of the state. They should supplies, or lower taxes.
only have to pay their fair share of costs for local schools. Sound far-fetched? Only if you listen, to the public
Ttlis proposition does not assure construction money education empire. Children trapped in crowded class-
for schools in YOUR community. It raises funds for rooms give educators the perfect excuse to demand more
communities SOMEWHERE in the state. Sacramento money from taxpayers. The system is bad for children,
decides where "somewhere" is. but it works very well for tenured educators. Those
3) There is a better .and rr/uch less expensive way to students provide enough tax-funded ransom each year to
rescue children from overcrowded conditions, maintain almost half a million school employees.
If public educators are so concerned about the damage A vote against this bond issue records your support for
suffered by students who are forced to endure crowded fiscal restraint, local control of- education, and greater
classrooms~ instead of demanding more money for their opportunity for students now held in the grip of an
education empire, why don't they allow parents to take a insulated school bureaucracy. It is time for us to approach
child's share of education money and search elsewhere education more intelligently instead of more expensively.
for less crowded schools?. Please vote NO.
We pay an enormous cost for maintaining the public ROGER MAGYAR
school monopoly. A 1986 Gallup Poll reported that 27% of State Director, Parents CARE
Rebuttal to Argument Against Proposition 79
· A "yes" vote on Proposition 79 will not raise taxes. · Local school communities are doing' their part to pay
· Over 1 million new pupils will enroll in California for new classrooms but cannot possibly meet the
public schools over the next six years, swelling kin- need alone. A "yes" vote on Proposition 79 continues
dergarten through grade 12 enrollments to 5,500,000. .the successful state/local partnership that has helped
· Proposition 79 will help your community to build build schools throughout 'California for generations.
new schools, repair old schools or remove'hazardous · Everyone benefits from an efficient and effectix~e
asbestos, public education system. Our investment in public
schools promotes a healthy economic future for all
· School distriCts are prohibited by law from using Californians.
lottery funds for construction. Lottery funds are · Using bonds to build schools for the.next generation'
being used as the voters intended: to improve class- of Californians is a fair deal for taxpayers. Vote YES
room instruction, on Proposition 79.
· Proposition 79 ensures the most cost-effective use of GEORGE DEUKMEJIAN
taxpayers' dollars for building schools. Proposition 79 Governor
uses the same financing mechanism preferred by BILL HONIG
private industry to fund its building and maintenance State Superintendent of Public Instruction
projects. MARIAN BERGESON
State Senator, 37th District '
G88 Arguments printed on this page are the opinions of the authors and have not been checked for accuracy by any official agency ,11
0' New Prison Construction Bond Act of 1988
Official Title and Summary Prepared by the Attorney General
NEW PRISON CONSTRUCTION BOND ACT OF 1988. This act provides for a bond issue of eight hundred
seventeen million dollars ($817,000,000) to provide urgently needed funds to relieve overcrowding in the stat,~'s
prisons, county jails, and Youth Authority facilities through new construction~ ~/
Final Vote Cast by the Legislature on SB 468 ~(Proposition 80)
Assembly: Ayes 66 senate: Ayes 33
Noes I Noes 0
Analysis by .the Legislative Analyst
Background County Jails. The Board of Corrections estimates that
In recent years there has been a large increase in the this bond measure, combined with existing state bGnd
number of people sent to the state's adult prisons and measures and money contributed by the counties, wo~ld
youth correctional institutions and to county jails. This permit renovation and expansion of county jail facilities
trend is expected to continue. These facilities were not to house 65,000 inmates, statewide by 1990. 'Even with
designed to house this increase, these steps, the Board of Corrections states th6re will be
Adult Prison System. In 1981 the prison system had a' shortage of space for an estimated 11,500 .inmates in
room to house 23,000 inmates. By June 1988the state had county jails at that time. By 1995, the board estimates tlhat
expanded the system to house 43,000 inmates.. At that the statewide average daily jail population will increase to
time, however, the system held about 67,000 inmates. By about 105,000 people.
July 1993 the Department of Corrections expects an Proposal
inmate population of about 93,000.
The state is addressing the prison capacity problem in This measure authorizes the state to sell $817 million of
several ways. In most prisons, the department is housing general obligation bonds for acquisitiofi, ~onstruction,
two inmates in cells intended to house only one. The renovation, remodeling, and deferred maintenance of
department has also converted gymnasiums, classrooms state youth and adult correctional facilities-and county
and other space into temporary dormitories. In addition, jails. The money would be deposited in the 1988 Prison
since 1981, the state has committed $2.5 billion from three Construction 'Bond' Fund, created by this measure. Gen-
sources to increase the prison capacity to 51,000 beds. eral obligation bonds are backed by the state, mean~ing
About $1.2 billion of the money for the new state that the state will use its taxing POWer to assure that
prisons has come from prison construction bond funds enough money is available to pay off the bonds. The si:ate
approved by the voters and about $100 million from the will use General Fund revenues to pay the principal and
state's General Fund. The state has financed the remain- interest costs on the bonds. General Fund revenues come
lng amount, about $1.2 billion, using lease-revenue bonds, primarily from the state corporate and personal income
These lease-revenue bonds are repaid from the state's taxes and the state sales tax.
General Fund, and are not subject to approval by the This measure:
voters. · Allows, with specified notification to the Legislature,
In addition to these steps, the department plans to proceeds frOm the bond sale to be transferred to
build more prisons, to improve existing prisons, and to prison construction bond funds approved by the
complete new prisons noTM under construction. These voters in 1981, 1984, and 1986.
Steps will raise the total capacity to 70,000 inmates. The · Provides for $40 million to be available to the Board
department expects this work to cost almost $1.7 billion, of Corrections to fund certain county jail projects and
The department plans to fund this effort with money to pay for administrative costs associated with prior
from this bond measure, a future bond measure and county jail bond measures. In 1984 when the Legis-
lease-revenue bonds, lature passed the County Jail Capital Expenditure
Youth Correctional Institutions. The state's existing' Bond Act, it was expected that the $40 million would
youth correctional institutions were built to house about ~become available from interest earnings on those
5,900 wards. In June 1988, there Were about 9,000 wards in 'bond funds and other bond funds already approved '~.
these institutions. By June 1992, the Department of'the by the voters. Those interest ear~ngs did not be-
Youth Authority expects this number to increase to 9,800. come available because of changes in federal tax laws.
In order to house this additional population, the state This bond measure would replace those lost interest
currently is building facilities to house about 500 wards earnings.
and plans to construct additional facilities for 2,400 wards. The proceeds remaining in the 1988 Prison Construc-
The department expects these additional facilities to cost tion Bond Fund would be used to buy land and construct,
about $260 million. The department also. plans to over- remodel, and maintain youth and adult correctional
crowd all institutions, existing and planned, .by about 12 facilities, as determined by the Governor and the L,~gis-
percent, lature. The Legislature already has approved (contingent
G88
upon passage of this bond measure) (1) $147 million for be about $1.5 billion to pay off the principal ($817 million)
construction of a prison in northern Los Angeles County and interest (about $650 million). The average payment
and (2) about $43 million in the 1988 Budget Act for' would be about $70 million per year.
maintenance and alteration of existing prisons and for Borrowing Costs for Other Bonds. By increasing the
administrative costs associated with the prison construc- amount which the state borrows, this measure may cause
tion program, the state and local gove~:nments to pay more under other
bond programs. These costs cannot be estimated.'
Fiscal Effect State Revenues. The people who buy these bonds are
Direct Cost of Paying Off the Bonds. .For these types not required to pay state income tax on the interest they
of bonds, the state typically would make principal and earn. Therefore, if California taxpayers buy these bonds
interest payments from the state's General Fund over a instead of making taxable investments, the state would
period of about 20 years. If all of the authorized bonds collect less taxes. This loss of revenue cannot be esti-
were sold at an interest rate of 7.5 percent, the cost would mated.
Text of Proposed Law
This law proposed by Senate Bill 468 (Statutes of 1988, Ch. 43), as of the Statutes of 1984, as amended, to the extent that those projects have
amended by SB 406 (Statutes of 1988, Ch. 386), is submitted to the People no't received full funding and for any costs associated with the sale of
in accordance with the provisions of Article XVI of the Constitution. bonds and any administrative costs incurred by the Board of Correc-
This proposed law adds sections to the Penal Code; therefore, new tions in the administration of the County Jail Capital Expenditure
provisions proposed to be added are printed in italic type to indicate Bond Acts of 1981 and 1984 and the County Correctional Facility
that they are new. Capital Expenditure Bond Act of 1986.
(c) Notwithstanding subdivision (b) of Section 11 of Chapter 1519 of
PROPOSED LAW . the Statutes of 1986 or any other provision of law to the contrary, and
subject to the annual Budget Act appropriations by the Legislature,
SEC. 2. Chapter 15 (commencing with Section 7400) is added to a~dministrative costs shall not exceed l % percent of the amount allocated
Title 7 of Part 3 of the Penal Code, to read:
Jor any costs incurred by the Board of Corrections in the administration
CHAPTER 15. NEW ,PRISON CONSTRUCTION BOND ACT OF 1988 of the County Jail Capital Expenditure Bond Acts of 1981 and 1984 and
7400. This chapter shall be known and may be cited as the New the County Correctional Facility Capital Expenditure Bond Act of 1986.
Prison Construction Bond Act of 1988. 7407. (a) All bonds herein authorized, which shall have been duly
7401. The State General O~ligation Bond Law is adopted for the sold and delivered as herein provided shall constitute valid a nd legally
purpose of the issuance, sale and repayment of, and otherwise providing binding general obligations of the State of California and the full faith
with respec! to, the bonds authorized to be issued by this chapter, and and credit of the State of California is hereby pledgee]for the punctual
the provisions of that law are included in this chapter as though set out payment qf both the principal thereof and interest thereon.
in full in this chapter except that notwithstanding anything in the
State General Obligation Bond L~w the maximum maturity of the (b) There shall be collected annually in the same manner and at the
bonds shall not exceed 20 years from 'the date of each respective series. same time as other state revenue is collected such a sum, in addition to
the ordinary revenues of the state as shall be required to pay the
The maturity of each respective series shall be calculated from the date principal of and interest on those bo'nds, and it is hereby made the duty
of that series.
7402. There is in the State Treasury the 1988 Prison Construction of all officers charged by law with any duty in regard to the collection
Fund, which fund is hereby created. The proceeds of the sale of bonds of that revenue to do and perform each and every act which shall be
authorized by this act shall be deposited in the fund, and may be necessary to collect that additional sum.
transferred upon request of the Department of Corrections and upon (c) All money deposited in the fund which has been derived from
approval of the Director of Finance, to the New Prison Construction premiums or accrued interest on bonds sold shall be available for
Fund established by Section 7102, the 1984 Prison Construction Fund transfer to the General Fund as a credit to expenditures for bond
established by Section 7202. or the 1986 Prison Construction Fund interest.
established by Section 7302 '~r any combination thereof If the moneys (d) All money deposited in the fund pursuant to any provision _of
are so transferred, 'fund'/means the New Prison Construction Fund law retluirin6 repayments to the state which are financed by the
1984 Prison Construction Fund or 1986 Prison Construction Fund o~ proceeas of the bonds authorized by this chapter shall be available for
any combination thereof, as i~ appropriate. At least 30 days prio'r to transfer to the General Fund. When transferred to the General Fund
requesting a transfer as ~uthorized by this section, the Department of that money shall be applied as a reimbursement to the General Fund on
Corrections shall notify the chairpersons of the fiscal committees in account of the principal of and interest on the bonds which has been
each house of the Legislatur~ and the Chairperson and the Vice paid from th'e General Fund.
Chairperson of the Joint Legislative Budget Committee.
7408. Notwithstanding Section 13340 of the Government Code, there
7403. The '1988 Prison Construction committee is hereby created., is. hereby appropriated from the General Fund in the State Treasury for
The committee shall consist of the Controller the Treasurer, and the the purpose of this chapter such an amount as will equal the following:
Director of'Finance. That committee shall be 'the "committee," as that (a) That sum annually as will be necessary to pay the principal of
term is us-ed in the State General Obligation Bond Law. and the interest on the bondd issued and sold pursuant to this chapter.
The Department of Corrections is the "board"for the purpose of the (b) That sum as is necessary to carry out the provisions of Section
State General Obligation Bond Law and this chapter. 7409, which sum is appropriated without regard to fiscal years.
7404. The committee is hereby authorized and empowered to create 7409. For the purpose of carrying out this chapter the Director _of
a debt or debts, liability or liabilities of the State of California in the Finance may by executive order authorize the with'~rawal from the
aggregate principal amount of eight ~undred seventeen million'dollars General Fund of an amount or amounts not to exceed the amount of the
($817,000,000), exclusive of refunding bonds, in the manner provided in unsold bonds which the committee has by resolution authorized to be
this chapter. That debt or debts liability or liabilities, shallbe created sold for the purpose of carrying out this chapter. Any amounts
for the purpose of providing th~ f~nd to be used for the object and work withdrawn shall be deposited in the fund and shall be disbursed by the
specified in Section 7406. committee in accordance with this chapter. Any money made available
7405. The committee ma~t determine whether or not it is necessary or under this section to the board shall be returned by the board to the
desirable to issue any bonds authorized under this chapter, and if so, General Fund from moneys received from the sale of bonds sold for the
the amount of bonds then to be issued and sold. The committee may purpose ode carrying out this chapter. Those withdrawals from the
authorize the Treasurer to sell all or any part of the bonds herein General~undshallbereturnedtotheGeneralFundwithinterestat'the
authorized at such time or times as may be fixed by the Treasurer. rate which would otherwise have been earned by those sums in the
7406. (a) Except asprovided in subdivi§ion (b) the moneys in the Pooled Money Investment Account.
fynd shall be used for the acquisition, construction, 'renovation, remod- 7410. The board may rdquest the Pooled Money Investment Board to
make'a loan from the Pooled Money Investment Account in accordance
eling,'and deferrea maintenance of state youth and adult correctional with Section 16312 of the Government Code for t]~e purposes of
facilities. ' .
(b) Of the moneys in the fund, forty million dollars($40, O00, O00) is carrying out the provisions of this chapter. Thd amount of the request
hereby appropriated to the Board of Corrections to fund those projects shaft not exceed the amount of the unsold bonds which the committee
entitled to be funded under subdivision (c) of Section 3 o£ Chapter 444 ~Continued on page 114
G88 13
Argument in Favor of Proposition 80
In the past ten years the number of felons in our state build more prison space so that we can remove criminals
prisons has increased from 21,000 to almost 75,000 due to from neighborhoods and keep'them where they belong.
the strong enforcement of new, tough laws. However, our This bond measure will cost less than $3 per year for
state prisons are built to house only about 46,500 eon- each Californian, and will not cause any tax increase. This
victed felons, is a small price to pay to keep convicted felons away fi'om
California's institutions are stir seriously overcrowded, our families and our homes.
If you want fewer criminals on the streets and more
placing our eour~tgeous correctional officers and staff in criminals behind bars, vote ~'YES" on Proposition 80.
constant danger. Passage of this bond measure is vital for
GEORGE DEUKMEJIAN
the safety of our communities, law-abiding citizens and Governor
our correctional officers and staff. ROBERT PRESLEY
In 39 other states~ the courts have issued orders limiting State Senator, 36th District
the prison population. We must have the funds provided Chairman, Joint Legislative Committee on
Prison Construction and Operations
by Proposition 80 to build additional prison facilities--or
LARRY STIRLING
the courts may begin to let felons out! We must prevent Member of the Assembly, 77th District
that in California. These bonds will make it possible to C~air, Assembly Committee on Public Safety
Rebuttal to Argument in Favor of Proposition 80~
As usual, politicians in Sacramento are Using scare Yes, there are unemplo~,ed People .who steal to ,live
tactics to win approval of a very expensive State prison mbecause of taxes, government regulations, and l.'ibor
bond. laws that keep businesses from creating jobs.
Don't be afraid to vote NO. Instead, be afraid to vote Any rise in crime has been directly caused by' the
"yes" and see more of' the same of Califbrnia's failed actions of the state and federal governments.' People are
"justice" system, equal before the law, but the uniqueness of each ind/ivid-
There is something wrong when the population grows ualcannot continue to be thwarted by politicians~ and
only 21% while the number of alleged felons grows 257% bureaucrats.
over a ten-year period. Either there is something wrong The Governor and his legislative aries turn blind eyes
with the people, or something is wrong-with the statistics, to alternatives, to incarceration and' instead unwittingly
We do not believe that tens of thousands of evil felons act to turn California into a pblice state. VOTE NO on
have moved to California in the last ten. years. Govern- Proposition 80.
ment officials have acted to turn more people into
TED BROWN
criminals by making more of our private actions illegal. Chairman, Libertarian Party of California'
Yes, there is more crime--because drug addiCts have to Candidate for U.S. Congress, 22nd District
steal and kill to supPort their habits (which are made KIM J. GOLDSWORTHY
expensive by government's "war on drugs"). Southern Vice Chairman, Libertarian Party of Califo',~nia
Yes, there are gangs terrorizihg the streets--because Candidate for U.S. Congress, 30th District
California's government educational system has failed tO WILLIAM J. FULCO .
motivate inner city youths. 'Libertarian Ca.ndidatefor .U.S. Congress, 27th Districl~
].4 Arguments printed on this page are the opinions of the authors and have not been checked for accuracy by any official agency G88~
New Prison Construeti°n Bond Act of 1988 80
Argument Against Proposition 80
Proposition 80 asks for $817 million in bonds for the business by making their occupation unprofitable.
acquisition, construction, and renovation of state adult The only people who should be sent to prison are those
and youth correctional facilities. We urge you to vote NO. convicted of violating the rights of other people. This
Voters .approved $500 million in bonds for the same group would include murderers, rapists, thieves, defraud-
reason in November 1986, only two years ago. We wonder ers, etc. The purpose of prison should not just be deten-
what the politicians and bureaucrats have used this much tion, however. Criminals must be made responsible for
their actions by paying restitution to their victimsmand
money for in such a short amount of time. .. to the taxpayers for their room and board while in prison.
Instead of building more prisons, we must completely Currently it costs more to keep people in prison than to
reevaluate the criminal "justice" system. California has a house them in luxury condos. To solve this problem, in
higher percentage of. its residents behind bars than almost many parts of the country, governments are contracting
any other political subdivision in the world, yet violent ' oul~ prison responsibilities to private companies. Since
crimes are on the upswing. Is it the goal of the politicians free enterprise is involved, the businesses have a motiva-
to hide from this problem by locking up more and more tion to keep down costs while providing an acceptable
people? We hope not. service. It would seem a reasonable step to sell Califor-
We believe that the people of California are threatened nia's existing prisons to economically efficient private
because of improper priorities on the part of law enforce- companies and turn over all real criminals to their care
ment. The crime rate continues its spiraling climb due to and control.
the government's "war on drugs." Cracking down on Innovative reforms are needed, not just more of the
bulky, hard-to-conceal marijuana merely drove a drug- same. California's bonded indebtedness rises with each'
craving population to cocaine and "crack" use. Outlawing election due to the massive amounts of bond measures
drugs has raised prices to astronomical levels, forcing presented for voter approval. Now it is time to say NO to
addicts to rob innocent citizens to support their habits. A more of this debt. Vote NO on Proposition 80 and vote
person may spend hundreds of dollars a day for chemicals NO no all the other bond measures on: this ballot.
which cost only a few cents to make. TED BROWN
The profits for drug dealer~ are so high that there is a Chairman, Libertarian Party of California
- Candidate for U.S. Congress, 22nd District
great deal of violence involved in .protecting their KIMJ. GOLDSWORTHY
"markets" and "turfs." This is a clear parallel to the Southern Vice Chairman, Libertarian Party of California
Prohibition-era gangsters of the 1920's. An obvious solu- Candidate for'u.S. Congress, 30th District
tion to at least half the crime, in California would be to WILLIAM J. FULCO
decriminalize drugs and thus put the drug dealers out of Libertarian Candidate for U.S. Congress, 27th District
Rebuttal to Argument Against Proposition $0
The State'~ of California has continued to vigorously DRUG- AND GANG-RELATED VIOLENCE ARE NOT
pursue a prison construction program that has allowed us THWARTED BY OUR INABILITY TO PROVIDE SUF-
to open fourteen new prisons, containing nearly 19,000 FICIENT PRISON SPACE FOR THESE CRIMINALS.
new beds for convicted felons. Is $3 a year for each member of your family worth it to
EVEN WITH THIS TREMENDOUS BUILDING EF- you to remove convicted felons from your neighborhood
FORT OUR PRISON SYSTEM IS STILL 158% OVER and put them in secure state prisons so they won't be able
CAPACITY, PROVIDING THE CONSTANT POTEN- to terrorize you and your family? We think it's a wise and
TIAL FOR PRISON VIOLENCE AND COURT- safe investment. We urge you to vote YES for continued
ORDERED RELEASES OF DANGEROUS AND VIO- public safety by voting YES on Proposition 80.
LENT CRIMINALS. GEORGE DEUKMEJIAN
If Proposition 80 does not pass, there will be no money Governor
to'continue the prison construction .program; since JanU- ROBERT PRESLEY
ary of this year the prison population has increased by State Senator, 36th District
Chairman, Joint Legislative Committee on
almost 200 convicted Felons a week, and is predicted to Prison Construction and Operations
reach 180% of capacity by 1993, or almost 100,000 inmates! LARRY STIRLING
WE MUST GUARANTEE THAT OUR LAW EN- Member oftheAssernbly, 77th District
FORCEMENT AGENCIES' EFFORTS TO STOP THE Chair, Assembly Committee on Public Safety
G88 Arguments printed on this page are the opinions of the authors and have not been checked for accuracy by any official agency 15
California Safe Drinking Water Bond Law of 1988
Official Title and Summary Prepared by the Attorney General
CALIFORNIA SAFE DRINKING WATER BOND LAW OF 1988. This act provides for a bond issue of seventy-five
million dollars ($75,000,000) .to provide funds for improvement of domestic water systems to meet minimum drinking
water standards.
Final Vote Cast by the Legislature on AB 1439 (Proposition 81)
Assembly: Ayes 70 Senate: Ayes 33
Noes 3 Noes 0
Analysis by the Legislative Analyst
Background Water Resources to provide up t° $25 million for grants to
Since 1976, the state has made loans and grants through public agencies that supply drinking water for that
the California Safe Drinking Water Program to help pay portion of the cost of a project that the public agency is
for improvements to local drinking water systems in not capable of repaying. The maximum grant to :any
order to meet state health standards. The state has sold public agency would be $400,000, and the Legislature
· general obligation bonds to raise this money. All but would have to approve each grant. No more than $6
'about $44 million of th.e $350 million authorized by million of the bond money could be used for studies to
previous bond acts will be spent or committed by No- identify Ways of improving local drinking water systems.
vember 1988. Administrative and Legal Costs. The measure would
The Department of Water Resources administers the allow up to $3.8 million of the bond money to be spent for
Safe Drinking Water Program in cooperation with the administrative costs of the Departments of Water Re-
Department of Health Services. sources and Health Services to make the loans. Tl~ese
costs would be repaid from fees charged to the loan
Proposal recipients. In addition, up to $1.1 million of the bond
This measure authorizes the state to sell $75 million of ~ funds could be used to pay legal costs of the Attorney
general obligation bonds to make low-interest loans and General. The Department of Water Resources and the
grants for local drinking water systems. The Department Attorney General also could spend Up to $1.3 million of
of Water Resources would use the money from the sale of the loan repayments to cover ongoing administrative and
the bonds for loans to public and private water suppliers legal costs over the life of the loans.
and grants to public agencies to bring drinking water
quality up to state health standards. The loans and grants Fiscal Effect
could be used for building, improving, or repairing water Net Cost of Paying Off the Bonds. The bonds aul:ho-
systems to meet drinking water standards and for ira- rized by this measure probably would be paid off ow~r a
provements to save water, period of about 35 years, and would be a responsibility of
General obligation bonds are backed by the state, the state's General Fund. The total cost of the b¢,nds
meaning that the state will use its taxing power to assure would be about $200 million~, consisting of $75 million for
that enough money is available to pay off the bonds, principal and $125 million for interest.
Revenues deposited in the state's General Fund would be However, because the loans would be repaid (wi~:h a
used to pay the principal and interest costs on these subsidized rate of interest), the net state cost would be
bonds. General Fund revenues come primarily from the about $110 million, or an average of about $3 million per
state corporate and personal income taxes and the state
year. (The net state cost would consist of $60 million, for
sales tax.
Loans and Grants. At least $45 million of the bond the bonds used for grants and about $50 million for the
money would be available for loans. First priority for the interest rate subsidy on the loans, plus ongoing adm:inis-
loans would go to water suppliers whose facilities pose the trative and legal expenses.) .
most critical public health problems. The maximum loan This estimate assumes that all o~ the bonds would be
to any water supplier would be $5 million, unless the sold at' an average interest rate of 7.5 percent, and that
Legislature raises this limit. The interest rate on these both the bonds and the loans would be paid off over the
loans would be subsidized by an amount equal to one-half same 35-year period in effect under the current Safe
of the interest rate that the state would pay on the bonds. Drinking Water Program.
Thus, the state's interest costs would exceed the interest Borrowing Costs for Other Bonds. By increasing the
that could be charged on the loans, amount which the state borrows, this measure may cause
· Although the remaining $30 million also could be used the state and local governments to 'pay more under oILher
for loans, the measure would allow the Department of bond programs. These costs cannot be estimated.
16 ,G88
State Revenues. The people who buy these bonds are instead of making Other taxable investments, the state
not required to pay state income tax on the interest they would collect less taxes. This loss of revenue cannot be
earn. Therefore, ff California taxpayers buy these bonds estimated.
Text of Proposed Law
This law proposed by Assembly Bill 1439 (Statutes of 1988, Ch. 45), as political subdivision of the state may be any public agency.
amended by Assembly Bill 1720 (Statutes of 1988, Ch. 297), is submitted Article 2. California Safe Drinking Water Program
to the people in accordance with the provisions of Article XVI of the 14010. The proceeds of bonds issued and sold pursuant to this
Constitution. chapter shall be deposited in the California Safe Drinking Water Fund,
This proposed law adds sections to the Water Code; therefore, new which is hereby created.
provisions proposed to be added are printed in italic type to indicate 14011. (a) Notwithstanding Section 13340 of the Government Cod. e,
that they are new. an aggregate amount of seventy-five million dollars .($75,000,000) of tt~e
PROPOSED LAW moneys in the fund are hereby continuously appropriated and shall be
SECTION 1. Chapter 16 (commencing with Section 14000) is used for the purposes set forth in this section and Section 14029.
added to Division 7 of the Water Code, to read: (b) The department may enter into contracts with suppliers having
CHAPTER 16. CALIFORNIA SAFE DRINKING WATER BOND LAW OF 1988 authority to construct, operate, and maintain domestic water systems,
Article 1. General Provisions for loans to suppliers to aid in the construction of projects which will
14000. This chapter shall be known and may be cited as the . enable the supplier to meet, at a minimum, safe drinking water
California Safe Drinking Water Bond Law of 1988. standards established pursuant to Chapter 7 (commencing with Section
14001. The Legislature hereby finds and -declares all of the follow- 4010) of Part 1 of Division 5 of the Health and Safety Code.
(c) Any contract entered into pursuant to this section may include
ing[a) The State Department of Health Services has discovered toxic provisions as agreed bt/ the parties thereto, and the contract shall
chemicals in 126 of California's large public drinking water systems, include, in substance, all of the following provisions:
(b) Many of the chemical contaminants in California's drinking (1) An estimate of the reasonable cost of the project.
(2) An agreement by the department to loan to the supplier, during
water supplies are known or suspected of causing cancer, birth defects, the progress of Construction or following completion of construction as
and other serious illnesses.
(c) New monitoring programs for small public water systems are agreed by the parties, an amount which equals the portion of construc-
expected to identify many new toxic contamination problems. It is lion costs found by the department.to be eligible for a state loan.
(3) An agreement by the supplier to repay the state over a period not
unlikely that these problems can be solved without financial assistance to exceed 50 years, (A ) the amount of the loan, (B) the administrative
from the State of California.
14002. The Legislature further fi_nds and declares that the protec- fee as described in Section 14022, and (C) interest on the principal,
tion of the health, safety, and welfare of the people of California which is the amount qf the loan plus the administrative fee.
requires that water supplied for domestic purposes be at all times pure, (4) An agreement by the supplier, (A ) to proceed expeditiously with,
wholesome, and potable, and that it is in the interest of the people that and complete, the project, (B) to commence operation of the project
the State of California provide technical and financial assistance to the upon completion thereof, and to properly operate and maintain the
end that the people of California are assured a safe, dependable, and project in accordance with the applicable provisions of law, (C) to
potable supply of water for domestic purposes and that water is apply for, and make reasonable efforts to secure, federa[ assistance for
the project, (D) to secure approva7 of the department and of the State
available in adequate quantity at sufficient pressure for health, clean- Department of Health Services before applying for federal assistance in
liness, and other domestic purposes.
14003. The Legislature further find. s and d,e.clares~ t, hat (t is t.he order to maximize and best utilize the amounts of that assistance
intent of the Legislature to provide for the upgraaing o~t. aomestic water available, and (E) to provide for payment of the supplier's share of the
supply systems to assure that all domestic water supplies at least meet cost of the project, if any.
minimum domestic water supply standards established under Chapter (d) Bond proceeds may be used for a grant program in accordance
7 (commencing with Section 4010) of Part 1 of Division 5 of the Health with this chapter, with grants provided to suppliers that are political
and Safety Code. subdivisions of the state that are otherwise unable to meet minimum
14004. As used in this chapter, the following terms shall have the safe drinking water standards established pursuant to Chapter 7
following meanings: (commencing with Section 4010) of Part 1 of Division 5 of the Health
and Safety Code. The total amount of grants made pursuant to this
(a) "Committee" means the Safe Drinking Water Finance Commit- chapter shall not exceed twenty-five million dollars ($25,000,000).
tee created by Section 14032.
(b) "Cost-per-connection" means the total amount of funds in (e) Notwithstanding any other provision, the proceeds of any bonds
grants or loans, or combination there,of, to be provided blt the depart- authorized to be issued under the California Safe_ Drinking Water Bond
ment to a supplier for any project, dtvided by the numoer of service Law of 1976 '(Chapter 10.5 (commencing with Section 13850)), the
connections in the water system. California Safe Drinking Water Bond Law of 1984 (Chapter 10.2
(c) "Department" means the Department of Water Resources. (commencing With Section 13810)), and the California Safe Drinking
(d) "Domestic water system" means a system for the provision to the Water Bond Law of 1986 (Chapter I0. 7 (commencing with Section
public of piped water for human consumption, if the system has at least 13895)) which are' unissued and uncommitted on the effective da~e of
five service connections or regularly supplies water to at least 25 this chapter, shall be used fqr loans and grants to suppliers in
individuals. The term includes any water supply, treatment, storage, accordance with the terms, conditions, and purposes of this chapter.
and distribution facilities under the control of the operator of the '(f) The Treasurer shall determine the interest rate to' be paid on
system, loans issued under the Safe Drinking Water Bond Law of 1976 (Chapter
(e) "Fund" means~the California Safe Drinking Water Fund created 10.5 (commencing with Section 13850)), as required under Section
pursuant to Section 14010. 13867, equal to the average interest rate, computed by the true interest
(f) "Supplier" or "supplier of water" means any person, partner- cost method, paid by the state on general obligation bonds sold
ship, corporation, association, or other entity or political subdivision of pursuant to that chapter up to the effective date of this chapter.
the state which owns or operates a domestic water system. 14012. (a) The department may make state grants to suppliers that
(g) "Federal assistance" means fu~nds available, or which may are political subdivisions of the state, from moneys in the fund
become available, to a supplier either directly or through allocation by available for that purpose pursuant to subdivision (d) of Section 14011,
the state from the federal government as grants or loans for the to aid in the construction of projects which will enable the public
improvement of domestic water systems, lished pursuant to Chapter 7 (commencing with Section 4010) of Part 1
(h) "Treatment works" means any devices or systems used in the agency to meet, at a 'minimum, safe drinking water standards estab-
treatment of water supplies, including necessary lands, which render of Division 5 of the Health and Safety Code. A grant may be made by
water supplies pure, wholesome, and potable for domestic purposes, the department only upon the specific approval of the Legislature.
(i) "Project" means proposed facilities for the construction, improve- (b) Any contract for a grani entered into pursuant to this chapter
ment, or rehabilitation of the domestic water system, and may include may include provisions as agreed by the parties thereto, and the
water supply, treatment works, and all or part of a water distribution contract shall include, in substance, all of the following provisions:
system, if necessary to carry out the purpose of this chapter. (1) An estimate of the reasonable cost of the project.
0') "Public agency" means any city, county, city and county, (2) An agreement by the department to grant to the public agency,
district, joint powers authority, or other political subdivision of the state during the progress of construction or following completion of con-
which owns or operates a domestic water system. For purposes 'of this struction as agreed by the parties, an amount which equals the portion
chapter, Chapter 10.2 (commencing with Section 13810), Chapter 10.5 of construction cobts found by the department to be eligible for a state
(commencing with Section 13850), Chapter 10.6 (commencing with grant. Continued on page 114
Section 13880), and Chapter 10. 7 (commencing with Section 13895) a
G88 17
, California Safe Drinking Water BOnd Law of 1988
Argument in Favor of Proposition 81
Vote yes on Proposition 81,' the California Safe Drinking only to eligible public agencies and the total grant
Water Bond Law of 1988. amount will be capped at $25 milliOn out of the entire
Ensuring safe drinking water and the public health is a bond issue. Grants and loans will be made on the basis of
fundamental responsibility of the state. Citizens have- immediate.health-related problems certified by the
recognized this need and responsibility in the past with partment of Health Services.
their overwhelming approval of d/inking water bond Support for this bond law is widespread and bipartisan.
issues in 1976,. 1984 and 1986. It is supported by the Associati6n Of California Water
Despite these efforts, we still have safe drinking water Agencies, the Health Officers Association of California,
.needs The Department of Health Services' priority' list to the California Municipal Utilities Association, and the'
distribute bond funds, including funds under the recent League of Women Voters.
1986 bond issue, has applications totaling'approximately The Department of Health Services continues to add
one billion dollars. These applications far exceed the community water suppliers to its priority health h~tzard
funds currently available. This means that significant list ~s new sources of contamination are discovered a:ad as
numbers of Californians will continue to drink polluted new drinking water standards are established. This effort
water that fails to meet federal and state public health deserves your. support. While'we will not fully ~solve
standards. The Safe Drinking Water Bond Law i~f 1988 California's diinking water problems with this bond law,
will address this urgent problem, it will help us meet our most immediate needs. The s:~fety
~alifornia's economic growth as well'as our quality of of our communities and the health of our children
life depends upon the availability of safe drinking water deserve no less.
for all of our citizens. The 1988 Safe Drinking Water Bond Support safe drinking water for all Californians. Vote
Law will assist local communities in modernizing their YES on' Proposition 81. '
water systems and meeting direct health threats by BILL LEONARD
bringing their drinking water up to primary drinking Member of theAssembly, 61st District
water standard levels. This bond law will provide a iotal JACK O'CONNELL'
of $75 million in grants and loans. Grants will be provided Member of the Assembly, 35th District
Rebuttal to 'Argument in Favor of Proposition 81
The supporters Of this measure are convinced that the stereo or a refrigerator with a credit card is pai~:dess
state government must be in charge of water programs, too--until the bill arrives. Taxpayers (and their children
and that voters must give a blanket seal of approval to all and grandchildren) will be stuck paying the bill fc,r 20
potential water projects. We disagree, years, a painful proposition indeed.
Voters have no way of knowing whether each of the Don't vote "yes" b~cause you are afraid of t~nclean
local projects to be funded by this bond measure is water. Vote NO to show your support for financial
necessary or cost-effective--or just a boondoggle. Local responsibility and a desire for an alternative. Vote NO on
water districts could present their own proposals to local Proposition 81.
voters for approval. People in a community are better
informed about the merits of each'project. If approved, JERRY R. DOUGLAS
Director, Topanga-Las Virgenes Resource
the bonds would be paid' off by the taxpayers who' v~ould Conservation District
directly benefit, not taxpayers statewide. Voters in other TED BROWN .
counties have no idea who is polluting the.water and Who Chairman,' Libertarian Party, of California
should pay the costs of providing safe drinking water. Candidate for U.S. Congress, 22nd District
The politicians in Sacramento support bond measures KIM J. GOLDSWORTHY
· Southern Vice Chairman, Libertarian Party of California
as a painless way of financing popular programs. Buying a Candidate for U.S. Congress, '30th District '
1.8 Arguments printed on this page are the opinions of the authors and have not been checked for accuracy by any official agency 688
California Safe Drinking Water Bond Law of 1988'
Argument Against Proposition 81
Proposition 81 asks for $75 million in bonds- for the domestic waterworks, Prime Minister Margaret Thatcl~er
construction, improvement, and rehabilitation of domes- has proposed a public stock offering to privatize' that
tic water supplies, We urge you to vote NO. entire system. Other money-wasting, publicly.run institu~
Voters approved $150 million in bonds for similar wa~er . tion.s in England have already been privatized, with
projects in the November 1986 election,.only two years ' much success.
ago. We wonder what the politicians and bureaucrats What officials in England, France, and San Jose have
have done with all that money in the meantime, realized is that private water firms are more efficient and
In any event, the time has come to start examining economical,than government agencies. Private owners
private alternatives to the rapidly failing government have significant incentives to keep costs down by moni-
water system in California. The huge growth industry in toring the behavior of managers and employees and
bottled water shows conclusively that people no longer supplying what consumers demand. No one can claim
trust the quality of water, and they don't trust the that government age~ncies and their employees ever try
government systems that provide it. to save money.
Privatization of water supplies is a good alternative. In California can enter a new era of extended free enter-
France, for example, private companies are the major
suppliers of water. It is no coincidence that French firms prise, and residential water customers can enjoy lower
are dominant internationally in research 'and develop- rates, if this bond measure is rejected. A serious shift to
ment, in equipment manufacture, and in the imanage- privatization is. the way to go. Vote NO on Proposition 81.
ment and provision of water services. JERRY R. DOUGLAS
One-fourth of the water in the United States is supplied Director, Topanga-Las Virgenes Resource
Conservation District
by private, investor-owned companies. Hawaii's water is
TED BROWN
alm6st completely privately supplied. And the nation's
Chairman, Libertarian Party of California
largest single private water system is right here in San Candidate for U.S. Congress, 2£nd District
Jose, where the 122-year-old San 'Jose Water Company KIM J. GOLDSWORTHY
provides 90% of the city's water to 200,000 hookups. Southern Vice Chairman, Libertarian Party of California
In England, where the federal government owns all Candidate for U.S. Congress, 30th District
Rebuttal to Argument Against Proposition 81
The argument'against Proposition 81 misses the point. The state can continue to 'make a source of financing
Voting for Proposition 81 would help alleviate a health available, as it has since 1976, through bond issues. The
problem as it exists today, and does not prevent us from 1986 Safe Drinking Water Bond Law 'made available $100
finding alternative solutions tomorrow, million for local water system improvements. As of June
Howbver, to bury our heads in the sand and think of 1988, the state has already received applications totaling
how our water system should be run will not meet our over $91 million for these funds.
challenge Of providing clean drinking water to millions of Vote YES on Proposition 8i. so that' California~s small
Californian's right now. communities, served by either public or private systems,
Currently the state maintains a list of approximately have financial means to construct badly needed improve-
2,000 water systems that need to improve their water ments to protect public health.
systems, and are interested in financing to help them
make these improvements. These represent a total of BILL LEONARD
about $1 billion of financial need. Often funding through Member of the Assembly, 61st District
commercial lenders or local municipal bonds is not JACK O'CONNELL
available. Member of the Assembly, 35th District
G88 Arguments printed on this page are the opinions of the authors and have not been checked for accuracy by any official agency 19
2 Water Conservation Bond Law of 1988
Official Title and Summary Prepared by the Attorney General'
WATER CONSERVATION BOND LAW OF 1988. This act provides for a bond issue of sixty million dollars
($60,000,000) to provide funds for a local water projects assistance program, water conservation programs, and
groundwater recharge facilities.
Final Vote Cast by the Legislature on AB 1715 (Proposition 82)
Assembly: Ayes 70 Senate: Ayes 33
Noes 2 Noes 0
Analysis by the Legislative Analyst
Background The Department of Water Resources would use the $60
The State Department of Water Resources is charged million as follows:
with ensuring that there will be enough water to meet 1. Water Conservation and Groundwater Recharge
the state's needs. The department also provides assistance ' Loans--S40 Million. The department would use $40
for water conservation and groundwater recharge pro- million to provide low-interest loans to local agencies for
grams, which make better use of existing water supplies, projects to improve water conservation, such as lining
Since 1984, voters have approved the sale of $85 million agricultural ditches, and for projects' to increase the
of general obligation bonds for water conservation and groundwater supply. The interest rate on these loans
groundwater recharge projects. Abou~t $77 million of would be subsidized by an amount equal ~to one-ha]if of
those funds are expected to remain available by Novem- the interest rate the state would pay on the bonds. Thus,
ber 1988. The Department of Water Resources, however, the state's interest costs would exceed the interest that
is reviewing applications, totaling $215 million for these could be charged on these loans.'
funds. 2. Local Water Project Loans-~$20 Million. The de-
Voters also approved a.measure in 1960 which, among partment would use $20 million for a program to provide
other things,, authorized $130 million in general obligation loans to local agencies to develop additional supplies of
bonds for local water supply projects. All of this $130 water..Eligible projects would include, for example, water
million is expected to be committed by November 1988. delivery systems, such as canals, or dams, and reserw)irs.
Water Conservation and Groundwater Recharge. The interest rate on these loans would equal the interest
Water conservation projects typically include repair or rate the state would pay on the bonds.
replacement of leaky water lines and canals, or of ineffi- The measure would limit the amount of loans to $5
cient agricultural irrigation systems. Groundwater re- million for any single project. The measure also would
charge facilities typically include ditches, pits, stream- require all loans to be approved by the Legislature, and
beds, or wells, into which water is placed and seeps into would set the term of the loans at up to 20 years.
the groundwater supply. The water is pumped out when 3. Administrative and Legal Costs. The measure al_
needed., lows up to $3 million of the bond funds (included in the
$60 million above) to be spent for-the department's.
Proposal administrative costs. These costs would be repaid from
This measure authorizes the state to sell $60 million of fees charged to loan recipients. In addition, up to $900,000
general obligation bonds for low-interest loans to local of the bond funds could be spent for legal costs of the
agencies to construct groundwater recharge and water Attorney General. The department and the Attorney
conservation projects, and for loans to local water agen- General also could spend up to $1.4 million of the 10an
cies for water supply projects and facilities. The measure repayments to cover ongoing administrative and legal
also would make minor changes in the interest rate costs over the life of the loans.
charged on loans provided under two previous water
conservation and water quality bond acts and in the Fiscal Effect
administration of bond funds under those acts. Net Cost of Paying Off the Bonds. The bonds autho-
General obligation bonds are backed by the state, rized by this measure probably would be paid off ow.~r a
meaning that the state will use its taxing power to assure period of about 20 years, and would be a responsibility of
that enough money is available to pay off the bonds, the state's General Fund. The total cost of the bonds
Revenues deposited in the state's General Fund would be would be about $118 million, consisting of $60 million for
used to pay the principal and interest costs on these principal and $58 million for interest.
bonds. General Fund revenues come primarily from the However, because the loans would be repaid (with a ,'
state corporate and personal income taxes and the state subsidized rate of interest), the net .state cost would be
sales tax. about $24 million, or an average of about $1.2 million per
20 (388
year. (The net state cost would consist of $21 million for~ amount which the state borrows, this measure may cause
the interest rate subsidy on the loans, and $3 million for the state and local governments to pay more interest
administrative and legal costs and related interest pay- under other bond programs. These higher interest costs
ments on the bonds.) cannot be estimated.
State Revenues. The people who buy these bonds are
This estimate assumes that all of the bonds Would be
not required to pay state income tax on the interest they
sold at an average interest rate of 7.5 percent, and both
earn. Therefore, if California taxpayers buy these bonds
the bonds and the loans would be paid off over the same instead of making taxable investments, the state would
20-year period, collect less income taxes. This loss of revenue cannot be
Borrowing Costs for Other Bonds. By increasing the estimated.
Text of Proposed Law
This law proposed by Assembly Bill 1715 (Statutes of 1988, Ch. 46), as groundwater as a primary supply, in order to accomplish groundwater
amended by Assembly Bill 1720 (Statutes of 1988, Ch. 297), is submitted storage through the direct use of that surface water in lieu of pumping
to the people in accordance with the provisions of Article XVI of the groundwater. In-lieu recharge shall be used rather than continuing
Constitution. pumping while artificially recharging with surface waters. However,
This proposed law amends and adds sections to the Water Code; bondproceeds shall not be used to purchase surface waters for use in
therefore, existing provisions proposed to be deleted are printed in lieu of pumping groundwater.
:~]zcc~at ty~c and new prox~isions proposed to be added are printed in ' (h) "Voluntar!t cost-effe~ctive capital outlay water conservation pro-
grams" means those feasible capital outlay measures to~ improve the
italic type to indicate that they are new. efficiency of water use through benefi~ts which exceed their costs. The
PROPOSED LAW programs include, but are not limited to, lining or piping of ditches;
SECTION 1. Chapter 4.7 (commencing with Section 12879) is improvements in water distribution system controls such as automated
can?~l control, construction of small reservoirs within distribution
added to Part 6 of Division 6 of the Water Code, to read: systems which conserve water that already has been captured for reuse,
CHAPTER 4.7. WAT._ER CONSERVATION BOND LAW OF 1988 and related physical improvements; tailwater pumpback recovery sys-
Article 1. General Provisions tems to reduce leakage; and capital changes in onfarm irrigation
12879. This chapter shall be known and may be cited as the Water systems which improve irrigation effi_ciency, such as sprinkler or
Conservation Bond Law of 1988. ~ subsurface drip systems. In each ease, the department shall determine
12879.1. The Legislature finds and declares as follows: that there is a net savings of water as a result of each proposed project
(a) There is a lack of local water projects in certain areas of the state and that the project is cost-effective.
where the demands of a growing population could exceed water
supplies which could threaten the public health and impede eco~iomic Article 2. Water Conservation Program
and social growth. 12879.3. (a) The proceeds of bonds issued and sold pursuant to this
chapter shall be deposited in the 1988 Water Conservation Fund, which
(b~ It is in the interest of the state to provide financial assistance to
locatagencies for the development of local water resources necessary to is hereby created. A Local Water Projects Assistance Account shall be
meet requirements for domestic, agricultural, and other uses. established in the fund for the purpose of implementing Section 12879.5,
(c) The participation of the state and the State Water Resources and a Water Conservation and Groundwater Recharge Account shall be
Development System in the construction and operation of local water established in the fund for the purposes of implementing Section
projects in those areas is desirable to further the development, control, 12879.6.
and conservation of the water resources of the state. (bi From time to time, the department may modify existing accounts
(d) Voluntary, cost-effective capital oittla7 water conservation pro- in the fund, or may establish other accounts in the fund, and in all
grams can help meet growing demand for clean and abundant water other bond funds administered by the department, which the depart-
supplies, ment determines are appropriate or necessary for proper administra-
(e) Recharging groundwater basins is an effective way to maximize tion.
the availability of scarce water supplies throughout the state through 12879.4. (a) The department may make loans to local agencies,
the efficient management of recharge and extraction activities in upon approval of the Legislature by statute, to aid in the construction
groundwater basins, and by reversing the effects of historical overdraft, of eligible projects and to aid in the funding of voluntary, cost-effqctive
12879.2. As used in this chapter, the following terms have the capital outlay water conservation programs and groundwater recharge
following meanings: fqcilities, and may adopt rules and regulations necessary to carry out
(a) "Committee" means the Water Conservation Finance Committee this chapter. '
created pursuant to 12879.9. Notwithstanding any provision of law, existing rules and regulations
(b) "Department" means the Department of Water Resources. adopted by the department pursua-nt to Chapter 5 (commencing with
(c) "Fund"means the 1988 Water Conservation Fund created pursu- Section 12880) andChapter 6.1 (commencing with Section 13450) that
ant to 12879.3. are in effect on the effeqtive date of this chapter may be'utilized to carry
(d) "Local agency" means any city, county, city and county, district, out this chapter. Th~ department may subsequently revise those rules
joint powers authority, or other political subdivision of the state and regulations pursuant to Chapter 3.5 (commencing with Section
involved in water management.
11340) of Part I of Division 3 of Title £ of the Government Code as
(e) "Eligible project"means any dam, reservoir, or other construction necessary to carry out this chapter.
or improvement by a local agency for the diversion, storage, or primary (b) For the purpose of administering this chapter, the total expendi-
distribution of water, or facilities for groundwater extraction, primarily tures _of the department through the making of any loans may not
for domestic, municipal, agricultural, industrial, recreation, fish and exceed 5 percent of the total amount of the bonds authorized to be issued
wildlife enhancement, flood control, or power production purposes. An under this chapter. The department shall establish a reasonable sched-
eligible project also means any reservoir, pipeline, or other construction
or improvement by a local agency for the storage or distribution of
ule of administrative fqes for loans, which fees shall be paid by the local
reclaimed water for reuse, agency pursuant to subdivision (c) of Section 12879.4 to reimburse the
(f) "Groundwater recharge facilities" means land and facilities for state for the costs of state administration of this chapter.
. Charges incurred by the Attorney General in protecting the interests
artificial groundwater recharge through methods which include, but of the state in the use and repayment of funds under this chapter shall
are not limited to, either percolation using basins, pits, ditches, and ~e paid fro_m the proceeds of bonds authorized to be.issued under this
furrows, modified streambed, flooding, and well injection, or in-lieu chapter. These charges shall not be paid from funds allocated for
recharge. "Groundwater recharge facilities" also means capital outlay administrative purposes, but shall be treated as a program expense, not
expenditures to expand, renovate, or restructure land and facilities to exceed 1.5 percent of the total amount of the bonds authorized to be
already in use for the purpose of groundwater recharge, issued under this chapter.
Groundwater recharge facilities may include either of the following:
(1) Instream facilities for regulation of water levels, but not regula-
tion of streamflow by storage to accomplish diversion from the water-
(c) Any contract entered into pursuant to this section may include
such provisions as may be determined by the department, provided that
any contract concerning an eligible project shall include, in substance,
way.
(2) Conveyance facilities to the recharge sitei including devices for all of the following provisions: .
(1) A j~nding by the department treat the local agency has the ability
flow regulation and measurement of recharge waters, to repay the loan, that the eligible project is economically justified, and
~ Any part or all of the project facilities, including land under the that the eligible project is feasible from an engineering and geologic
facilities, may consist of separabl~ features, or an appropriate share of standpoint.
multipurpose features of a larger system, or both. (2) An estimate of the reasonable cost and benefit of the eligible
(g) "In-lieu recharge" means accomplishing increased storage of
groundwater by providing surface water to a user who r~ties on Continued on page 115
G88 21
82 Water.Conservation Bond Law of 1988
Argument in Favor of Proposition 89.
Proposition 82 continues California's commitment to and economical. Storing water underground in coastal
the wise and efficient use of our limited water supplies. ' areas also keeps ocean salt water from seeping into
Proposition 82 has two goals, drinking water supplies, thereby ensuring better quality
First, it provides $20 million in loans for local govern- drinking water.
ment agencies to build water supply projects needed .to The State Department of Water Besources currently'
provide water to their residents, has 103 apPlications from local agencies on file represent-
· ing $205 million worth of water conservation and ground-
California's population continues to grow. Loans made water recharge projects. Over half of these projects have
available from Proposition 82 will enable local agencies to .$3 in benefits for every $1 in cost, making them a good
satisfy the demands created by that growth: New local investment for all Californians.
water storage projects also could help ease the threat of - Proposition 82 makes good sense for California. Con-
future drought-related water supply shortages, serving more water coulddelay the need to build e:cpen-
Second, Proposition 82 provides $40 million to enable sive new dams on our rivers. Conserving more water
communities to obtain loans for voluntary, cost-effective helps provide a water supply adequate to meel: the
water conservation programs and groundwater recharge demands of a rapidly growing population.
facilities. Water conservation helps local agencies to save Stretching our limited water supply will also ensure the
water now being l°st due to leaking pipes and unlined continued..vitality of our agriculture and industry. Most
ditches and canals. This means more water for customers importantly, however, a clean and abundant supply· of
at a lower cost as compared to the costs of building new water is necessary to preserve and protect public health.
facilities to make up for'the lost supply. . Californians previously have shown overwhelming sup-
Another way t° use our water more efficiently is port for using general obligation bonds for financing local
through the refilling--or recharge--of our underground water projects, water conservation programs, and
water supply. Many areas of California ~/re using ground- groundwater recharge facilities.
water faster than nature-can.replenish it. Groundwater We respectfully urge your support of~ Proposition 82.
recharge has been practiced here for 90 years..It is a Our water resources are too precious to squander ~[way.
proven method of placing surplus surface water from JIM COSTA '
extremely Wet years into available storage space under- Member of the Assembly, 30th District
ground so that it can be used in dry. years. This under- Chairman, Assembly Water, Parks and Wildlife Committee
ground space is available in the great Central Valley and HENRY J. MELLO
in valley areas in coastal and southern California. State Senator, 17th District
Moreover, as storing surface water behind dams be- NORMAN WATERS
comes more expensive, storing water underground where Member of the Assembly, 7th District
it does not evaporate becomes more practical, ' efficient, Chairman, Assembltl Agriculture Committee
RebUttal to Argument in Favor of Proposition 82
The supporters of Proposition 82 seem convinced that With bond financing, these legislators can show, their
government action is the only way to solve water short- support for popular projects without immediately r,tising
ages in California. As we show in our argument, it is often taxes to pay for them. Taxpayers in the future, though,
government actions that contribute to shortages in the will have to pay hefty interest charges to the bondholtders.
first place. Is this a good' way to run our state government?
If you vote NO on Proposition 82, it won't mea~ that
Undergro.und water supplies could better be conserved you favor water shortages. It means that you favor
by assigning ownership rights to the groundwater. Cur- accountability from our elected officials, desire to keep
rently these vital ,resources are used in common, so that California oUt of debt, and desire to look into free market
no individual has a stake in seeing this water used more alternatives to government programs.
sparingly. This is similar to the overgrazing ofcattle on Vote NO on Proposition 82.
government-owned pasture land in the Rocky Mountain JERRY R. DOUGLAS
states. Director, Topa~ga-Las Virgenes Resource
We admit that this meaSure is popu.lar. But we also urge Conservation District
you to note that there are so many bond issues on this TED BROWN
ballot that the whole concePt is getting ridiculous. With Chairman, Libertarian Party of California
each election, the number grows and grows until your Candidate fo~ U.S. Congress, 22nd'District
ballot pamphlet looks like a phone book. KIM J. GOLDSWORTHY
Democratic and Republican politicians are never hap- Southern Vice Chairman, Libertarian Party of Califi~rnia
pier than when they are spending the taxpayers' money.' Candidate for U. S2 Congress, 30th District
22 Arguments printed on this page are the opinions of the authors and have not been checked for accuracy by any official agency G88 ,1
' Argument Against Proposition 82
Proposition 82 'asks for $60 million in bonds for' local water. We favor allowing farmers to sell their water at
water projects, waterconservationprograms, andground- market rates. Otherwise, they have to use all of it
water recharge facilities. We urge you to vote NO. themselves, thus causing waste now and shortages later.
Government water policies have given us a potentiai California's water consumers would benefit greatly by a
water shortage. Not flushing the tOilet and not watering free market in water. The end of price controls would
our driveways is no answer. As individuals we should not lower prices for individual residential users while raising
waste water, but it is worth noting that 85% of the water them to market values for big agricultural and commer-
used here in California is for agricult6re, our state's cial customers.
largest industry. Lower rates can also result from the private operation
The main reason for the shortage is that low prices of water systems. For example, two wells privately'drilled
encourage waste. One of the worse features of state water in Irving, Texas, have been greatly economical for the
policy is uniform water charges over given areas. This users there. In a different use of the private sector, San
leads to residential customers, who are low water users, Diego's County Water Authority has agreed to buy some
'subsidizing' agricultural and commercial customers, who .of its water from a private supplier in Colorado.
use a lot of water. A good example is the difference in By rejecting this bond measure, we can not only keep
water prices paid by the Imperial Irrigation District from going into debt, but we can look seriously at
(agricultural), which pays $10 an acre-foot, and Los lowering our individual water rates and establishing a
Angeles Metropolitan Water District (residential), which fair, free market in water in California. Vote NO on
pays $250 an acre-foot for the same Colorado River water. Proposition 82.
If big water users had to pay the real cost of their water,. JERRY R. DOUGLAS.
prices would fluctuate according to supply and lead to Director, Topanga-£as Virgenes Resource
conservation as well~ as cost effectiveness would emerge Conservation District
to help the long-term supply and maintenance needs of TED BROWN
our most vital resource. This would be in stark contrast to Chairman, Libertarian Party of California
California's Central Valley, where users pay only 9% of · · Candidate for U.S. Congress, 22nd District
the actual cost of the water they use and thus keep KIM J. GOLDSWORTHY
submarginal dry land in production. Southern Vice Chairman, Libertarian Party of California
Statelaw forbids the sale or reallocation of agricultural Candidate for U.S. Congress, 30th District
Rebuttal to Argument Against Proposition 82
The argument against Proposition 82 is confusing, Water conservation stretches our current water supply
inaccurate and misdirected, to ~serve more people. Water conservation and ground-
Proposition 82 provides loans to cities, counties, water water recharge are the most environmentally sound,
districts and other local governmental agencies so that cost-effective means of addressing our short-term water
(1) leaking pipes, ditches and canals can be repaired, (2) needs.
floodwaters can be captured and stored underground for Proposition 82 would enable local governments to
use in drougl~t years, and (3) local areas can build small make much-needed improvements' to our water delivery
water storage facilities to meet the needs of a growing system. Proposition 82 would fund proven programs
population. --programs which California voters have supported for
California's vast system of waterworks provides ample years.
water supplies to cities and farms even in dry years. The Don't be confused or misled by the argument against
issue is whether we are delivering water to our farms and this measure. Please join us in voting "YES" on Proposi~
residents in an efficient and cost-effective manner, tion 82.
The opponents argue about the broader implications of JIM COSTA
who gets how much Water and at what cost--not about Member of the Assembly, 30th District
the merits of Proposition 82. Chairman, Assembly Water, Parks and Wildlife Committee
Government water policies have not given us a poten- HENRY J. MELLO
tial water shortage. Our population continues to grow at State Senator, 17th District
a record pace. There are six million more people in NORMAN WATERS
California today then 10 years ago. That means we are Member or, the Assembly, 7th District
using more water. Chairman, Assembly Agriculture Committee
Arguments printed on this page are the opinions of the authors and have not been checked for a~curacy by any official agency
3 Clean Water and Water Reclamation Bond Law of 1988
' Official Title and Summary Prepared by the Attorney General
CLEAN WATER AND WATER RECLAMATION BOND LAW OF 1988. This act provides for a bond issue of
sixty-five million dollars ($65,000,000) to provide funds for water pollution control and water reclamation projects and
makes changes in the Water Conservation and Water Quality Bond Law of 1986 relating to loans and the Clean Water
Bond Law of 1984 relating to accounts, funding for specified purposes, loans, and compliance with federal
requirements.
Final Vote Cast by the Legislature on SB 997 (Proposition $3)
Assembly: Ayes 65 Senate: 'Ayes 32
Noes .4 Noes 1
Analysis by the Legislative Analyst
Background come primarily from the state corporate and'personal
In the past, the costs to build local sewage treatment income taxes and the state sales tax.
plants have been paid from a mix of federal, state, and The bond money would be used for the following three
local moneys. The federal government provided grants to purposes:
public agencies to pay for up to 75 percent of the project 1. Loans for Water Reclamation Projects--S30 Million.
costs. The remaining costs .were paid from State and local The State Water Resources Control Board would use
funds. However, as of October 1988, the federal govern- these funds to make loans for up to 20 years to local
ment is providing primarily loan funds, Father than agencies for water reclamation projects which cost less,
grants, to build sewage treatment plants. This change overall, than developing new water supplies. Loans could
shifts the costs of building the plants to local agencies and be made for up to the full cost of designing and building
the state, projects. The interest rate on the loans would be subsi-
Since 1970, voters in California have approved four dized by an amount equal to one-half of the interest rate
ballot measures to sell general obligation bonds totaling that the state pays on the bonds. Thus, the state's interest
$1.2 billion to help pay for the costs of building local cost would be more than the interest it collects on the
sewage treatment plants and other related projects. As of loan repayments.
June 1988, the State Water Resources Control Board had 2. Grants for Sewage Plants in Small Communities--
spent or committed all but $257 million of the funds $25 Million. The State Water Resources Control Board
authorized by the previous bond acts. Of the $257 million would give these grants to small communities (less than
left, $207 million primarily is for grants to communities of 3,500 people) with a financial hardship, as determined by
any size for building sewage treatment plants, $36 million the board: The grant could pay for up to 97.5 percent of
specifically is set aside for grants to small communities, the total costs of pollution studies and of planning,
and $14 million is for loans to build water reclamation designing, and building the plants. No grant for any single
projects. Water reclamation projects are projects that project could exceed $2 million.
allow wastewater to be reused in place of using additional 3. Guarantees for Local Agency Bonds--S10 Million.
fresh water. These projects include facilities that treat The State Water Resources Control Board could use these
wastewater or transport it to a place where it can be .funds for a 'new program to guarantee proposed local
reused, agency bond issues for building sewage treatment plants.
The board estimates that small communities will need The state bond money could be used to pay off the local
at least $85 million to build or expand sewage treatment bonds, if the local agency is unable to make its payments.
plants to meet current needs. In addition, local 'agencies Any of the $10 million not used for guarantees could be
will need about $150 million to pay for water reclamation spent for the loans and grants discussed above as weitl as
projects, other purposes of the bond measure.
The measure would allow the board to use aboul: $3
Proposal million of the bond money for administrative cost:~ to
This measure authorizes the state to sell $65 million of oversee the grant and loan programs. All of the bond
general obligation bonds to help local agencies build moneys would be available to the board, except adminis-
water reclamation projects and sewage treatment plants, trative costs would have to be appropriated by the
General obligation bonds are backed by the state, mean- Legislature. The measure also would allow the Legiisla-
lng that the state will use its taxing power to assure that ture to appropriate bond moneys for research and plan-
enough money is available to pay off the bonds. The state ning'activities relating to water quality. It is assumed that
would use General Fund revenues to pay the principal these costs would be paid from the $3 million allowed for
and interest costs of the bonds. General Fund revenues administrative costs.
24 G88
In addition, the measure would make minor changes in However, because the loans would be repaid (with a
the interest rate charged on loans provided in previous subsidized rate df interest), the net state cost would be
clean water bond acts and in the administration of bond about $82 million, or an average of about $4 million per
funds under those acts. The principal change would be year. (The net state cost would consist of $68 million for
that bond money from the Clean Water Bond Law of 1984 the bonds used for grants, bond guarantees, and adinin-
could be used, as approved by the Legislature, in combi- istrative cgsts, and about $14 million for the interest rate
nation with federal funds to build sewage treatment subsidy on the loans.)
This estimate assumes that all of the bonds would be
works to protect residents of the City of San Diego and sold at an average interest rate of 7.5 percent, and both
other areas along the California-Mexico border frbm the bonds and the loans would be paid off over the sariie
water pollution originating from Mexico. No single 20-year period.
project cOuld receive more than $10 million in loans from Borrowing Costs for Other Bonds. By increasing the
the board, amount which the state borrows, this measure may cause
the state and local governments to pay more interest
Fiscal Effect under other bond programs. These costs cannot 'be
Net Cost of Paying Off the Bonds. The bonds autho- estimated.
State Revenues. The people'who buy these bonds are
rized by this measure probably w~uld be paid off over a not required to pay state income tax on the interest they
period of about 20 years, and would be. a responsibility of earn. Therefore~ if California taxpayers buy these bonds
the state's General Fund. The total cost of the bonds instead of making other taxable investments, the state
would be about $120 million, consisting of $65 million for would collect 'less tax. This loss of revenue cannot be
principal and $55 million for interest, estimated.
Text of prOposed Law
This law proposed by Senate Bill 997 (Statutes of 1988, Ch. 47) is eliminate water pollution and public health hazards. '
submitted to the people in accordance with the provisions of Article (2) .It is also the intent of this chapter tO provide funds for the design
XVI of the Constitution. and construction of eligible water reclamation projects and for the
This proposed law amends and adds sections to the Water Code; development and implementation of programs and activities that lead
therefore, existing provisions proposed to be deleted are printed in to increased use of reclaimed water in Califqrhia.
~tr~!zcc,-,;~ ty~c and new provisions proposed to be added are printed in 14052. As used in this chapter, the .-f~llowing words have the
italic type to indicate that they are new. followin~ meanings:
PROPOSED LAW (a) "Board" means the State Water Resources Control Board.
(b) "Committee" means the Clean Water'and Water Reclamation
SEC. 2. Chapter 17 (commencing with Section 14050) is added to Finance Committee created by Section 1406Z ·
Division 7 of the Water Code, to read: (c) "Construction" has the same meaning as in the Federal Clean
CHAPTER 1~. CLEAN WATER AND WATER RECLAMATION Water Act.
BOND LA W OF 1988
(d) "Eligible project" means a project for a small community for the
Article 1. General Provisions . construction of treatment works which is all of the following..
14050.' This chapter shall be known and may be cited as the Clean (1) Necessary to prevent pollution.
Water and Water Reclamation Bond Law of 1988. (2) Eligible for federal assistance pursuant to Title VI of the Federal
14051. The Legislature finds and declares as follows: Clean Water Act.
(a ) Clean water is essential to the public health, safety and welfare. (3) Certified b~. the board as entitled to priority over other treatment
(b) Clean water fosters the beauty of Californ~"a's environment, the works, and complies with applicable water quality standards policies,
expansion of industry and agriculture, maintains fish and wildlife and and plans. '
supports recreation. ' (e) "Eligible reclamation project" means a water reclamaHon
(c) California's abundant lakes and p~nds, streams and rivers, project which is cost-effective when compared with the cost ofalterna-
coastline, and groundwater are threatened with pollution, which could tive new freshwater supplies, and for which .no federal assistance is
threaten public health and impede economic and social growth if left currently available.. These projects shall comply with applicable water
unchecked. ' quality standards, policifs, and plans.
(d) The state's growing population has increasing needs for clean (f) "Federal assistance" means funds available to a local agency
water supplies and adequate treatment facilities. ' pursuant to the Federal Clean Water Act.
(e) It is of paramount importance that the limited water resources of (g) "Federal Clean Water Act" or "federal act" means the Federal
the state be protected from pollution conserved and reclaimed when- Water Pollution Control Act (33 U.S.C. Sec. 1251 et seq.) and any acts
ever possible to ensure continued ~'conomic, ~c'ommunity, and social amendatory thereof or supplementary thereto.
growth. (h) "Fund" means the 1988 Clean Water and Water Reclamation
(f) The chief cause of water pollution is the discharge of inade- Fund created pursuant to Section 14055.
quately treated waste into the waters of the state. (i) "Local public agency" means any city, county, district, joint
(g) Local agencies have the primary responsibility for construction, powers authority, or any other local public body or political subdivision
operation, and maintenance of facilities to cleanse our waters, of the state created by or pursuant to state law and involved with water
(h) Rising costs of construction and technological changes have or waste water management.
pushed the cost of constructing treatment facilities beyond the reach of
many small communities. (j) "Municipqlity" has the same meaning as in the Federal Clean
Water Act and also includes the state or any agency, department, or
(i) Because water knows no political boundaries, it is desirable for
political subdivision thereof.
the state to contribute to construction of needed fqcilities in order to
meet its obligations to protect and promote the health safety and (k) "Small community"means a municipality with a population of
' ' 3,500 persons or less, or a reasonably isolated and divisible segment of
welfare _of its people and environment.
(j) The people of California have a primary interest in the develop- a larger .municipality encompassing 3,500 persons or less, with a
ment of facilities to reclaim waste water to supplement existing water financial hardship as defined by the board. .
supplies and to assist in meeting the future water needs of the state. (1) "State grant" means a grant given to a qualifying small commu-
(k) A significant portion 9f the future water needs of California nity eligible for federal assistance under Title VI of the Federal Clean
may be met by the use of recl[~imed water. Water Act.
(l) Local public agencies have the primary responsibility for the (m) "State Water Pollution Control Revolving Fund" means a
revolving fund created under state law for the purpose of issuing lohns
ties.C°nstructi°n' operation, and maintenance of ~ater reclamation facili- for the ~onstruction of eligible treatment works in accor-dance with the
federal act.
(m) Local public agencies need financial assistance to make cost-
effective reclamation projects financially feasible. (n) "Treatment works" has the same meaning as in the Federal
(n) (1) It is also the intent of this chapter to provide special
assistance to small communities to construct facilities necessary to Continued on page 118
G88 25
83 Clean Water and Water ReClamation Bond 'Law of 1988
Argument in Favor of Proposition 83
The most' effective way we have found to improve' California is currently in a drought, which dramatizes
water qUality in our streams, lakes, and estuaries is to the importance of conserving our water supply a~td of
properly treat waste water. One of California's most finding new ways to make the supply go further. A
successful environmental programs for more than a dec- sensible and practical way to do that is to "reclaim" used
adc has been a series of state bond issues used to make and dirty water, process it to remove all impurities,, and
grants and loans to localities to build or improve their provide ways to reuse that water, especially for landscape
sewage treatment works. Californian's voters have ap- and agricultural purposes. Several California communi-
proved every one of these bond issues by' large margins, ties have successfully reclaimed waste water for u.rban
Proposition 83 would allow the state to. issue bonds' to purposes in this way. Proposition 83 provides funding for
continue this program. It would allow grants totaling $25 $35 million in loans to lOcalities of all sizes for projects to
million to be made to Smaller communities that have had treat and reclaim waste water.
the most difficulty achieving current water quality?an-
dards, because the costs of sewage treatment for each HENRY J. MELLO
household are so high there. It would also allow the state · State Senator, 17th District
to create a bond guarantee program so that localities of all JIM COSTA
sizes could borrow more cheaply tO finance treatment Member of theAssembly, 30th District
works. ~ Chairman, Assembly Water, Parks and Wildlife Committee
Rebuttal to Argument in Favor of Proposition 83
Pollution of other people's propert3) is a' violation of Strict liability for pollution damage should regulate
individual'rights, water use, not government agencies and arbitrary gov-
Pesticides, industrial wastes, and other pollutant's are ernment standards. AS LONG AS TAXPAYERS ]BAIL
not dumped into the water supply by average taxpay- OUT POLLUTERS, POLLUTION WILL CONTINUE
ers--they are predominantly byproducts of commercial TO GROW UNCHECKED.' .
farming and industry. The control and cleanup of these This bond issue makes the wrong person pay. Vote NO
on Proposition 83.
effluents'should be a necessary cost of doing business--
CHUCK OLSON
and not a burden on the general taxpayer. Libertarian Candidatef~r State Senate, llth Distridt
The solution to our water pollution problems is not
MARK ROSS
more. government programs and more government debt. Environmental Activist
Rather, property rights to clean water should be pro- JOHN L. CORL
tected and .enforced. Libertarian Party Central Committee, Contra Costa County
26 Arguments printed on this page are the opimons of the authors and have not been checked for accuracy by any official agency G88
Clean Water and Water Reclamation Bond Law of'1988
Argument Against Proposition 83
This bond issue, would fund projects of three distinct should fund these projects on a pay-as-you-go basis, not a
types. One is to enable small communities with financial, bond issue.
hardships to construct or upgrade sewage treatment Payments of principal and interest on outstanding
facilities. The Second is to treat agricultural drainage bonds totaled $515 MILLION in the 1987-88 budget.
water to remove pesticides, etc. 'The third is to .reclaim Bonds already authorized but not yet sold will add $372
and recycle waste water. MILLION when sold. The nine bond is'sues on this ballot
Water' reclamation may not be cost-effective for agri- would add $295 MILLION, for a total of $1.1 BILLION
cultural use or aesthetically acceptable for domestic use. each year. On a pay-as-you-go basis $1.1 BILLION would
Costs of treatment of agricultural wastes should be borne finance all of the projects in the nine bond issues, schools,
by the. agricultural industry, who might then be moti- prisons, housing, etc. in three years.
vated to reduce the use of pesticides. Small communities, By placing capital expenditures on the ballc~t as bond
many of them resort~ and/or retirement communities, issues the Legislature postpones' major costs to future
should not expect taxpayers statewide to subsidize their years, leaving more room in the current budget for
lifestyles, boondoggles with low priority or lacking popular supi~ort.
If bond financing is unavOidable, the local public The Legislature. trots out the sacred cows on the ballot
agencies should present their proposals as bond issues for where the voter can see them, while hiding in the fine
approval by the local voters. If approved, the bonds print of the budget the white elephants Such as the
should be paid off by the local taxpayers, not taxpayers . legislative slush fund.
statewide. Interest income from state bonds is exempt from
In 1987-88 the 'state paid $248 MILLION in interest federal and state income taxes, a loophole for wealthy
alone (not including principal) on_ outstanding state investors to avoid paying their fair share of taxes, thus
bonds. The money lost by the state in bond interest costs shifting the tax burden to working people. By voting for
would fund this program and also the safe drinking water these bonds you are voting for a higher share of federal
and water conservation programs without these three and state taxes for yourself.
ballot issues on this ballot. Vote NO on the water pollution'bonds!
Bonds 'are not the way to go. But if necessary to protect WILLIAM McCORD
downstream water consumers'from pollution the state Retired State Administrato~
Rebuttal to Argument Against Proposition 83
Proposition 83 would allow the state to issue bonds to grants could be made only in small rural places with
continue the state's successful program to treat urban evidence of real financial hardsh!p. Wealthy resort and
waste water. The bonds could not-be used to pay for retirement communities need nof~apply.
treating agricultural drainage water. The opponent's Most of the money from Proposition 83 ~vould be used
argument is incorrect about that. The pr6position does to make loans, not grants. Local tcitizens and industries
correct ,several old bond acts, to bring them into confor- would pay the state bac. kl Why should we use state bonds
miry with the new federal tax laws. for this purpose, then? Because the State of California is
large and well respected, and can borrow money more
Proposition 83 would provide loans to localities to build cheaply than can localities. At little cost or risk, we can
water reclamation plants. These plants would treat sew- save money for taxpayers in areas needing sewage treat-.
age to a high standard, so it could be reused for landscap- ment works. And we can make our state's waters cleaner.
lng and industrial purposes. Several California communi- These are good reasons to vote for Proposition 83.
ties already reclaim water in this way, and it has proven
HENRY J. MELLO
to be a cost-effective way to make our existing water State Senator, 17th District
supply go further. JIM COSTA
Proposition 83 would also finance grants to small eom- Member of the Assembly, 30th District
munities to help pay for sewage treatment plants. The Chairman, Assembly Water, Parks and' Wildlife Committee
G88 Arguments printed On this page.are the opinions of the authors and have not been checked for accuracy by any official agency 27
4 . Housing and Homeless Bond Act of 1988
official Title and Summary Prepared by the Attorney General
HOUSING AND HOMELESS BOND ACT OF 1988'. This act provides for a bond issue of three hundred million
dollars ($300,000,000) to provide funds for a housing program that includes: (1) emergency shelters and transitional
housing for homeless families and individuals, (2) new rental housing for families and individuals including rental.
housing which meets the special needs of the elderlY, disabled, and farmworkers, (3) rehabilitation and preservation
of older homes and rental housing, and (4) home purchase assistance for first-time homebuyers.
Final Vote Cast by the Legislature on SB 1693 (Proposition 84)
Assembly: Ayes 54 Senate: Ayes 27 :
Noes 16 Noes 3
Analysis by ~he Legislative Analyst
Background Snough assistance to. keep tents affordable to these
The state administers yarious housing p?ograms to help targeted householdS. In these instances, the state could
meet the need for affordable and decent housing. Most of make grants on an ongoing l~asis to ensure affordability.
these programs provide either low-interest loans or Special User Housing Rehabilitation Loan Program
grants for the construction or rehabilitation of housing for ($25 Million). The state would make $25 million in loans
low-income persons, for the purchase and rehabilitation of residential l~otels.
Proposal These hotels typically rent rooms to low-income individ-
uals on a month-to-month basis. The state would lend this
This measure authorizes the state to sell $300 millior~ in money at low interest rates--up to 3 percent--for periods
general obligation bonds to provide funds for six housing
programs administered by the state~ General obligation ranging from 20 to 30 years. During that time, hotel
bonds are backed b-y the state, meaning that the state will owners could not raise rents on units rehabilitated or
rise its ta~ing power to assure that enough money is purchased with program loans above levels affordable to
available to pay off the bonds. The state's General Fund the low-income tenants. Borrowers could postpone, pay-
would be Used to pay the principal and interest costs On ment of principal and interest until the end of the; loan
the bonds. General Fund revenues come primarily from period.
the state Corporate and personal income taxes and the Emergency Shelter Program ($25 Million). The state
statesales tax. would make $25 million in grants to nonprofit agencies
The $300 million in bond proceeds would be used and local governments to provide emergency shelters for
entirel.~¢ to assist low-incpme perso, ns by providing assis- the homeless.
tahce for the development or rehabilitation of affordable Migrant Housing Program ($10 Million). The state
rental housing and temporary housing for the homeless, would spend $10 million to construct rental ha,using
and by providing finkncial assistance to first-time home developments for migrant farmworkers and their fami-
buyers. The state would use specific definitions of "low- lies. The housing units would be owned by the stat.e and
. in~ome" and "affordable" to administer the programs, operated by local governments using other state funds
Of the $300 million in bond proceeds, $260 million and rent receipts. These units would be available at
would be spent on four existing state programs: affordable rents to farmworkers when they are wc,rking
Rental Housing Construction Program ($200 Million). at local farms.
The state would use $9.00 million to provide affordable The measure also provides $40 million for two. new
rental housing for low-income households. Under the housing programs:
existing program, the state may make a variety of loans Home Purchase Ass, istance Program ($25 Million).
and grants to public and 'private developers to provide The state would provide $25 million in loans and mort-
this housing. In the past, the state has made "deferred-
payment" loans to develop and finance affordable rental gage insurance to help low-income persons buy their first
housing and grants to reduce the amount of rent col- homes. This program would supplement low-interest
leered from low-income tenants. If the state Continues to loans provided under two existing state program:; that
operate the program in a similar manner, the state woUld assist California veterans and low- and moderate-income
make lob_ns, at no or low interest, for periods of at least 40 households in buying homes. The loans under the; new
years. The borrowers would begin repaying principal and program could be used, among other things, for: (a) ad-
interest after 30 years. In return for the low-interest loans, ditional interest-rate subsidies; (b) low-interest second
the state would require borrowers to rent at least 30 mortgages; or ~(c) down payment assistance. The state
percent of the units to low-income households at afford- would make the loans under this program for periods up
able rents. In some cases, the loans would not provide to 30 years, and the borrowers would repay principal and,
28 G88
interest at the end of the loan period or when they sell or Fiscal Effect
refinance their homes. Direct Cost of Paying Off the Bonds. The state would
Family HousingDemonstration Program ($15 Million). would receive loan repayments under the four loan
The state would provide $15 million in loans, at 3 percent
programs discussed above. These repayments, however,
interest, for the construction or rehabilitation of two would be used for additional loans, not for repayment of
"nontraditional" forms of housing: the general obligation bonds. As a result, the state's
· Congregate Housing. Twenty-five to 35 percent of General Fund would be responsible for the bond princi-
the funds would be allocated for "congregate hous- pal and interest payments, which typically would be paid
ing" developments. These projects would house 2 to off over a period of about 20 years. If all of the authorized
10 families within a single large unit and provide bonds were sold at an interest rate of 7.5 percent, the cost
common living areas, would be about $535 million to pay off both the principal
· Community Housing. The remaining funds would
go to "community housing" developments, which ($300 million) and interest ($235 million). The average
would have 20 or more rental or cooperative units payment would be about $25 million each year.
and provide various support services (such as. child Borrowing Costs for Other Bonds. By increasing the
care, job training and placement) to the residents, amount that the state borrows, this measure may cause
Both of these housing developments would be aimed at the state and local governments to pay more under other
serving the needs of low-income single-parent households bond programs. These costs cannot be estimated.
and households with both parents working outside the State Revenues. The people who buy these bonds are
home. Rents or payments on units would be kept low and not required to pay state income tax on the interest they
affordable. The state would make loans for periods rang- earn. Therefore, if California taxpayers buy these bonds
ing from 20 to 30 years, and the borrowers could postpone instead of making taxable investments, the state would
payment of principal and interest until the end of the collect less in income taxes. This loss of revenue cannot be
loan term. estimated.
Text of Proposed Law
This law proposed by Senate Bill 1693 (Statutes of 1988, Ch. 48) is provisions of that law apply to the bonds and to this part and are
submitted to the people in accordance with the provisions of Article hereby incorporated in this part as though set forth in full in this part.
XVI of the Constitution. 53172. (a) Solbly for the purpose of authorizing the issuance and
This proposed law adds sections to the Health and Safety Code; sale, pursuant to the State General Obligation Bond Law, of the bonds
therefore, new provisions proposed to be added are printed in italic authorized by this part, the Housing Committee is hereby created. For
purposes of this part, the Housing Committee is "the committee"as that
type to indicate that they are new. term is usbd in the State General Obligation Bond Law. The committee
PROPOSED LAW consists of the Controller, the Treasurer, the Director of Finance, the
Director of the Department of Housing and Community Development,
SECTION 1. Part 9 (commencing with Section 53150) is added to and the Executive Director of the California Hous. ing Finance Agency,
Division 31 of the Health and Safety Code, to read: or their designated representatives. A majority of the committee may act
PART 9. HOUSING AND HOMELESS BOND ACT OF 1988 for the committee.
CHAPTER 1. GENERAL PROVISIONS (b) For purposes of the State General Obligation Bond Law, the
53150. This part shall be known and may be cited as the Housing Department of Housing and Community Development is designated as
and Homeless Bond Act of 1988. the "board" for programs administered by the department and the
53151. As used in this part, the following terms have the following California Housing Finance Agency is designated as the "board"for
meanings: programs administered by the agency.
(a) "Committee" means the Housing Committee created pursuant to 53173. The committee shall determine whether or not it is necessary
Section 531 72. or desirable to issue bonds authorized pursuant to this part in order to
carry out the actions specified in Part 8 (commencing with Section
(b) "Fund" means the Home Building and Rehabilitation Fund 53130) as added by Senate Bill No. 1692 of the 1987-88 Regular Session,
created pursuant to Section 53160. and, if so, the amount qf bonds to be issued and sold. Successive issues
CHAPTER 2. HOME BUILDING AND REHABILITATION FUND of bonds may be authorized and sold to carry out those actions
53160. The proceeds _of bonds issued and sold pursuant to this part progressively, and it is not necessary that all of the bonds authbrized to
shall be deposited in the Home Building and Rehabilitation Fund, be issued be sold at any one time. .
which is hereby created. Moneys in the'fund shall be allocated and 53174. There shall be collected each year and in the same manner
utilized in accordance with Part 8 (commencing with Section 53130),. as and at the same time as other state revenue is bollected, in addition to
added by Senate Bill No. 1692 of the 1987-88 Regular Session. the ordinary revenues of the state, a sum in an amount required to .pay
CHAPTER 3. FISCAL PROVISIONS the principal of, and interest on, the bonds maturing each year, and it
53170. Bonds in the total amount of three hundred million dollars is the duty of all officers charged by law with any duty in regard td the
($300,000,000), exclusive of refunding bonds issued pursuant to Section collection of the revenue to do and perform each and every act which is
53170.5, or so much thereof as is necessary, may be issued and sold to necessary to collect that additional sum.
provide a fund to be used fo_r carrying out the purposes expressed in this 53175. Notwithstanding Section 13340 of the Government Code,
part and, to be used to reimburse the General Obligation Bond Expense there is hereby appropriated from the General Fund in the State
Revolving Fund pursuant to Section 16724.5 of the Government Code. Treasury, for the purposes of this part, an amount that will equal the
The bonds shall, when sold, be and constitute a valid and binding total of the following:
obligation of the State of Califo_ rnia, and the full faith and credit of the ' (a ) The sum annually necessary to pay the principal of, and interest
State of Ca~'fornia is hereby pledged for the punctual payment of both on, bonds issued and sold pursuant to this part, as the principal and
principal of, and interest on, the bonds as the principal and interest interest become due and payable.
become due and payable. (b) The sum which is necessary to carry out the provisions of Section
53170.5. Any bonds issued and sold pursuant to this chapter may be 53176, appropriated without regard to fiscal years.
refundedbytheissuanceofrefundingbondsinaccordancewithArticle 53176. For the purposes of carrying out this part, the Director of
6 (commencing with Section 16780) of Chapter 4 of Part 3 of Division Finance may authorize the withdrawal from the General Fund of an
2 of Title 2 of the Government Code. Approval by the electors of the amount or amounts not to exceed the amount of the unsold bonds which
state for the issuance of these bonds shah include the approval of any have been authorized to be sold for the purpose of carrying out this
bonds issued to ~efuncf any bonds originally issued or previously issued part. Any amounts withdrawn shall be deposited in the fund. An~
refunding bonds. ' money made available under this section shall be returned to the
'53171. The bonds authorized by this part shall be prepared, exe-
cuted, issued, sold, paid, and redeemed as provided in the State General General Fund, plus interest that the amounts would have earned in the
Obligation Bond Law (Chapter 4 (commencing with Section 16720) o.f
Part 3 of Division 4 of Title 2 of the Government Code), and all of tl~e Continued on page 120
G88 29
Iollo41 Housing and Homeless Bond'Aet Of 1988
Argument in FavOr of Proposition 84 -
Homelessness. It's a' California tragedy. Over 100,000 And Proposition 84 contains provisions for child care,
'Californians are homeless and the number grows daily, job training arid-other support services to help break the
Who are they?, cycle of homelessness and hopelessness.
Many are frail elderly, Vietnam veterans, families with This bond act will do a lot of good.
small children, single mothers, mentally ill, disabled men For many in need of emergency shelter: a bec[ in a
I. and women, secure place and the chance to stop the humiliat~ion of
They all have one thing in common. They can't find living on the street, to seek out new or. imp:roved
affordable housing. " employment.
Anyone can end up without shelter. For the elderly: the chance to live in an affordable
Serious illness or injury, low wages, a sudden layoff, a home or apartment without fear of eviction or premature
house fire, mental illness, loss' of a spouse. Any of these nursing home institutionalization.
can spell devastation for someone barely able to balance For single parents and couples with children: the
the cost of food, clothing, medical bills and shelter, chance to leave a neighbor's couch or the family car to
The forecasts are tmsettling.
While the holes in the safety net of low-income housing find decent housing, child care and jobs.
~ For the growing number of homeless children: the
are getting bigger and homelessness growi, federal hous- chance to go to school regularly.
ing subsidies are ending. For veterans: the chance for job training, affordable
California, the sixth largest economic power in the rental housing and the possibility of owning a home.
world, has a severe shOrtage of affordable homes and Proposition 84 is the right thing to do and the right way
rental units. Homeless shelters throughout the state are to do it.
overcrowded and turning people away. Help bring the homeless inside. Help restore their
There is something We can do. sense of community and family. Help break the cycle of
Simply stated, eropo~ti0n 84 is the most important hopelessness t'h'atst"hreatenSye- so many Californians.
action to fight homelessness in i0 years. After a decade of Please vote on Proposition 84.
neglect, this responsible and effective measure can help
communities and citizens-groups solve local houSing DAVID ROBERTI
· problems. ' State Senator, 23rd District
Senate President pro Tempore
This .program will produce 33,000 new emergency PETER T. CHACON
shelter beds, 22,000 rehabilitated residential hotel units, . Executive Director, Vietnam Veterans of California
8,000 rental units for-low-income tenants and 300 farm- CARL JONES
worker housing units. Director, Congress of California Seniors, Inc.
. Rebuttal to Argument in Favor of Proposition 84
If you vote for this measure you may temporarily feel in June of this year voters approved $1.7 BILLION in
like a nice person, but don't think that you,will solve the bonds. This ballot proposes $3.3 billion more--S5 billion
problems of the poor or homeless. Government efforts to just this year alone! At this rate, before these bonds are
help the poor .inevitably produce the opposite, result, paid off in 20 years, we will have a bonded indebtedness
Today's government-subsidized housing, becomes tomor- of $100 BILLION and annual payments of $9 BILLION, a
row's human-demoralizing siren. The proponents of this quarter of today's entire state budget. Politicians know
that voters don't want their taxes raised. They have
measure hope to pull at your heartstrings, but they do chosen instead to address genuine humanitarian concerns
not, and cannot, show you that government housing by mortgaging ours and our children's future for. pro-
subsidies make any significant dent in the problems, of the grams which won't work to solve the problems whiclh the
poor or homeless. In fact, government housing projects politicians have created.
typically destro~ potentially repairable, homes, and then VOTE NO oN 84! ~
erect instant slums in their place. JUNE R. GENIS
Studies have found that exclusionary zoning and oner- "
Libertarian. Candidate for State Assembly, gOth District
ous building codes and regulations add up. to 25% to the MICHAEL TEJEDA
cost of new construction and can delay and even discour- Businessman
age new residential building. These are the major causes . 'DAVID M. GRAPPO
of housing shortages, not a lack of gov&rnment spending. Attorne~d
Arguments printed on this page are the opinions of the authors and have not been checked for accuracy by any official agency G88
Housing and Homeless Bond Act of 1988
Argument Against PropOsition 84-
Public housing projects quickly become the ugliest, the other Spots in the world where we are trying to
worst maintained, and most blighted part of any neigh- maintain the roles of world policeman and world banker.
borhood in which they are found. England is selling its By abandoning our policies of worldwide intervention
public housing to the tenants, recognizing that public . and the arms race in space we could balance the budget,
housing projects are not only inefficiently managed by start paying off the national debt, and free up hundreds of
BILLIONS of dollars for construction and mortgage loans.
government bureaucracies but demoralizing to the occu- Interest rates would drop back to where they were in the
pants. Those senior citizen housing projects which are '50s, at 4% or 5% for mortgage loans. The construction
planned and operated by .churches and other private industry would boom, ~providing jobs and housing for all.
organizations are more attractive, more'responsive to the · There is no surplus in the State budget this year. The
needs of senior citizens, and less costly to operate. A $27 MILLION needed to pay off these bonds will have to
White House commission, after studying the problem of come from a tax increase or a cut somewhere else in
housing, recently urged the use of direct subsidies to future state budgets.
individuals for housing rather than pouring any more Payments of principal and interest on outstanding
money into public housing projects, bonds totaled $515 MILLION in the 1987-88 budget.
There are alternative solutions to housing shortages. Bonds already authorized but not yet sold will add $372
MILLION when sold. The nine bond issues on this ballot
One is to stop the massive influx of illegal immigrants into would add $295 MILLION, for a total of $1.1 BILLION
California, competing for low-cost housing with our citi- each year. On a pay-as-you-go basis $1.1 BILLION would
zens who have lived, worked, and paid taxes in this finance all of the projects in the nine bond issues, schools,
country all their lives. · prisons, housing, etc. in only three years.
Another alternative is to chop in half federal spending Vote NO on the housing bonds!
on "defense," by pulling our troops out of Germany, WILLIAM McCORD
Japan, andKorea, our ships out of the Persian Gulf, and all Retired State Administrator
Rebuttal to Argument Against Proposition 84
Proposition 84 is the right thing to do, and the right way Mr. McCord's scare tactics are an attempt to cover the
to do it: Mr. McCord's opposition suggests no solutions. It truth. This bond act will help thousands of people at a
is also inaccurate, minimal cost to taxPayers. The annual debt service will be
This bond act is not a pUblic housing program.' approximately $1 per Californian per year.
Support for Proposition 84 is widespread. Nearly 100
ChurChes and private organizations will be eligible to public and private organizations throughout California
build, own and manage low-income housing financed have joined the fight against homelessness by supporting
under this bond act. Private and public, nonprofit and the Housing and Homeless Bond Act. They include: the
profit-motivated sponsors will all participate in building Congress of California Seniors, the Vietnam Veterans of
the housing. _ California, the California Council of Churches, the Cali-
Apartments built under the bond act will not be fornia Homeless Coalition, the Salvation Army, Jewish
managed by government bureaucracies, but in most cases Family Services, Catholic Charities, and the League of
will be run by private management companies. Women Voters of California.
In addition to housing and temporary shelters, this Please join us in support of Proposition 84.
bond act provides child care, job training and other PATti WHITNEY-WISE
support services for families and single parents. This Director, California Council of Churches
DAVID P. RILEY
innovative program lis supported by housing experts as. Lieutenant Colone~ the Salvation Army
the way to fight homelessness on a permanent rather than SHELLY HANCE
"barid aid" basis. · Cochairperson, California Homeless CoalitiOn
G88 Arguments printed on this page are the opinions of the authors and have not been checked for accuracy by any official .agency 31
5 Library Construction and Renovation Bond Act of 1988
Official Title and Summary Prepared by the Attorney General
LIBRARY CONSTRUCTION AND RENOVATION BOND ACT OF 1988. This act provides for a bond issue of
seventy-five million dollars ($75,000,000) to provide funds for a library construction and renovation program.
Final Vote Cast by the Legislature on SB 181 (Proposition 85)
Assembly: Ayes 59 Senate: Ayes 33
Noes 10 Noes 0
· Analysis by the Legislative Analyst
Background the board would consider all of the following factors:
Historically, cities, counties or special districts have · needs of urban and rural areas,
paid most of the costs of operating and building facilities · projected population growth,
· changing concepts of public library service,
for the 169 local public library jurisdictions throughout
· distance of the proposed project from other existing
the state. Since 1982, however, local libraries have re- and proposed facilities, and
ceived about $76 million from the state's General Fund to · age and condition of the facility.
pay a portion of their operating costs and about $13
million from the federal government for building and Fiscal Effect
remodeling purposes. Direct Costs of Paying Off the Bonds. For these types
of bonds, the state typically would make principal and
Proposal interest payments from the state's General Fund over a
This measure authorizes the state to sell $75 million of period of about 20 years. If all of the authorized bonds
general obligation bonds for grants to specified local were sold at an interest rate of 7.5 percent, the cost would
agencies to buy property for, construct, renovate and be about $134 million to pay off the principal ($75
expand local libraries. Grants for books, other library million) and interest (about $59 million). The aw~rage
materials, operating expenses, and administrative Costs payment for principal and interest would be about $6
· million per year.
would be prohibited. General obligation bonds are BorrOwing Costs for Other Bonds. By increasing the
backed by the state, meaning that the state will use its amount which the state borrows, this measure may cause
taxing power to assure that enough money is available to the state and local governments to pay more under other
pay off the bonds. The state would use General Fund bond programs. These costs cannot be estimated.
revenues to pay the principal and interest costs of the State Revenues. The people who buy these bonds are
bonds. General Fund revenues come primarily from state not required to pay state income tax on the interest they
corporate and personal income taxes and the state sales earn. Therefore, ff California taxpayers buy these b.onds
tax. instead of making taxable investments, the state would
In order to participate in this grant program, local 'collect less taxes. This loss of revenue cannot be esti-
· agencies would have to: mated.
· pay 35 percent of the project costs, Costs to Administer the Program. The State Librarian
· use their own money to buy books and operate the may use an amount not to exceed 1 percent of the 'bond
library, and funds to pay the costs of administering the program.· The
· operate for at least 20 years any library acquired, State Librarian would incur about $750,000 of such costs
constructed, remodeled or rehabilitated with state over the first six, years of the program to administer the
grant funds under this program, grants.
The State Librarian would administer this grant pro- Costs to Operate New Library Facilities. Local agen-
gram. A board made up of certain state officials would cies that build new libraries or expand their existing
review local agency requests and decide which agencies libraries would incur additional operating costs. This
would receive grant money. In reviewing the requests, added cost cannot be estimated.
Text of Proposed Law
This law proposed by Senate Bill 181 (Statutes of .1988, Ch. 49) is matching funds provided pursuant to Section 1996£ shall be used by a
submitted to the people in accordance with the provisions of Article recipient for any of the following purposes:
XVI of the Constitution. (a) Books and other library materials. ~
This proposed law adds sections to the Education Code; therefore, (b) Administratidn costs of the project, including, but not limited to,
new provisions proposed to be added are printed in italic type to the costs of all of the fo_llowing:
indicate that they are new. (1) Preparation of the grant application.
PROPOSED LAW (£) Procurement of matching funds.
($) Conducting an election for obtaining voter approval of the
SECTION 1. Chapter Il (commencing with Section 19950) is project.
added to Part 11 of the Education Code, to read: (4) Plan checking and code compliance inspections.
(c) Interest or other carrying charges for financing the project,
CHAPTER 11.' .CALIFORNIA LIBRARY CONSTRUCTION AND RENOVATION including, but not limited to, costs of loans or lease-purchase agree-
· BOND ACT OF 1988
Article 1. General Provisions ments in excess of the direct costs of any of the authorized purposes
19950. This chapter shall be known and may be cited as the
specified in Section 19957.
California Library Construction and Renovation Bond Act of 1988. (d) Any ongoing operating expenses for the facility, its personnel,
19951. The Legislature finds and declares all of the following: supplies, or any other library operations.
19959. All construction contracts for projects funded in part
(a) The public library is a supplement to the formal system of free through grants awarded pursuant to ibis chapter shall be awarded
public education, a source of information and inspiration to persons of through competitive bidding pursuant to Part 3 (commencing with
all ages, cultural backgrounds, and economic statuses, and a resource -
for continuing education and reeducation beyond the years of formal Section 20100) of the Public Contract Code.
education, and therefo, re deserves adequate financial support from 19960. This chapter shall be administered by the State Librarian,
who shall adopt rules, regulations, and policies for the implementation
government at all levels, of this chapter.
(b) It is in the interest of the people and of the state that there be a 19961. A city, county, city and county, or district may apply to the
general diffusion of information and knowledge through the continued State Librarian for a grant pursuant to this chapter, as follows:
operation of free public libraries. This diffusion is a matter of general (a) Each application shall be for a project for a purpose authorized
concern inasmuch as it is the duty of the state to provide encouragement
to the voluntary lifelong learning of the people of the state· by Section 19957.
(c) Many existing public library facilities are not safe, efficient, or (b) The applicant shall request not less than thirty-five thousand
accessible for use, adequate fo_r the size of the communities they serve, dollars ($35,000) per project.
or otherwise capable of providing the public library services needed by (c) No application shall be Submitted for a project for which
construction bids already have been advertised.
the communities they serve.
19962. (a) Each grant recipient shall provide matching funds from
(d) Many communities that are populous enough to require a public any available source in an amount equal to 35 percent of the costs of the
library facility do not have one. project. The remaining 65 percent of the costs of the project shall be
(e) Local public library authorities do not have sufficient funds to provided through allocations from the fu~nd.
construct or rehabilitate necessary public library facilities. (b) Qualifying matching funds shall be cash expenditures in the
(f) Funding to meet the need for public library facilities, which is categories specified in Section 19957 which are made no earlier than
beyond the ability of local government to supply, is most appropriately
met by a partnership of state and local governments, three years prior to the submission of the application to the State
19952. As used in this chapter, the following terms have the Librarian. Except as otherwise provided in subdivision (c), in-kind
expenditures shall not qualify as matching funds.
following meanings: - (c) Land donated or otherwise acquired for use as a site for the
(a) "Committee" means the California Library Construction and facility, including, but not limited to, land purchased more than three
Renovation Finance Committee created pursuant to Section 19972. years prior to the submission of the application to the State Librarian,
(b) "Fund" means the California Library Construction and Resto- may be credited towards the 35 percent matching funds requirement at
ration Fund created pursuant to Section 19955.
(c) "Board" means the California Library Construction and Reno- its appraised value as of the date of the application.
ration Board. The board includes the State Librarian, the Treasurer, the (d) Cash expenditures not to exceed 10 percent for furnishings
Director of Finance, the Assembly Member appointed by the Speaker of required to make the facility fully operable may be credited towards the
35 percent matching funds requirement. The recipient shall certify to
the Assembly, and the Senator appointed by the Senate Rules Commit- the board that these furnishings have an estimated useful life of not less
tee.. than 10 years.
Legislative members `of the board shall meet with, and participate in, (e) Architect fees for plans and drawings for library renovation and
the work _of the board to the extent that their participation is not new construction, includingplans and drawings purchased more than
incompatitSle with their duties as Members of the Legislature. For the three years prior to the submission of the application to the State
purposes of this chapter, Members of the Legislature who are members Librarian, may be credited towards the 35 percent matching funds
of the board shall constitute a joint legislative committee on the subject
matter of this chapter. , requirement.
19963. An amount not to exceed 1 percent of the cost of construction
Article 2. California Library Construction and Renovation Program of the project may be used for appropriate works of art to enhance the
19955. The proceeds of bonds issued and sold pursuant to this facility. '
chapter shall be deposited in the California Library Construction and 19964. (a) The estimated costs of a project for which an application
Renovation Fund, which is hereby created. Notwithstandin~ Section is submitted shall be consistent with normal public construction costs in
13340of the Government Code, the fund shall be continuousty appro- the applicant's area.
priated without regard to fiscal year. . (b) An applicant wishing to construct a project with costs which
19956. All moneys deposited in the fund shall be available for exceed normal public construction costs in the applicant's area may
grants to any city, county, city and county, or district that is empowered apply for a grant in an amount not to exceed 65 percent of the normal
at the time of the project application to own and maintain a facility for costs if the applicant certifies that it is capable of financing the
the acquisition, construction, remodeling, or rehabilitation of facilities remainder of the project costs from other sources.
for public library services. 19965. Once an application has been approved by the board and
19957. The grant funds authorized pursuant to Section 19956 and the included in the State Librarian's request to the committee, the amount
matching funds provided pursuant to Section 19962 shall be used by the
of funding to be provided to the applidant shall not be increased. Any
recipient for any of the following purposes: actual changes in project costs shall be the full responsibility of the
(a) Acquisition or construction of new facilities or additions to applicant. In the event that the amount of funding Which is provided
existing facilities, is greater than the cost of the project, the applicant shall return that
(b) Acquisition of land necessary for purposes of subdivision (a). portion of the funding which exceeds the cost of the project to the State
(c) Remodeling of existing facilities for energy conservation puT- Librarian.
poses. . 19966. In reviewing applications, the board shall consider all of the
(d) Remodeling of existing facilities to provide access for the following factors:
disabled. (a) Needs of urban and rural areas.
(b) Projected population growth.
(e) Behabilitation qf existing facilities to bring them into compli-
ance with current health and safety requirements for public facilities. (c) Changing concepts of public library service.
(f) Procurement and installation of shelving fastened to ~the struc- (d) Distance of the proposed project from other existing and pro-
ture, and built-in equipment required to make a facility fully operable, posed facilities.
(g) Payment of fees charged by architects, engineers, and other (e) Age and condition of the facility.
design professional~ whose services are required to plan and execute a 19967. (a) A facility, or the part thereof, acquired,' constructed,
project authorized pursuant to this chapter.
19958. No grant funds authorized pu~Zsuant to Section 19956 or Continued on page 121
G88 33
I' 85 Library Construction and Renovation Bond Act of 1988
Argument in Favor of Proposition 85
California is in the midst of extraordinary population construction or renovation cost. The local community
and economic growth. THIS YEAR ALONE, CALIFOR- must cover the remaining 35%. That means a librarY
,NIA'S POPULATION HAS GROWN BY 600,000 PEO- must be a priority to the local community before the state
PLE! Like many important community services, libraries will help finance it. That also means Proposition 85 will
have been unable to keep pace. The results are: actually result in over $115 million in library construction
· MANY ·CALIFORNIA COMMUNITIES DO NOT and renovation.
HAVE A LOCAL LIBRARY. Libraries are the open, community-based, public way
· Many communities rely on old structures that need we make our heritage, literature, know, ledge, and .skills
to be expanded;strengthened for earthquake safety, available to all·Californians. Daniel Boorstin, former
made more accessible to the handicapped, or remod- Director of the Library of Congress, said:
eied for efficiency. SOME LIBRARIES CURRENTLY "Libraries remain the meccas 'of self-help, . . . where
IN USE WERE BUILT AS FAR BACK AS there are no entrance examinations and no diplomas.., and
1852~MANY PRIOR TO 1930. where we can enter at any age."
· impo~-t, ant library programs, LIKE NEW PRO- We need safe and efficient libraries to serve our·
GRAMS 'FOR CHILDREN AND ADULTS JUST communities. We need Proposition 85!
LEARNING TO READ, have placed added demands BARRY KEENE
on library facilities.. . State Senator, 2nd District .'
Proposition 85 is a common sense, Cost-effective ap- Senate Majority Leader
KEN MADDY
proach to address these critical problems. Your yes vote
State Senator, 14th District ~
for Proposition 85 will NOT raise taXes. Senate Minority Leader
Proposition 85 establishes a partnership of state and HELEN H. LINDSEY
local government, in which the state pays only 65% of the President, California State PTA
Rebuttal to Argument in Favor of Proposition 85
The proponents of this bond measure are telling less service, but always remember that someone must pay.
than the truth when they say Proposition 85 will not raise And that someone is YOU!
taxes. They fail to note that bonds are backed by the full Proposition 85 'creates' a dangerous precedent of a
faith and credit of the State of California. When the Word "partnership of state and local :government." This just
"state" is mentioned, this really means "taxpayer." means that state officials will be interfering in local affairs
more than they do already.
In 1979 voters passed Proposition 4 by a 74% majority. Proposition 85 is expensive, flawed, and deceptive.
This measure, known as the ,Gann Spending Limit," VOTE NO on Proposition 85.
limits the annual rise' in state budgetS. Politicians like
Senators Keene and Maddy are frustrated by their inabil- TED BROWN
Chairman, Libertarian Party of California
ity tb directly spend more of the taxpayers' money. Since Candidate for U.S. Congress, 22nd District ·
bonds are exempt from the spending limits,, their use has KIM J. GOLDSWORTHY
grown 'phenomenally over the last eight years. There are Southern Vice Chairman, Libertarian Pa~ty 'of Calif~..rnia
$3,282,000,000 in bonds on this ballot alone! Candidate for U.S. Congress, 30th District
It's time to stop approving every bond measure that SARAH E. FOSTER
comes up for a vote. You may love a certain program or . Libertarian Candidate for State Senator, 23rd District
34 Arguments printed on this page are the opinions of the authors and have not been checked for accuracy by any official agency G88
Library Construction· and Renovation. Bond Act of 1988
Argument Against PropOsition 85
The State Legislature asks you to approve $75 million in Others haVe contracted library services .to private com-
bonds to improve public library facilities. We urge you to panics.
vote NO. If a service is worthwhile, as libraries certainly are, it
Libraries are usually run by cities and counties. Since will be provided in the free market. Libraries receive
when has the state.government been responsible for the extensive gifts and efidowments even now. Such contri-
upkeep of libraries? The state already requires spending butions would increase if there was a lack of government
for numerous programs in California's cities and counties, financing.
This appears to be further interference in an area where Please remember when you cast your ballot that there
it is completely unnecessary, are $3,282,000,000 worth of bonds being proposed. This
In any event, this measure is unfair to most Califor- measure by itself may seem small, but it is Part of a much
nians. Less than one-third of the people use library larger picture. Remember that a "bond" is defined as
services, yet they are subsidized by the other two-thirds
of the non-library-patronizing public. Poor and lower ' "anything that.binds, fastens, or confines; imprisonment;
income residents must pay taxes for services that are used captivity." Californians will be stuck paying the bill for 30
primarily by middle- and upper-middle-class white collar YEARS.
individuals. A vote for Proposition 85 will put th,e. state government
This subsidy should end. Many libraries across the into yet another area where it doesnt belong--and will
cou~ntry already charge for special services, such as loan- put us in debt at the same time. Vote NO on Proposition
ing best sellers, giving intei'library loans, handling equip- 85 and vote NO on all the other bond measures on this
ment rentals, etc. Why shouldn't library patrons pay ballot.
either an annual membership fee or a by-the-book rental TED BROWN
fee for regular library services? Let those who want a Chairman, Libertarian Par~y of California
service pay for it! Candidate for U.S. Congres~ £2nd District
The first library in the United States was a private ' KlM J. GOLDSWORTHY
Southern Vice Chairman, Libertarian Party of California
subscription library founded by Benjamin Franklin in Candidate for U.S. Congress, 30th DistriCt
1731. Many communities today use the same method by SARAH E. FOSTER
charging an annual fee and by using volunteer staff. Libertarian Candidate for State Senator, 23rd District
Rebuttal to Argument Against Proposition 85
Despite claims of opponents of Proposition 85, the State It is appropriate to use bonds for public library facilities
Of California has a history of commitment to public because the facilities will be available for public use
libraries dating back to the turn of the century. Provisions throughout the period when the bonds are being paid off.
for a statewide system of local public libraries are firmly Bond financing is also the mechanism preferred by
fixed in state law, not local ordinances, private industry to fund major building projects. Califor-
The opponents' statement that bond funds would be nia has a AAA bond rating,-and the nonpartisan Legisla-
used to run libraries which are "usually run by cities and tire Analyst has concluded that "there is no evidence that
California's current debt burden is excessive or pos6s any
counties" is/tbsolutely misleading. The only use of these significant fiscal threat."
funds is for projects to build or renovate library struc- We need to have local libraries to serve our growing
lures. Local communities would continue to retain oper- communities. Proposition 85 is the logical, cost-effective
ati°nal control of libraries, and pay operational costs as way to build those libraries. Vote "YES" on Proposition
they deem necessary. 85.
State bond funds are used to build local schools, acquire MARIAN BERGESON
community parks, and build county jails. Community State Senator, 37th District
libraries supplement our system of free public education. TOM BRADLEY
To argue that bond funding should not be available for Mayor, City of Los Angeles
library construction denies education the top priority RICHARD P. SIMPSON
· Executive Vice President
given it by the State Constitution. California Taxpayers'Association
G88 Arguments printed on this' page are the opinions of the authors and have not been checked for accuracy by any official agency 35
Youth Facility Bond Act of 1988
Official Title and Summary Prepared by the Attorney General
COUNTY CORRECTIONAL FACILITY CAPITAL EXPENDITURE AND YOUTH FACILITY BOND ACT OF
1988. This act provides for a bond issue of five hundred million dollars ($500,000,000) to provide funds for the
construction, reconstruction, remodeling, replacement, and deferred maintenance of county correctional facilities and
county juvenile facilities and to provide funds to youth centers and youth shelters.
FinaI Vote Cast by the Legislature on SB' 1664 (Proposition 86)
Assembly: Ayes 64 Senate: Ayes 37
Noes 3 Noes 0
Analysis by the Legislative Analyst
Background · $65 million for construction, reconstruction, remod-
' · · ~, cling, deferred maintenance, and replacement of
Jails and Juvenile Detention Facilities. Cahforma s 58
counties house adults and juveniles who are serving time county juvenile facilities, and
for committing a crime or are awaiting court decisions in · $25 million for the purchase of equipment and for
jhils and detention facilities. , acquiring, renovating, or constructing youth centers
~n 41 cdunties, these facilities are holding mo,re People or youth shelters.
than they were designed to house. In 24 counties with In order for a county to receive bond money for jails or
overcrowded conditions, courts have imposed limits on juvenile detention facilities, it would be required t,~ do
the number of people that may be held at any one time. the following:
Since 1981; the voters have authorized the state to sell 1. Provide matching funds of 25 percent of the
$1 billion in general obligation bonds to.raise money to project's costs (this requirement could be modified or
expand and improve county jail and juvenile facilities, waived by the Legislature),
'tGeneral obligation bonds are backed by the state, mean- 2. Adopt a plan to prohibit the detention of juveniles in
ing .that the state will use its taxing power to assure that jails unless the county is permitted by law to keep them
enough money is available to pay off the bonds.) All of there,
this money is fully committed for various projects. 3. Show that it has adequate facilities for mentally ill
The Board of Corrections estimates that after counties inmates and persons arrested because of intoxication, or
have used all existing resources (including their own that it has a plan to provide services to these persons, and
funds) for jail construction and renovation, plus an addi- 4. Show that it has made the greatest applicable use of
tional $40 million proposed in Proposition 80 (also on this alternatives to keeping persons in jail, such as work
ballot), the jails will have the capacity to house about release, own recognizance release, or weekend '~vork
65,000 people by 1990. The board states there will be a programs.
shortage of space for an estimated 11,500 inmates in The amount of money a county would be eligible, to
county jarls at that time. By 1995, the board estimates that receive would be determined by the Legislature.
the statewide average daily jail population will increase to
about 105,000 people. Fiscal Effect
Youth Centers and Youth Shelters. Private nonprofit Direct COst of paying Off the Bonds. The state would
and local government agencies throughoUt the state make principal and interest payments on these bonds
provide a variety of programs and services to ~,outh, from the state's General Fund over h period of about 20
including recreation, delinquency prevention, counsel- years. Assuming that 'all of .the bonds were sold :at an
ing, and shelter. The Department of the Youth Authority interest rate of 7.5 percent, the cost would be about: $900
provides about $'1.5 million annually to various agencies million to pay off the principal ($500 million) and interest
for support of these activities. Currently, the state pro- ($400 million). The average payment for principal and
vides no money to construct facilities for these programs, interest would be about $40 million per year.
Borrowing Costs for Other Bonds. By increasing the
Proposal amount that the state borrows, .this. measure may cause
This measure would authorize the state to sell $500 the state and local governments to pay more under other
million in general obligation bonds to raise money for bond programs. These costs cannot be estimated.
county correctional facilities, county juvenile facilities, Lower State Revenues. The people who buy these
yOuth centers and youth shelters. The money would be bonds are not required to pay st&re income tax on the
allocated as follows: interest they earn. Therefore, if California taxpayer's buy
· $410 million for construction, reconstruction, remod- these bonds instead of making other taxable investments,
cling, deferred maintenance, and replacement of the state would collect less taxes. This loss of re~enue
county correctional facilities, cannot be estimated.
36 G88
Text of Proposed Law
This/aw proposed by Senate Bill 1664 (Statutes of 1988, Ch. 264) is ities shall only include items with a useful life of at least 10 years.
submitted to the people in accordance with the provisions of Article (2) Moneys in the fund, up to a limit of sixty-five million dollars
XVI of the Constitution. ($65,000,000), may be available for the construction, reconstrucHon,
This proposed law adds sections to the Penal Code; therefore, new remodeling, and replacement of county juvenile facilities, and the
provisions proposed to be added are printed in italic t~lpe to indicate performance of deferred maintenance on county juvenile facilities, but
that they are new. may only' be used for the purpose of reducing overcrowding and
PROPOSED LAW. eliminating health, fire, and life safeiy hazards.
SECTION 1. Title 4.8 (commencing with Section 4496) is added to (3) Expenditure shall be made only if county matching funds of 2~
Part 3 of the Penal Code, to read: percent are provided as determined by the Legislature, except that this
requirement may be modified or waived by the Legislature where it
TITLE 4.8. COUNTY CORRECTIONAL FA CILITY CAPITAL determines that it is necessary to facilitate the expedit~'ous and equitable
EXPENDITURE AND YOUTH FACILITY construction of state and local correctional facilities.
BOND ACT OF 1988 (b) Moneys in the fund, up to a limit of twenty-five million dollars
CHAPTER 1. GENERAL PROVISIONS ($25,000,000), may be available for the purpose of making awards to
4496. This title shall be known and may be cited as the County public or private nonprofit agencies or joint ventures, or a combination
Correctional Facility Capital Expenditure and Youth Facility Bond Act of those entities, for purpose of purchasing equipment and for acquir-
of 1988. ing, renovating, or constructing youth centers or youth shelters, as may
4496.02. The Legislature finds and declares all of the following: be provided by statute. Fifteen million dollars ($15,000,000) shall be
(a) While the County]ail Capital Expenditure Bond Act of 1981, the available for youth centers and ten million dollars ($10,000,000) shall
County Jail Capital Expenditure Bond Act of 1984, and the County be available for youth shelters and shall be distributed by the Depart-
Correctional Facility Capital Expenditure Bond Act of 1986 have helped ment of the Youth Authority. However, any remaining money that has
eliminate many of the critically overcrowded conditions found in not been awarded under this subdivision within two years of the
county correctional facilities in the state, many problems remain, effective date of this title shall be available for both youth centers and
(b) Numerous county jails and jUvenile facilities throughout Cali- youth shelters.
fornia are dilapidated and overcrowded. 4496.16. In order to be eligible to receive funds for the purposes
(c) Capital improvements are necessary to protect life and safety of specified in subdivision (a) of Section 4496.12 derived from the issuance
the persons confined or employed in jail facilities and to upgrade the of bonds under this title, a county shall do all of the following:
health and sanitary conditions of those facilities. (a) Adopt a plan to prohibit the detention of all juveniles in county
(d) County jails are threatened with closure or the imposition of jails unless otherwise authorized by law.
court supervision if'health and safety deficiencies are not corrected (b) Demonstrate that it has adequate facilities for mentally ill
immediately, inmates or detainees and for those persons arrested because of inebria-
(e) Due to fiscal constraints associated with the loss of local property tion, or demonstrate that it .has a plan for the provision of services to
tax revbnues, counties are unable to finance the construction of these persons.
adequate jail and juvenile facilities. . (c) Demonstrate that it has utilized, to the greatest practicable
(f) Local facilities for adults and juveniles are operating over extent, alternatives to jail incarceration.
capacity.and the population of these facilities is still increasing. It is 4496.19. Money in the fund may only be expended for projects
essential to the public safety that construction of new facilities proceed specified in 'this chapter as allocated in appropriations made by the
as .expeditiously as possible to relieve overcrowding and to maintain Legislature.
public safety and security. CHAPTER 3. FISCAL 1PROVISIONS
4496.04. As used in this title, the following terms have the following
meanings: 4496.30. Bonds in the total amount of five hundred million dollars
(a) "Committee" means the 1988 County Correctional Facility Cap- ($500,000,000), exclusive of refunding bonds, or so much thereof as is
ital Expenditure and Youth Facility Finance Committee created pursu- necessary, may be issued and sold to provide a fund to be used for
ant to Section 4496.34. carrying out the purposes expressed in this title and to be used to
(b) "Fund" means the 1988 County Correctional Facility Capital reimburse the General Obligation Bond Expense Revolving Fund
Expenditure and Youth Facility Bond Fund created pursuant to Section pursuant to Section 16724.5 of the Government Code. The bonds shall,
4496.10. when sold, be and constitute a valid and binding obligation of the State
(c) "County correctional facilities" means county jail facilities, of California, and the full faith and credit of the State of California is
including separate facilities for the care of mentally ill inmates and hereby pledged for the punctual payment of both principal of, and
persons arrested because of intoxication, but does not include county interest on, the bonds as the principal and interest become due and
juvenile facilities, payable.
(d) "Countyjuvenilefacilities"meanscountyjuvenilehalls, juvenile 4496.32. The bonds authorized by this title shall be prepared,
homes, ranches, or camps, and other juvenile detention facilities, executed, issued, sold, paid, and redeemed as provided in the State
(e) "Youth center" means a facility where children, ages 6 to 17, Gen, eral Obligation Bond Law (Chapter 4 (commencing with Section
inclusive, come together for programs and activities, including, but not 16720) of Part 3 of Division 4 of Title 2 of the Government Code), and
limited to, recreation, health and fitness, delinquency prevention such all of the provisions of that law apply to the bonds and to this chapter
as antigang programs and programs fostering resistance to peer group and are hereby incorporated in this chapter as though set forth in full
pressures, counseling for problems such as drug and alcohol abuse and in this title.
suicide, citizenship and leadership development, and youth employ- 4496.34. (a) Solely for the purpose of authorizing the issuance and
ment. sale, pursuant to the State General Obligation Bond Law, of the bonds
(f) "Youth shelter" means a facility that provides a variety of authorized by this title, the 1988 County Correctional Facility Capital
services to homeless minors living on the street or abused and neglected Expenditure and Youth Facility Finance Committee is hereby created.
children to assist them with their immediate survival needs and to help For purposes of this title, the finance committee is "the committee" as
reunite them with their parents or, as a last alternative, to find a that term is used in the State General Obligation Bond Law. The
suitable home. committee consists of the Governor, the Controller, the Treasurer, the
Director of Finance, or their designated representatives. A majority of
CHAPTER 2. PROGRAM the committee may act for the committee.
4496.10. The proceeds of bonds issued and sold pursuant to this (b) For purposes of the State General Obligation Bond Law, the
chapter shall be deposited in the 1988 County Correctional Facility Board of Corrections is designated the "board."
Capital Expenditure and Youth Facili~ Bond Fund, which is hereby 4496.36. The committee shall determine whether or not it is necessary
created, or desirable to issue bonds authorized pursuant to this chapter in order
4496.12 (a) (1) Moneys in the fund, up to a limit of four hundred to carry out the actions specified in Section 4496.12 and, if so, the
ten million dollars ($410,000,000), may be available for the construc- amount of bonds to be issued and sold. Successive issues of bonds may
tion, reconstruction, remodeling, and replacement of county correc- be authorized and sold to carry out those actions prqgressively, and it is
tional facilities, and the performance of deferred maintenance on
county correctional facilities. However, deferred maintenance for facil- Continued on page 122
G88 37
6 County ,Correctional FaCility Capital Expenditure and
Youth Facility Bond Act of 1988
Argument in Favor of Proposition 86
Proposition 86 is an important opportunity to address County juvenile facilities are also plagued by over-
the problems arising from overcrowded county jails, crowding and significant fire and safety deficiencies.
juvenile halls, and youth facilities throughout the state. These problems must be addressed before these facilities
California is growing at a rapid rate and that growth is also become the target of 'lawsuits. Our ability to keep
placing an enormous demand on county jails. In 24 of the county juvenile halls and camps operating, effectively will
state's 58 counties the courts have stepped in and set greatly enhance our efforts to redirect troubled y,~uth
limits on the number of inmates that may be held in before it's too late,
county jails at any one time. Twenty-eight counties have Proposition 86 also authorizes $25 million for y,vuth
been sued because of the general conditions in their jail centers and youth shelters. This is an important Step
facilities, and 40 counties have seriously overcrowded toward recognizing our obligation to provide guidance
~facilities. The simple fact is that thei'e is a valid need for and support for youth in need and shelter for tlhose
more jails-if we are 'to maintain public safety, abused and neglected children who, through no fault of
However, it is important for you, the voter, to recog- their own, are without a home of any kind. '
nize that Proposition 86 does' not just encourage the This measure has bipartisan support in the Legislature
building of more jails in response to the overcrowding, and the support of the Governor. It is also supported by
Proposition 86 requires counties to provide matching local law enforcement, county officials and comm~Lnity
funds for construction. This requirement has the effect of
groups.
forcing design and operational efficiencies. The counties It deserves your support as well.
must also demonstrate they have developed alternative .
detention plans for public inebriates and mentally ill ROBERT PRESLEY :
inmates before funding is granted:This provision encour- State Senator, $6th District
SHERMAN BLOCK
age,s further efficiency because it can be unnecessarily Sheriff, Los Angeles County
expensive or si, mply inappropriate to keep these persons BARBARA SHIPNUCK
in jail when other more suitable and equally safe arrange- Supervisor
ments can be developed at far less cost. Presideng County Supervisors Association of California
Rebuttal to' Argument in Favor of proposition 86
· County. jails hold convicts who have received jail as pickpockets, car thieves, 'assaulters, etc., restitution to
sentences of one year or less, and prisoners waiting for their victims should be the first priority, and house arrest
trial, should be at least one alternative to imprisonment.
In some counties half the prisoners are awaiting trial. ' The proponents of Proposition 86 want to ignore the
For many of these inmates, the court process could be government policies that foster rises in criminal activity
speeded up. Currently misdemeanor cases drag on for and just build more jails where society's problems can be
months, while felony cases take over a year. The victims locked away and forgotten. This philosophy does not
should have a right to see their assailants have speedy work.
trials, as required by the U.S. Constitution. The most A vote against Proposition 86 is a vote for new thinking,
extreme example of judicial dawdling has been the common sense, and a much-needed change in Our f~Jled
"Night Stalker" case in Los .Angeles. The suspect has been judicial system. Vote NO on Proposition 86.
in the county jail since his arrest over three years ago, and TED BROWN
the trial is just beginning after all this time. Chairman, Libertarian Party of California .
The main reason for overcrowded jails, though, is that Candidate for U.S. Congress, 22nd District
many prisoners do not belong there. Those charged with KIM J. GOLDSWORTHY
Southern Vice Chairman, Libertarian Party of California
victimless crimes, such as prostitution, drug~ use, gam- Candidate for U.S. Congress, 30th District
bling, traffic .warrants, etc., should be released immedi- WILLIAM T. "BILL" LAKE
.ately. For those prisoners who deserve punishment, such Libertarian Candidate for State A~sembly, 46th Distric, t
38 Arguments printed on this page are the opinions of the authors and have not been checked for accuracy by any official agency (.~8~
Youth Facility Bond Act of 1988
Argument Against Proposition 86
Proposition 86 ask§ for $500 million in bonds for. the are full of kids who also shouldn't be there~ like runaways,
construction of county jails and juvenile detention facili- curfeTM violators, etc. All that kids learn in institutions like
ties. We urge you to vote NO. · these is how to commit violent crimes.
Please note that there are $3,286,000,000 in bond pro- There is a great need for a shift in priorities in law
posals on this ballot alone. Among them is Proposition 80, enforcement. A recent study found that more than 50%
of a police officer's'time is spent dealing with victimless
which calls for $817 million for state prisons. Proposition crimes, like prostitution, pornography, gambling, drug
86 is remarkably similar, except it is designed to pay for
use, and public drunkenness. If traffic violations are
county facilities. : added, it is easy to see that there is little time left for
Since when 'does the state government pay for county officers to protect us against murderers, rapists, thieves,
jails and youth camps? Such projects are usually planned and defrauders.
and financed locally, like the similar Proposition A, which Only crimes where someone' violates the rights of
was passed by Los Angeles County voters in November another are crimes, and thus deserve punishment. Any
1986. Proposition 86 is just another example of the state other use of law is unconstitutional and leads to the
government trying to expand its sphere of influence, persecution of people who choose alternative lifestyles
In any event we would oppose this measure no matter that may offend, but not harm, others.
which set of taxpayers was to pay for it. County jails To vote half a billion dollars for more county jails and
usually house minor offenders who cannot make bail. At youth camps is to vote for more of a police state. A deep
best, they house some dangerous people before they go and serious review of the reason people are being impris-
on trial. The key to making us safer is not automatically oned is needed before there is talk of locking more away.
locking everybody up for'minor infractions. The key to .-Send a message to the politicians. We don't want
California turning into one big detention center. Vote NO
our safety is a shift in law enforcement priorities.
on Proposition 86.
Did you know that you could go to jail if you don't pay
TED BROWN
a traffic ticket or a jaywalking ticket? It's true, and it's an Chairman, Libertarian Party of California
outrageous practice that must end. Many people are in Candidate for U.S. Congress, 22nd District
county jails on such warrants, and no one can claim that
KIM J. GOLDSWORTHY
these individuals are dangerous. The laws are arbitrary, Southern Vice Chairman, Libertarian Party of California
and enforcement is selective. They are used to harass Candidate for U.S. Congress, 30th District
individuals unfairly. WILLIAM T. "BILL" LAKE
This example only looks at county jails. Youth facilities Libertarian Candidate for State Assembly, 46th District
Rebuttal to Argument Against Proposition 86
After reading the Opponents' arguments, it's obvious Finally, providing funding for youth centers and shel-
they are completely uninformed, ters is not voting for a police state, as the opponents claim.
The opponents claim coun.ty jails mostly house minor It's voting to aid youth who need our help and support.
offenders. Let's be realistic. No one goes to jarl for failing The old adage, "An ounce of prevention is worth a pound
of cure," has never been more true when .dealing with
to pay the fine on one traffic ticket. For minor offenses these problems.
sheriffs operate alternative detention programs where Without adequate jail space law enforcement will be
qualified offenders work off their sentences doing ser- hampered and your public safety could be compromised.
vices of benefit to the community. Without 'adequate juvenile and youth facilities, our efforts
Further, the Board of Corrections estimates that 75% of to help the troubled and needy youth of this state will be
all pretrial jail inmates have been charged with felonies diminished. Don't let that happen. Vote YES on Pr0Posi-
involving murder, rape, armed robbery, drugs, etc. The tion 86.
-truth is, cour/ty jails are holding very 'dangerous criminals ROBERT PRESLEY
and withOut more space these persons could be back on State Senator, 36th District
the streets: SHERMAN BLOCK
Sheriff,, Los Angeles County.
And we're sure you join us in rejecting the opponents' BARBARA SHIPNUCK
suggestion, that law enforcement should ignore crimes Supervisor
involving drugs, gambling and pornography. Presideng County Supervisors Association of California
G88 Arguments printed on this page are the opinions of the authors and have not been checked for accuracy by any official agency 39
87 Property Tax ReVenues. Redeve°lopment Agencies
Official Title and Summary Prepared by the Attorney General
PROPERTY TAX REVENUES. REDEVELOPMENT AGENCIES. LEGISLATIVE CONSTITUTIONAL AMEND-
MENT. Presently, if a taxing agency increases the tax rate for revenue to repay its bonded indebtedness for the
acquisition or improvement of real property, a portion of the revenues raised for this purpose is allocated to
redevelopment agencies having property affected by the rate increase. The revenues received by the redevelopment
agency don't have to be applied to repayment of the bonded indebtedness. This measure authorizes the Legislature
to require all revenues produced by the rate increase go to the taxing agency for purpose of the repayment of its
bonded indebtedness. Summary of Le~slative Analyst's estimate of net state and local government fiscal impact: By
itself, this measure would have no fiscal effect because it requires legislative imp!ementation If implemented, the
amount of property tax revenues received by redevelopment agencies in 1989-90 and later years would be reduced
in an amount which would depend on the number and value of bonds approved by the voters. There would be ho
fiscal effect on the state or the taxing agencies which impose property taxes to pay off general obligation bonds.
Final Vote Cast by the Legislature on ACA 56 (Proposition 87)
Assembly: Ayes 72 Senate: Ayes 33
Noes 0 Noes 0
Analysis by the Legislative Analyst
Background payments on their bonds. Thus, all revenues raised for
The California Constitution permits redevelopment this purpose would go to the local governments respon-
agencies to create projects to eliminate blight and pro- sible for paying off the bonds. As a result, local govern-
ments would impose a lower property tax rate for bond
mote economic growth. The redevelopment agency gen-
erally receives most of the property tax revenue (called financing.
The measure would apply only to tax rates levied to
"tax increment revenue") that results from the increase finance bondSapproved by the voters on or after January
in the value of taxable property within the area of a 1, 1989.
redevelopment project. Other governments, such as cit-
ies, counties, and special districts, generally continue to Fiscal Effect
receive the same amount of property tax revenue that By itself, this measure has no fiscal effect because it
they received prior to the formation of the redevelop- merely authorizes the Legislature to implement its pro-
ment project, visions. ' '
Under Current law, a redevelop, ment agency using tax If the Legislature implements this measure, there
increment revenue receives additional property tax rev- would be no significant effect on state costs or revenues.
enue whenever a local government increases its property However, the measure could reduce the amount of
~tax rate to pay off its general obligation bonds. Specifi- property tax revenues received by redevelopment agen-
cally, the redevelopment agency receives the amount of ties in 1989-90 and later years. Specifically, redevelop-
revenue generated by applying the local government's ment agencies would no longer receix~e an increase in
increased property tax rate to the increase in the value of their property .tax revenues whenever a local agency's
taxable property that has occurred since the formation of voters approve certain general obligation bond measures.
the redevelopment project. The size of this revenue reduction would depend on the
number and value of these general obligation bonds
Proposal approved by the voters in future years. '
This constitutional amendment authorizes the Legisla- The measure would have no effect on the amour~tt of
ture to prohibit redevelopment agencies from receiving revenues received by local'governments that impose
any of the property tax revenue raised by increased increased property taxes to pay off their general ob][iga-
property tax rates imposed by local governments to make tion bonds. -~,
Property Tax Revenues. Redevelopment Agencies 87
Argument in Favor of Proposition 87
Proposition 87 corrects a flaw in the Constitution that Proposition 87 will allow local agencies to pay off their
forces some cities, counties, and school districts to levy new bonds faster.
higher property tax rates than necessary to repay local Proposition 87 will assure that any new property taxes
general obligation bor/ds, approved for bonds will be used ONLY FOR THE
Currently,. the Constitution requires that community · PURPOSES INTENDED BY THE VOTERS.
redevelopment agencies be given a share of all property The future of California's economic growth and quality
of life will in large part depend on our ability to meet our
taxes collected within their boundaries even those taxes tremendous needs for schools, roads, water, parks, and
levied by some other local government to repay bonds, other public services. Many of these services will be
Because of this diversion of tax revenues, the other local financed by local voter-approved bonds. We owe it to the
government must levy a higher tax rate than necessary to taxpayers of California to finance this economic growth
raise enough money to meet its bond obligations. And with the LOWEST POSSIBLE PROPERTY TAX RATES.
local citizens must pay higher property taxes than neces- Please join us in voting YES on Proposition 87.
sary to retire the bonds. JACK O'CONNELL
Proposition 87 will correct this problem. Member of the Assembly, $$th District
Proposition 87 will dedicate ALL newly approved RICHARD P. SIMPSON
property tax revenues for bonds to bond repayment. Executive Vice Presideng California
Taxpayers Association
Proposition 87 will allow local agencies to pay off their BOB EPPLE
new bonds with LOWER PROPERTY TAX RATES. Candidate for the Assembly, ~3rd District
No argument against Proposition 87 was filed
Text of Proposed Law appears on pages 122-123
'~ G88 Arguments printed on this page are the opinions of the authors and have not been checked for accuracy by any official agency 41
8 Deposit of Public MoneYs
Official Title and Summary Prepared by the Attorney General
DEPOSIT OF PUBLIC MONEYS. LEGISLATIVE CONSTITUTIONAL AMENDMENT. Currently, the State
Constitution authorizes the Legislature to provide for the deposit of public moneys in any bank, savings and. loan
'association, or in any credit union in California. This measure amends the State Constitution to authorize the
Legislature to provide for the deposit of public moneys in any federally insured industrial loan company in Califi~rnia.
~Summary of Legislative'Analyst's estimate of net state and local government fiscal impact: No direct fiscal effect.
However, adoption could result in greater interest income to the state and local governments by increasing
competition for the deposit of public moneys.
Final Vote Cast by the Legislature on ACA 63 (Proposition 88)
Assembly: Ayes 70 Senate: Ayes 37
Noes I Noes 0
Analysis by the Legislative Analyst
Background
The California' Constitution authorizes the Legislature
to permit the deposit of public moneys in banks, savings
and loan associations, or credit unions located in Califor-
nia. Currently, the Constitution does 'not authorize the
deposit of such moneys in industrial loan companies.
Public moneys are funds in the custody of state and
local governments. In general, industrial loan companies
are financial institutions which attract investment funds
with investment certificates and, in turn, loan these funds
for various purposes.
The State Superintendent of Banks oversees deposits of
public~ moneys made by local governments. The State
Treasurer performs a similar function for deposits of
public moneys made by the state.
Proposal
This constitutional amendment authorizes the Legisla-
ture to permit the deposit of public moneys in federally
insured industrial loan companies located in California.
Fiscal Effect
By itself, this measure has no direct fiscal effect. The
legislation to implement this measure could result in
greater interest" income to the state and loc01 govern-
ments by increasing competition for the deposit of public
moneys.
40. G88
Argument in Favor of Proposition 88
A yes vote on Proposition 88 will help us as taxpayers · .Public deposits in industrial loan companies are as
get the most for our tax dollars. Proposition 88 is common- ~ safe as those in banks--they are FDIC insured and
sense legislation that benefits taxpayers throughout Cali- subject to the same regulatory requirements as pub-
fornia by ensuring state and local governments can get' lic deposits in other financial .institutions.
the most competitive interest rates on deposits of public · Industrial loan companies have a long history of more
funds backed by the full faith and guarantee of the ersthanand69 yearSsmall Ofbusinesses.Service to California savers, consum-
federal government. ' ' We believe governments should maximize interest in-
Proposition 88 will increase funds available for needed come on deposits of taxpayer dollars while preserving the
government services WITHOUT increasing taxes, safety of public funds. Industrial loan companies' offer
Public funds have been deposited for many years 'in highly competitive interest rates on government deposits.
federally insured banks and savings and loan associations. SO PROPOSITION 88 WILL SAVE TAXPAYER MONEY
In 1986, California overwhelmingly voted to allow public FOR NEEDED PUBLIC SERVICES BY EARNING
deposits in credit unions. Proposition 88 similarly allows MORE ON DEPOSITS.
deposits of public 'funds in industrial loan companies Federalist insured industrial loan institutions provide
insured' by the Federal Deposit Insurance Corporation depositors the same protections' offered by banks:
(FDIC). · Industrial loan companies are regulated by the State
Just like individuals and businesses, state and local of California and the FDIC.
governments (including school, water and Park districts, · More than $3,000,000,000 is currently deposited in
as well as cities and counties) deposit funds in financial over 400 industrial loan company offices~statewide.
institutions to earn interest until needed. Proposition 88 is · The State Banking Department regulates the deposit
a nonpartisan technical amendment that includes feder- of public'~ funds.
ally insured industrial loan companies along with banks, . Proposition 88 was overwhelmingly approved by the
savings and loans and credit unions on the list of autho- State Legislature--by votes of 37-0 in the Senate and 70-1
rized deposit institutions, in the Assembly--because it saves taxpayers dollars,
Here's why allowing deposits in federally insured in- encourages competition for deposits of public funds~ and
dustrial loan companies makes sense: . provides additional safe and secure deposit options to
· Proposition 88 provides more options to public fi- public finance officers.
nance officers responsible for reviewing and select- Please join us in voting YES ON PROPOSITION 88.
ing financial institutions, which encourages competi- PATRICK JOHNSTON
tion fo/government deposits. Member of the Assembly, 26th District
· More competitive interest rates Will earn greater JOHN LEWIS
interest income on taxpayer dollars since industrial · Member of the Assembly, 67th District
loan companies typically offer slightly higher interest GRAY DAVIS
rates. State Controller
No argument against Proposition 88 was fi'led
· Text of proposed law appears on page 123
G88 Arguments printed on this page are the opinions of the authors and have not been 'checked for accuracy by any official agency 43
9 Governor's Parole Review
Official Title and Summary Prepared by the Attorney General
GOVERNOR'S PAROLE REVIEW. LEGISLATIVE CONSTITUTIONAL AMENDMENT. Provides that no decision
of the parole authority which grants, denies, revokes, or suspends the parole of a person sentenced to an indeterminate
term upon. conviction of murder shall become effective for a period of 30 days. Permits Governor to review the
decision during this period subject to statutory procedures. States that the Governor may only affirm, modify, or
reverse a parole authority decision on the basis of the same factors which the parole authority may consider. Requires
Governor to report to the Legislature the pertinent facts and reasons for each' parole action. Summary of Legislative
Analyst's estimate of net state and local government fiscal impact: The fiscal impact of this measure is unknown and
depends on the actions of the Governor. Grants of parole would result in relatively minor savings. Denials of parole
could result in relatively minor costs.
Final Vote Cast by the Legislature on SCA 9 (Proposition 89)
Assembly: Ayes 63 Senate: Ayes 29
Noes 11 Noes 5
Analysis by the Legislative Analyst
Background of a felony, unless the action is recommended by four
Under California statutes, adults who commit murder members of the State Supreme Court.
are sentenced to an indeterminate term in state prison or, Proposal
in the case of first degree murder, death. A minor who
This constitutional amendment would allow the Gov-
commits murder when he or she is 16 years of age or older
ernor to approve, modify, or reverse any decision by the.
may be dealt with under the juvenile court law or may be parole authority (Board of Prison Terms or Youthful
tried as an adult and sentenced accordingly. If tried as an Offender Parole Board) regarding the parole of persons
adult, however, the death penalty may not be imposed if who are sentenced to an indeterminate term for commit-
the person was. under the age of 18 at the time of the ting murder. The Governor, subject to specified proce-
commission of the crime. Other minors who commit dures, would have 30 days from the date of the beard's
murder may be committed to' the Department of the parole action to review the decision. In reviewing parole
Youth Authority for an indeterminate period, although decisions, the Governor could consider only that informa-
they may be confined only until the age of 25 unless an tion which the Board of Prison Terms and the Youthful
order or petition for further detention has been made. Offender Parole Board are required to consider in mak-
The parole release date for state prison inmates serving ing their parole decisions.
an indeterminate term is set by the Board of Prison Fiscal Effect
Terms. The date of release on parole for minors commit- The fiscal impact of this constitutional amendment is
ted to the Youth Authority is set by the Youthful Offender unknown and would depend on the actions of the Gov-
Parole Board. In making parole decisions, the Board of ernor. The measure could result in relatively minor state
Prison Terms and the Youthful Offender Parole Board savings if the Governor decided to release a person {rom
are required to consider many factors, including the prison or the Youth' Authority after the person's parole
following: the seriousness of the inmate's offense; the had been denied by the~ Board of Prison Terms or the
safety of the public; and statements from the public. Youthful Offender Parole Board. The measure could,
Under the California Constitution, the Governor may however, result in relatively minor state costs if the
grant a reprieve, pardon, or commutation after a person Governor decided to deny parole to a person who would
is sentenced. The Governor may not grant a pardon or have been granted parole by the Board of Prison Terms
commutation to a person who has been twice convicted or the Youthful Offender Parole Board.
44 G88
Text of Proposed Law
This amendment proposed 'by Senate Constitutional
Amendment 9 (Statutes of 1988, Resolution Chapter 63)
expressly amends the Constitution by amending a section
thereof; therefore, new provisions proposed to be added
are printed in italic type to indicate that they are new.
PROPOSED AMENDMENT TO ARTICLE V, SECT,ION 8
SEC. 8. (a) Subject to application procedures pro-
vided by statute, the Governor, on conditions the Gover-
nor deems proper, may grant a reprieve, pardon, and
commutation, after sentence, except in ease of impeach-
ment. The Governor shall report to the Legislature each
reprieve, pardon, and commutation granted, stating the
p6rtinent facts and the reasons for granting it. The
Governor may not grant a pardon or commutation to a
person twice convicted of a felony except on recommen-
dation of the Supreme Court, 4 judges concurring.
(b) No decision of the parole authority of this state
with respect to the granting, denial, revocation, or sus-
pension 'of parole of a person sentenced to an indetermi-
nate term upon conviction of murder shall become
effective for a period of $0 days, during which the
Governor may review the decision subject to procedures
provided by statute. The Governor may only affirm,
modify, or reverse the decision of the parole authority on
the basis of the same factors which the parole authority is
required to consider. The Governor shall report to the
Legislature each parole decision affirmed, modified, or
reversed, stating the pertinent facts and reasons for the
action.
G88 45
____ Governor's Parole Review
Argument in Favor of PropOsition 89
Proposition 89provides that no decision of the parole Krenwinkle, as well as Robert Kennedy assassin
board releasing a convicted murderer shall become effec- Sirhan Sirhan.
tive until it is first reviewed by the Governor. Under- We have already seen many tragic examples of the
Proposition 89, the Governor, for the first time, will have instances where a convicted killer has been paroled from
the power to block the parole of convicted murderers., prison only to commit further crimes.
Proposition 89 is based on a simple'premise--namely, For example, Robert Nicolaus was sentenced to death
that the public has a right to be 'protected against the in 1964 for killing his three children. After his death
sentence was overturned in 1967, he was subseq~aently
early release of murderers from state prison by having as paroled in 1977. In 1985 he murdered his former wife.
much scrutiny and as many'leveis of examination as Robert L. Massie mUrdered a woman in a robbery in
possible before a convicted murderer is paroled. Surely, 1965 and was sentenced to death. His death sentence was
everyone would agree that any decision to parole a overturned in 1972. He was paroled in 1978 and kJilled a
'convicted killer should be carefully scrutinized.' store clerk in 1979.
In 1983, Governor Deukmejian tried to block the parole In- Sacramento County alone since 1978, there have
of convicted rapist-murderer William 'Archie Fain. The been eight cases where a previously convicted murderer
court declared the Governor didn't have that authority was paroled from prison only to murder again!
and Fain was set .free. Proposition 89 will correct the Murder is the most serious of crimes contemplated by
situation created by that court decision by expressly our society. For this reason, the trial of a murder defen-
giving the Governor the power to block the early release dant is a difficult and closely monitored process. Even if
of convicted murderers. .- the defendant is convicted, the Governor still has the
Proposition 89 is needed because current law does not power to grant reprieves, pardons and commutations.
protect the public. Consider the following: The procedural safeguards of the system are designed t6
· First-degree murderers who-were paroled last year ' protect defendants. 'The Governor can act on behalf of
averaged less than 14 years in state prison, more lenient treatment of convicted criminals. We be-
lieve the state's 'top elected official should also be given
· Between 1973 and 1986, 365 murderers who had been the power to prote'ct the public from the early release of
· paroled were sent back to prison because they vio- still dangerous killers.
lated parole or. committed another felony. We urge a "Yes" vote on Proposition 89.
· In the next ~three years, over 500 convicted killers are '
due for parole 'hearings and possible release, includ- I~ANIEL E. BOATWRIGHT
' State Senator, 7th District
lng Hillside Strangler Kenneth Bianchi, mass tour-
GARY A. CONDIT .
derer Juan Corona, Golden Dragon Massacre killer Member of the Assembly, 27th District
Peter.. Ng, Manson 'Family followers Tex Watson, IRA REINER ~
Bobby Beausoliel, Leslie Van Houten and Patricia Los Angeles County District Attorney
Rebuttal to Argument in Favor of Proposition 89
Proposition 89 will require the Governor. to act within Prison Terms guidelines call for much longer time.
30 days of the grantingof ~ parole date or it will become The law does not require that any parole date be set for
final. He will not have any different information than his a murderer. Public safety is the primary consideration of
nine-member parole board would have had. It will simply the parole board. The person 'has to be found suitable for
allow him to grant or deny 'a parole date when it is parole. The Board of ,Prison Terms commissioners are
politically expedient, prosecutors, sheriffs, police officers, and probation offi-
cers. They represent hundreds of years of experience in
Proposition 89 would have made no difference in the law enforcement. Their main job is to protect the public.
William Fain Case. The Governor tried to block Fain's If they give a parole date it is only when all doubt has
parole years after his parole date was granted by the been removed. Any question about the advisability of a
Board of Prison Terms. parole date is cause for them to take it awayl Proposition
Under current law, a person convicted of first degree 89 will only politicize the parole process. ·
murder must serve a minimum of 17 and three quarters REVEREND. PAUL W. COMISKEY S.J.
years of actual time in prison before parole. The Board of. on behalf of the Prisoners Rights Union
46 Arguments printed on this page are the opinions of the authors and have not been checked for accuracy by any official agency G88
Argument Against Proposition 89
8 f
Proposition 9 in effect makes the Governor of the state for parole. The actual release date is usually, set for years
another parole board with the same powers and the duty away. If any. information develops during those years that
to apply the same rules. The only plausible reason for makes a parole date inadvisable, the parole board has full
change is to give the Governor power to veto the parol~ authority to take the date away. At the hearing to set a
board if the parole board makes a 'Politically unpopular parole date the prisoner is present with his attorney, the
decision. Examples would be giving someone a parole district a. ttorney from the county is there, and three
date when large parts of the public did not approve or parole board members conduct the hearing. If the three
denying someone a parole date when it is politically .parole board members cannot agree on a decision they
unpoptilar to d6 so. The Board of Prison Terms is can refer the matter to the entire panel of nine members
compoged of a group of nine commissioners who are to make a decision. Most of the persons in prison now
appointed by the Governor with the consent of the have not been found suitable for parole and it is likely
Senate. They apply a very technical set of rules when that many never will be. The parole board is under no
they make decisions about setting a parole date. They are obligation to set a parole date if there is any risk to
trained and experienced and conduct hundreds of hear- society. To require prisoners to go through the extremely
ings each year for prisoners all over the state. They are rigid process they must go thlough to get a parole date
former police officers, prosecuting attorneys~ and proba- and then leave the decision up to the whim of the
tion officers. They grant a parole release date in about 9. Governor is to make a farce and mockery of justice and
percent of the hearings they conduct. Persons convicted the rule of law. The parole board' members are appointed
of murder are only eligible to be released on parole after by the Governor and paid a handsome salary. If they are
serving 10 years in prison and typical release dates are not competent to make a decision, how can we expect the
given for 9.0 years or more. A prisoner given a release date Governor who appointed them to do any better?
today will have gone before the parole board a number of Proposition 89 will politicize decisions about whether to
times. All ~relevant facts are considered in great detail grant or deny parole. Unpopular persons will be denied
from the day the person is born to the day of the hearing, parole dates because governors will sacrifice the interests
This means considering the person's family background, of justice for votes. The criminal justice system will
education, crimes, psychological and physical health, job appear even more hypocritical than it is at present.
history, prison behavior, and plans for the futdre. Parole REVEREND PAUL W. COMISKEY S.J.
release dates are-only set after a, person is found suitable on behalf of the Prisoners Rights Union .
Rebuttal to Argument Against Proposition 89
Protecting public safety is a legitimate responsibility of their decisions to grant parole dates to prisoners. But in
the Governor and other elected officials. Proposition 89 virtually every case there has been no significant degree
will not politicize the parole process, but it will provide of public outcry. In most instances, the families of the
an extia measure of safety to law-abiding Citizens by murder victims wish to put those tragic events behind
giving the Governor the authority to block the parole of them and have no desire to become involved in public
criminals who still pose a significant threat to society. 'campaigns associated with the murder of a loved one.
Proposition 89 will help ensure that the rights of crime Proposition 89 will correct a weakness in the state's
parole system and further strengthen California's system
victims and their families are protected, and it represents of justice.
a positive step in maintaining law and order in our state. VOTE YES ON PROPOSITION 89.
The opponents of Proposition 89 contend that the law
would encourage more public outcry, but the evidence GEORGE DEUKMEJIAN
Governor
suggests otherwise. Since 1984, the Board of Prison Terms DANIEL BOATWRIGHT
has been able to consider public views in connection with State Senator, 7th District
(7,88 Arguments printed on this page are the opinions of the authors and have not bgen checked for accuracy by any official agency 47
.0 ] Assessed Valuation. Replacement Dwellings
Official Title and Summary Prepared by the Attorney General
ASSESSED VALUATION. REPLACEMENT DWELLINGS. LEGISLATIVE CONSTITUTIONAL AMENDMENT.
Currently, homeowners over the ageof 55 may, under certain conditions, transfer the .current assessed value of their
home to a replacement dwelling of equal or lesser value lobated in the same county. This authorizes the Legislature
to permit the transfer of assessed valuation to replacement dwelling~ located in different counties if the county G,f the
replacement dwelling adopts an ordinance participating in the program. Applies to replacement dwellings acq~ired
on or after a counW ordinance is adopted, but not before November 9, 1988. Cot/rains provisions concerning the
effective date o~ amendments. Summary of Legislative Analyst's estimate of net state and local government fiscal
impact: By Rself, this measure would have no direct fiscal effect because it merely authorizes legislative action. If
implemented, it would reduce property tax collections in an ambunt 'which would depend on the extent of county
participation, number of qualifying'homeowners, ar/d value of dWellings inv01,~ed. The property tax revenue loss
would not exceed .$20 million in the first year if all cdunties participated and could be substantially less. The revenue
loss would increase~ annually. Sixty percent of the loss would be borne by the cities, counties, and special districts. The
remainder would affect school' districts and community college distr'ict~s. Under existing law, the State General Fund
would offSet the schools' losses beginning in 1989-90.
Final Vote Cast by the Legislature on ACA 1 (Proposition 90)
Assembly: Ayes 77 Senate: Ayes 36
Noes 1 Noes 0
Analysis by the Legislative Analyst
Background counties must adopt the special valuation program by
ordinance. The program Would apply only to replace-
Current law allows homeowners over the age of 55 to ment homes acquired on or after the date on which the
transfer the current assessed 'value of their present home county ordinance is adopted, but in no event earlier than
to a replacement home located in the same county. This November 9, 1988.
program provides qualified homeowners with an exemp-
tion from the increased pr. operty'taxes they would other- Fiscal Effect
wise pay. This measure would have no direct state or local fiscal
To qualify for this special treatment: effect, because it merely authorizes the Legislature to
· The homeowner must buy or build a'replacement adopt its provisions.
home within two years of selling his or her previous If implemented by the Legislature, ihe measure would
- reduce propeity tax collections. The amount of this
home;
· The replacement home must be of equal or lesser revenue loss would depend on the number 'of counties
that choose to participate in the program, the number of
value than the home being rePlaced; and qualifying homeowners, and the value of the original and
· The homeowner must move within, the same county, replacement homes owned by these individuals.
This property tax revenue loss would not exceed $20
Proposal million in the first year if all counties choose to ]?artici-
This constitutional amendment would authorize the pa~e, and could be Substantially less than tha~ amount.
Legislature to extend the existing special valuation pro- The ~evenue loss from this program would increase
gram to homes located in different counties. If imple- · annually.
mented by the Legislature, this proposal would alloW a Cities, counties and special districts would bear approx-
qualified homeowner (~age 55 and over) to transfer the imatelY 60 percent of the revenue loss. The remai!~der of
current assessed Value of the original home to a replace- the losses would affect school districts and communi~ty
ment residence in another county, but only if the county college districts. Under existing law, the State General
in which the replacement home is located has agreed to Fund would offset the losses to the schools and colleges
participate in the program. In order to participate, beginning in 1989-90.
G88
48
Text of Proposed Law' '
This amendment Proposed by Assembly Constitutional constructed ~rlar t~ tko cffcct?;c ~atc of ~2a ~aragra~h
Am6ndment 1 (Statutes of 1988, Resolution Chapter 64) on or after November 5, 1986. '
expressly amends the Constitution by amending sections ' Second-2'That a third paragraph is added to subdivision
.there. of; therefore, existing provisions proposed to be (a) of Section 2 of Article XIII A thereof, to read:
deleted are printed in st~heo~ ~-~ and' new provisions In addition, the Legislature may authorize each COunty
.propos.ed't0 be added are printed in italic type to indicate board of supervisors, after consultation with the local
that they are new. affected agencies within the county.'s boundaries, to
, adop.t an ordinance making the provisions of this SUbdi-
PROPOSED AMENDMENT TO ARTICLE XIII A, SECTION 2 vision ?elating to transfer of base year value also appli-
First'That the second paragraph of subdivision (a) of cable to situations in which the replacement dwellings
Section 2 Of Article XIII A thereof is amended to read: are loca'ted in that county and the original properties are
However, the Legislature may provide that under located in another county Within this state. For pflrposes
appropriate circumstances and pursuant to definitions of this paragraph, "local affected agencyt" means any
and procedures established by the Legislature, any per- city, special district, school district, or community college
son over the age of 55 years who resides in-property district which receives an annual property 'tax 'revenue
which is eligible for the homeowner's exemption under allocation. This paragraph shall apply to any replace-
subdivision. (k) of Section 3 of Article XIII and any ment. dwelling which was 'purchased or newly con-
implementing legislation, may transfer the base year structed on or after the date the county adopted the
value of the property entitled to exemption, with the provisions of this subdivision relating to transfer of base
adjustments authorized by subdivision (b), to any re- year value, but shall not apply to any replacement
placement dwelling of equal or lesser value located dwelling which was purchased or nbwly constructed
within the same county and purchased or newly con- before November 9, 1988.
structed by that person as his or her principal residence ThirdtThat subdivisioxi (i) of Section 2 of' Article
within two years af~,cr of the sale of the original property. XIII A thereof is amended to read:
For purposes of this section, "any person over the age of (i) Unless specifically provided otherwise, amend-
55 years" includes a married couple one member of ments to this section adopted prior to November 1, 1988,
which is over the' age of 55 years. For purposes of this shall be effective for char. gc of c,'.','r, cr:~./p: changes in
section, "replacement dwelling" means a building, strut- ownership which occur, and new construction which is
ture, or other shelter constituting a place of abode, completed, after the effective date of the amendment.
whether real property or personal property, and any land Unless specifically provided otherwise, amendments to
on which it may be situated. For purposes of this section, this section adopted after November 1, 1988, shall be
a two-dwelling unit shall be considered as two separate effective for changes in ownership which occur, and new
single-family dwellings. This paragraph shall r.c,~. apply to construction which is completed, on or after the effective
any replacement dwelling which was purchased or newly date of the amendment.
G88. 49
Argument in Favor of Proposition 90
This is an important tax relief and housing measure for interest in moving to other counties in California so.that
California senior citizens. Why should seniors who wish to they can be close to their children, grandchildren or
takb advantage of Proposition 60, which passed on the other friends and relatives.
NoVembei- 1986 ballot with 77 percent of the vote, be Accordingly, Proposition 90 does two things:
prevented from moving to another California county? If · Allows senior citizens, 55 years of age and older, the
voters ~apProve Proposition 90 they will ease this restric- - ~opportunity to take their lower property tax assess-
't ion by permitting counties, at their option, to accept ments to replacement homes in other California
· Proposition. 60 transfers from other counties, counties if those counties have age:ced to accept such
As you may recall, to qualify for Proposition 60, the transfers, and
"property must be: .
· Purchasehy either (a) a person over the age of 55 · Gives counties the option of accepting transfers by
.. . (~ seniors from other counties. Further, Proposition 90
yea~s ~ a married couple if one spouse is over calls upon county boards of supervisors to consult
the age of 55 years. ,
· Eli'gible for the homeowners exemption, with other affected local government agencies, such
· Purchased within t(VO years of the sale of the original as cities, within the counties', boundaries 'before
~property. , deciding to accept transfers.
"With the passage of Proposition 60, California created Such consultations would no doubt include a determi-
~nev~ housing opportunities for senior citizens by easing a nation if any tax revenues are likely to be lost. But they
. 'property tax burden that prevented many of them from should also include an examination of the benefits that
finding affordable housing. Older homeowners are pro- seniors can bring to their communities. For example,
reefed from huge property tax increases when they since seniors rarely have school-age children, their .arrival
. .choose to sell their larger family homes and move into does not contribute to further school overcrowdin~g that
'smaller replacement residences. At the same time, it many communities are now facing. .
~ ' By approving Proposition 90, we can help increase our
_helps ,many growing families find the larger homes they senior citizens freedom to live where they choose and at
need:
the same time help more young families have the oppor-
: As a,result, more seniors are able to enjoy the rewards
~5f years of hard work, and new buyers, many of whom are tunity to achieve the American dream of homeowner-
young families, are able to enjoy the home that Served the ship. ..
seniors so well for so many years. DAVE ELDER
Unfortunately, because some local ·governments feared Member of the AssemblY, 57th District°
a. loss in revenue they were able to remove the provision CECIL GREEN'
in Proposition 60 which would have authorized seniors to State Senator, 33rd District
transfer their lower property tax assessments across JOSEPHINE D. BARBANO
county lines, or, in other words, from one county to Chair, California State Legislative Committee
another. However, many seniors have since indicated Ameriean.qssociation of Retired Per#ons
- ,' ~'" Rebuttals to Argument in Favor of Proposition 90
The Legislature should-offer voters a comprehensive with normal tax rates, based on current values. ·
amendment to Proposition 13. Here are some possibilities: Ima,gine if income.taxes· used that principle.
· · '- (1) Reduce the assessed value of all property to the You d pay based on your income when you started your
' 1975 levels established for some owners under Proposition present job. Every April 15th, you'd file yo,ur 1975 tax over
13.-Homesbuilt since 1975, for example, would be taxed at again--unless you changed jobs (then you d pay based on
current income).
a level reflective of the area's loWer property values in That's how Proposition 13 handles p~-oPerty, taxes!
'1975. ' Proposition 60 expanded this, letting h0fiieowners over
(2) Periodically reassess all property but provide for an 55 move~ within county without losing "seniority."
automatic reduction in the tax rate so that government Proposition 90 goes further, allowing moves to' other
does not get more money just because overall property counties.
values go up. "Affordable housing??" · '
For other ideas, I assign the remainder of the rebuttal No, a seam letting a fortunate few avoid norma]i taxes.
to a group"with which I have no affiliation. THE WEALTHIEST BENEFIT MOST; THE POOR NOT
GARY B. WESLEY AT ALL.
Attorney at'Ldw Instead: base all taxes on realistic; Current values.
· OVERALL TAXES COULD THEN BE LOWERED
PROPORTIONALLY.
Proposition 13 gave longtime homeowners lower taxes If we lower taxes, shouldn't everyone benefit?
than new homeowners with equal property. That"s discri- . Vote NO.
mination--unfair and irrational. PEBBLES TRIPPET
But when they move, they become new homeowners, San Francisco Grassroots
· 50 Arguments printed on this page are the opinions of the authors and have not been checked for ac?uracy by any official agency G88
' Assessed Valuation. ReplaCement Dwellings 90
Argument Against PrOposition 90
This measure is another proposal by the Legislature to assessments with them when they ha~,~' ~urchased a
amend Proposition 13, a constitutional limitation on prop- dwelling in one county (on or after NoVember 5~..1986)
erty taxes approved by voters in 1978. within 2 years of having sold a dwelling in another county
Under Proposition 13 (now Article XIII A of the Cali- of equal or greater value. A 1986 amendment to Proposi-
fornia Constitution), assessed property values generally tion 13 only allowed such persons to retain their old
assessments if the replacement dwellings purchased were
are frozen at their 1975 levels; however,-property is
reassessed and highe,r, property taxes are' imposed each in the same county.
time the property is purchased, newly construdted, or a Surely, it is unfair to impose higher taxes on persons (of
change in ownership has occurred after the 1975 assess- any age) when all they are doing is moving to more
suitable quarters.
ment." At least persons who sell one home and' buy anOther of
As a result of this reassessment each time property
changes hands, new owners are required to pay far more equal or lesser value have the money to buy the new-
in property taxes than do their neighbors whose property home. Consider the plight offirst-time homebuyers. They
has the same value but was purchased earlier when must pay the sky-high current price for a home in
property values were lower. California by mortgaging their futures and Committing
In addition, this automatic reassessment provision has most of their monthly income to pay the mortg,a~e. It is
caused a gradual but massive shift of the overall property the height of unfairness that these persons shoula suffer
· tax burden from owners of commercial and industrial the additional penalty of paying sky-high property taxes
property (which is. often leased but seldom sold) to based on,,a brand-new assessment of the property.,:
owners (and renters) of residential l~roperty. A "no vote on Proposition 90 may send a message to
Instead of offering voters an amendment to Proposition the Legislature (and Governor) that voters wantto be
13 which would correct these inequities, the Legislature offered a comprehensive amendment to Proposition 13
proposes in this measure to retain the basic flaw but which would eliminate the unfairness to all new Owners
and renters c~eated by the automatic reassessment pro-
permit counties to exempt a relatively small number, of
persons from the unfair, tax burden the automatic reas- vision.
sessment provision places upon new owners and renters Let's stop tinkering with'Proposition 13 and get on With
correcting the basic flaw.
of residential property. '
Specifically, this measure would permit counties to GARY B. WESLEY
allow Persons over the age of 55 to bring their old Attorney at Law
Rebuttal to Argument Against Proposition 90
The opponent of Proposition 90 is right on one count, friends.
Proposition 90 will not make major changes in the · Republican and Democratic legislative leaders back
voter-approved measure known as Proposition 13. Prop- Proposition 90 because it helps correct unfairness in
osition 90, like Propositions 13 and 60, helps ease the our current property tax laws while maintaining the
property tax burden for senior citizens by. permitting tax relief provided by Proposition 13.
them to transfer their lower property tax assessments to By yoting for Proposition 90 we can help give senior
other counties, citizens freedom to 'live where they choose.
Republicans and Democrats agree that Proposition 90 . Please remember that Proposition 90 stands fo'r fair-
encourages the transfer of underused, larger homes'to ness. Proposition 90 helps our seniors and at the same
younger, growing families. . time it helps young families by increasing the supply of
· Not one taxpayer association has opposed Proposition larger homes available for purchase. We urge you to
90 because it, like Proposition 60, will help senior support Proposition 90. On NoVember 8 vote "yes" on 90.
citizens to improve' their' housing without being .. HENRY J. MELLO
· penalized by excessive taxation and allow' them to State Senator, 17th District
take their lower property tax assessments to other Chairman, Senate Subcommittee on Aging
WILLIAM CAMPBELL
counties if those counties agree to accept transfers.
· Proposition 90 will allow older Californians the free- state Senator, Mst District
dom to sell their homes in one County and move to Chairman, Joint Legislative Budget Committee ,.
another county, without paying excessive property PHILLIP ISENBERG
taxes so they might live near family mc.tubers or Member of the Assembly, lOth District
G88 ArgUments printed on this bage are the' opinions of the authors and have not been checked for accuracy by any official agency 51
· 91 Justice Courts. Eligibility
Official Title and Summary Prepared by the Attorney General
JUSTICE COURTS. ELIGIBILITY. LEGISLATIVE' CONSTITUTIONAL AMENDMENT. Amends the State Con-
stitution to provide that justice courts are courts of record and that a person is ineligible to be a justice court judge
unless the person has' been a member of the State Bar or served as a judge of a court of record in California for five
years immediately preceding selection. Makes changes operative on January 1, 1990. Exempts justice court judges who
held office on January 1, 1988, from the 5-year membership or service requiremeni. Makes exemption operatiw., only
until January 1, 1995. Summary of Legislative Analyst's 'estimate of net state and local government fiscal impact: By
itself, this measure would, have no fiscal effect, but Would depend on actions taken by the Legislature to implement
it. The counties affected by the measure would have costs or savings to the extent 'that legislative changes in the
salaries and/or retirement bbnefits of justice court judges would differ from those the counties would otherwise have
made.
Final Vote Cast by the Legislature on ACA 12 (Proposition' 91)'
Assembly: Ayes 73 Senate: Ayes 30
Noes 0 Noes 0
Analysis by the Legislative Analyst
Background
' ProPosal
The Ca. lifornia state court system consis[s of courts on This constitutional amendment' designates justice
five levels: the Supreme Court, the courts of appeal, courts as courts of record. As a result, the Legislature
superior courts, municipal courts, and justice courts. All would set the salaries arid retirement benefits of these
except justice courts are "courts of record." The jUdg- judges. Responsibility for the payment of these costs
ments of courts of record are enforceable in other states, would remain with the counties. The measure also re-
The Legislature sets the salary and retirement benefits o£ quires that justice court judges be attorneys and members
these judges., o£ the State Bar £or at.least five years before they become
There are 76 justice courts in 33 counties in~ California. judges. The measure would take effect January 1, i[990.
Justice courts are established in districts with populations The requirement that these judges be attorneys and
of less than 40,000 and share jurisdiction with municipal members of the State Bar for five years would not apply
courts. Under'.current law, the board of supervisors in to those who held office on January 1, 1988.
each county determines the operations of the justice Fiscal Effect
courts, including the composition of the court staff. By itself, this measure would have. no direct fiscal
Counties also determine and pay the salaries and retire- effect, but would depend on actions taken by the L.'gis-
ment benefits of justice court judges.
lature to implement it. The counties affected by the
In order to become a justice court judge, a Person must measure would have costs or savings to the extent that
be an attorney, and a member of the State Bar of legislative changes in the salaries and/or retirement
California. Most justice court judges serve on a part-time benefits of justice court judges would differ from those
basis, the counties would otherwise have made.
./
59.
Text of Proposed Law
This amendment proposed by Assembly Constitutional
Amendment 12 (Statutes of 1988, Resolution Chapter 65)
expressly amends the Constitution by amending sections
thereof; therefore, existing provisions proposed to be
deleted are printed, in ~.....~w.~'-~ ......... .,~,~ and new provisions
proposed to be added are printed in italic t!tpe to indicate
that they are new.
PROPOSED AMENDMENTS.TO ARTICLE VI,
SECTIONS 1, 15 AND 15.5
First--That Section 1 of Article VI thereof is amended
to read:
SEC. 1~ The jUdicial Power of this State is vested'in
the Supreme Court, courts of appeal, superior courts,
municipal courts, and justice courts. All c×cc~t
courts are courts of record.
Second--That Section 15 of Article VI thereof is
amended to read:
SEC. 15. A person is ineligible to be a judge of a court
of record unless for 5 years immediately preceding
selection to a' municipal or justice court or l0 years
immediately preceding selection to other courts, the
person has been a member of the State Bar or served as
a judge of a court of record in this State. A judge eligible
for municipal court service may be assigned by the Chief
Justice to serve on any court.
Third--That Section 15.5 is added to Article VI thereof,
to read:
SEC. 15.5. The 5-!tear membership or service require-
ment of Section 15 does not apPl!t to justice court judges
who held office on JanUar!t 1, 1988.
This section shall be operative only until Januarll 1,
1995, and as of that date is repealed.
Fourth--That the changes made by this measure shall
be operative on January 1, 1990.
G88 53
1 Justice Courts. Eligibility
Argument in Favor of Proposition 91
~' P~0position' 91 would amend 'the State Constitution to: the lack of a designation as a court of record has a serious
(1) decldre justice cOurts to. be courts of record, (2) impact on the disposition of some cases. Residents in
require justice $ourt judges to have the same minimum these counties suffer legal shortcomings not faced by
experience as municipal court judges, and (3) prohibit residents in larger counties. Proposition 91 eliminates
justice court judges from practicing law. these inequities by affording all California residents equal
California's judicial power is vested in the Supreme treatment within our court system.
Court, courts of appeal, superior, municipal and justice To assure a basic level of judicial competency a.nd
courts. With the exception of justice courts, all courts are commitment, Proposition 91 also requires justice court
courts of..r.e.C, grd. This designation means that orders and judges to have the same minimum experience and qual-
judgments of those courts are fully respected and en- ifications as municipal court judges. Existing law prohibits
forced outside the state and within the federal court judges of courts of record from practicing law. Prop0si-
tion 91 would include justice court judges in that prohi-
system. Not so for justice courts, bition.
Many small, less poPulated counties are served by Approval of Proposition 91 would provide all California
justice courts rather than by municipal courts. The types residents with the same level of judicial and law enforce-
of cases heard by and the jurisdiction'of justice courts are
ment services from our court system.
the same as municipal courts. But the absence of a We respectfully ask you to vote yes on Proposition 91.
designation as a court of record prevents justice courts
LARRY STIRLING
from dealing with several types of matters such as federal
Member of the Assembly, 77th District
search and arrest Warrants and extraditions from other v. GENE McDONALD
states. Yet, these matters all may be dealt with in munic- President, California Judges Association
ipal courts. P.,TERRY ANDERLINI
In counties with a justice court but no municipal court, President, State Bar of California
Rebuttal-to Argument. in Favor of Proposition 91
If Proposition 91 only made justice courts "courts of of the law and a willingness to learn.
record," it would be acceptable. I write ballot arguments to make sure voters receive
Justice court judges should not be allowed to practice arguments on both sides. This November 8, California
law on the side. It is not clear, however, that this is a voters face a long list of ballot measures and will be
problem anywhere in the state. . choosing candidates for high public office.
The heart of Proposition 91, therefore, appears to be It is not easy to decide all of these matters. But the rigiat
the requirement that justice court judges have at least 5 to decide is largely what separates our great nation from
years of experience in the legal profession, the dictatorships and totalitarian governments around the
This requirement unduly restricts the Governor and world.
local voters (when there is a contest for a judgeship) in Let's not let others decide for us. On November 8,
selecting persons .to serve as justice court judges on the please be sure to VOTE.
basis of such factors as integrity, temperament, work GARY B. WESLEY
habits, fairness, judicial philosophy as well as knowledge Attorney at Law
54 Arguments printed on this page are the opinions of the authors and have not been checked for accuracy by any official agency (_~88 il~
Argument Against Proposition 91
Proposition 91 is a proposal by the Legislature to amend .than justice court) have a minimum period of experience
our State Constitution to require that judges of "justice brings to mind provisions of the United States Constitu-
courts" have at least 5 years of experience as attorneys tion written two centuries ago which require'that the
before becoming judges. President be a "natural-born citizen" and at least 35 years
As a general rule, 5 years of experience is not.enough. . of age before taking office (United States Constitution,
Judges of justice courts perform vital functions, including Article II, Section 1, subSeCtion 5). ' ·
hearing evidence at the initial stage of a complex, death- Ted Koppel of ABC's "Nightline" was not born iri this
penalty murder case. Such judges should ordinarily have country; perennial presidential candidate Lyndon LaRi~u-
far more than 5 years of experience in the practice of law. the evidently was born in the United States. Does that
On the other hand, our Constitution provides that mean that Mr. LaRouche 'would necessh'rily be a 'better
judges of the municipal court need only 5 years Of President than Ted Koppel? I hope the question'answers
experience and judges of higher courts, including the itself. ·
California Supreme Court, need only 10 years of experi- With regard to judgeships, 'the Governor and voters
ence.
Both former Governor Jerry Brown and current Gov- should be free to make their own assessment o~ each
ernor George Deukmejian appointed many attorneys to candidate's qualifications without well-intentioned but
the bench who had barely more than the minimum misguided restrictions.
period of experience required under our Constitution. Our State Constitution~should not require a minimum
Surely, a high percentage of these appointees have period °f experience for'any judicial office. A "no" vote
proven to be capable judges, on Proposition 91 at least ensures that the' ~rror 'of
The point is that, while experience is important, there requiring a minimum period of experience is not ex-
is no minimum period of experience that gives voters any tended to candidates for the lowest of California's
significant assurance that an attorney will make a good courts--the justice court.
judge. GARY B. WESLEY
The current requirement that judges of courts (other Attorney a.t Law
· Rebuttal to Argument Against Proposition 91 -.
The argument against Proposition 91 misses' the point, tion to the requirement that justice court judges have the
~The main purpose of this proposition is to establish same, minimum experience as municipal court judges.
justice courts as courts of record. The argument against its The opponent argues that "our State Constitution should
passage fails to address this basic fact. Without the not require a minimum period of experience for'any
approval of Proposition 91, justice courts will continue to judicial office." We disagree. Californians deserve a basic
be treated differently from all other California courts, level of competency and commitment from their'judges,
and Proposition 91 extends that requirement to justice
Today, orders and judgments from our justice courts are
not always fully respected and enforced outside the state court judges as well.
Please improve our judicial system. Require a mini-
and within the federal'court system. Proposition 91 Solves mum level of qualifications and experience before anyone
that problem by declaring all justice courts to be courts of may become a judge and prohibit justice court judges
record, from practicing law.
The argument against Proposition 91 fails to mention Vote "yes" on Proposition 91.
another important fact. Today, justice court judges are
LARRY STIRLING
allowed to practice ]aw on a limited basis. Proposition 91 Member of the Assembly, 77th District
would remedy that situation by including those judges v. GENE McDONALD
under provisions which prohibit judges of courts of record Presideng California Judges Association
from practicing law. P. TERRY ANDERLINI
The argument against Proposition 91 expresses opl~osi- Presideng State Bar of California
G88 Arguments printed on this page are the opinions of the authors and have not been checked for accuracy by any official agency ~5
,92 Commission on Judicial Performance
Official Title and Summary Prepared by the Attorney General ~"
COMMISSION ON JUDICIAL PERFORMANCE. LEGISLATIVE CONSTITUTIONAL AMENDMENT. Specifies
the powers which the CommisSion on Judicial Performance may exercise if, after conducting a preliminary
investigation, it determines, that formal disciplinary proceedings should be instituted against a judge. Such powers
would permit public hearings on charges of moral turpitude, dishonesty, or corruption, and require public hearing at
request of judge charged absent good cause for confidentiality. Shortens the term of specified members of the
commission from 4 to 2 years in order to provide for staggered terms. Prohibits members from serving more than l:wo I
4-year terms. Summary of Legislative Analyst's estimate of net state and local government fiscal impact: This measure
would have a minor impact on state costs.
Final V~te Cast by the Legislature on SCA 6 (Proposition 92)
Assembly: Ayes 72 Senate: Ayes 36
Noes 0' Noes 0
AnalYsis by the Legislative Analyst
Background serious misconduct, the commission may recommend to
. the Supreme Court that judges be suspended, censured,
Under the California Constitution, the Commission on
Judicial Performance investigates complaints regarding retired, or removed. ·
the conduct of judges. Proposal
The Commission on jUdicial Performance consists of This constitutional amendment shortens the terms of
nine members. These members include five judges, who specified members of the commission on Judicial Perfor-
are' appointed by the Supreme Court; two members of mance to two years in order to Provide for staggered
the State Bar of California, Who are appointed by the terms. The measure also prohibits members from serving
State Bar's Board.of Governors; and two representatives more than two four-year terms, but authorizes a member
of the public, who are appointed by the Governor and whose term has expired to continue serving, unE[1 'a
apprOved by 'the Senate. The members serve four-year successor is appointed. In addition, this measure specifies
terms. There is no express requirement that the terms be that if the commission determines that formal proceed-
staggered. Moreover, there are no provisions specifying ings should be instituted, the judge or judges char.ged
whether members may be reappointed. The commis- may require the hearings to be public, unless the eom-
si0n's recommendations for discipline of judges are sub- mission finds good cause for making them confidential.
jeer to review and approval by the California Supreme The measure also allows the commission, without fu/ther
Court. review by the Supreme Court, to issue a public repri-
· The commission receives, on average, about 400 eom- mand, with the consent .of the judge, for conduct, war-
plaints against judges each year and determines that ranting discipline. It further allows the commission to
about five cases warrant hearings. The complaints are issue press statements or releases, and explanatory state-
handled on a confidential basis, but become public when ments, as specified, or, in some instances, to open h,ear-
they are filed with the Supreme Court. For less serious ings to the public.
cases of misconduct, the commission may privately rep-
rimand a judge. The Supreme Court may, but is not Fiscal Effect
required to, review these actions. For cases involving This measure would have a minor'impact on state.costs.
56 G88
, Text of Proposed Law
This amendment proposed bY Senate Constitutional is reversed suspension terminates, and the judge shall be
Amendment 6 (Statutes of 1988, Resolution Chapter 67) paid the salary for the judicial office held by the judge for
expressly amends the Constitution by amending sections the period of suspension. If the judge is suspended and
thereof; therefore, existing provisions proposed to be the conviction becomes final the Supreme Court shall
deleted are printed in ~ ~c. and new provisions remove the judge from office.
p~bposed tobe added are printed in italic type to indicate (e) On recommendation of the Commission on Judi-
. eial Performance the SUpreme Court may (1) retire a
that they are new. judge for disability that seriously interferes with the
PROPOSED AMENDMENTS TO ARTICLE VI, performance of the judge's duties and is or is likely, to
SECTIONS 8 AND 18 become permanent, and (2) censure or remove .a judge
· First--That Section 8 of Article.VI thereof is amended for action occurring not more than 6 years prior to the
to read: commencement of the judge's current term that consti-
SEC. 8. (a) The Commission on Judicial Perfor- tutes, wilful misconduct in office, persistent failure or
manee consists of 2 judges of courts of appeal, 2 judges of inability to perform the judge's duties, habitual intemper-
' ante in the use of intoxicants or drugs, or conduct
superior courts, and one judge of a municipal court, each. prejudicial to the administration of justice that brings the
appointed by the Supreme Court; 2 members of the State judicial office into disrepute. The cc,~".~".~7. Commis-
Bar of California who have practiced law in this State for sion on Judicial Performance may privately admonish a
10 years, appointed by its governing body; and 2 citizens judge found to have engaged in an improper action or a
who. are not judges, retired judges, or members of the dereliction of duty, subject to review in the Supreme
State Bar of California, appointed by the Governor and Court in the manner provided for review of causes
approved by the Senate, a majority of the membership decided by a court of appeal.
concurring. 9AiExcept as provided in subdivision (b), all (d) A judge retired by the Supreme Court shall be
terms are 4 years. No member shall serve more than 2 considered to have retired voluntarily. A judge removed
4-year terms, by the Supreme Court is ineligible for judicial office and
Commission membership terminates if a member pending further Order of the court is suspended from
ceases to hold the position that qualified the member for practicing law in this State.
appointment. A vacancy shall be filled by the appointing (e) A recommendation of the Commission on Judicial
power for the remainder of the term. A member whose Performance for the censure, removal or retirement of a
term has expired may continue to serve until the vacancy judge of the Supreme Court shall be determined by a
has been filled by the appointing power, tribunal of 7 court of appeal judges selected by lot.
(b) To create staggered terms among the members of : (f) If after conducting a preliminary investigation,
the Commission on Judicial performance, thd following the Commission on Judicial Performance by vote deter-
'members shall be appointed, as follows: mines that formal proceedings should be instituted:
(1) The court of appeal member appointed to immedi- (1) The judge or judges charged may require :that
'ately succeed the term that expires on November 8, 1988, formal hearings be public, unless the Commission on
:shall serve a 2-year term. Judicial Performance.by vote finds good cause for confi-
(2)' Of the State Bar members appointed to immedi2 ,dential hearings.
fftely sUcceed terms that expire on December 31, 1988, one (2) The Commission on judicial Performance may,
member shall serve for a 2-year term. without further review in the Supreme Court, issue a
'Second--That' Section 18 of Article VI thereof is publi~ reproval with the consent of the judge for conduct
-amended to read: warranting discipline. The public reproval shall include
SEC. 18: (a) A judge is disqualified from' acting as a an enumeration of any and all formal charges brought
judge, without loss of salary, while there is pending (1) an against the judge which have not been dismissed by the
indictment or an information charging the judge in the commission.
United States with a crime punishable as a felony under- (8) The Cbmmission on Judicial Performance may in
California or federal law, or (2) a recommendation to the the pursuit of public confidence and the interests of
Supreme Court by the Commission on Judicial Perfor- justice, issue press statements or releases or, in the event
mance for removal or retirement of the judge, charges involve moral turpitude, dishonesty, or comp-
. . (b) On recommendation of the Commission on Judi- . tion, open hearings to the public.
cial Performance or on its own motion, the Supreme (g) The Commission' on Judicial Performance may
Court may suspend a judge from office without salary issue explanatory statements at any investigatory stage
when in the United States the judge pleads guilty or no when the subject matter is generally known to the public.
contest or is found guilty of a crime punishable as a felony (h) The Judicial Council shall make rules implement-
under California or federal law or of any other crime that ing this section and providing for confidentiality of
involves moral turpitude under that law. If the conviction proceedings.
'11 i"~ G88 ' 57
Argument in Favor of Proposition 92
For our system of justice to work, it is absolutely does not require public proceedings following formal
necessary that we have comPlete faith in our judges, charges as in other states. It simply allows an accused
For the most part, California has been' blessed with a judge or the commission to open proceedings subsequent
judiciary of integrity. While some citizens will always to formal charges in appropriate cases. Due to the high
object to the policies of particular judges, few would quality of our judiciary, this change poses no threat of
question their 'honesty and basic decency. When judicial endless public spectacle. After all, in 1987 only five judges
abuses do occur, however, they must be addressed in California faced any formal charges at all.
promptly, decisively and with sufficient~ openness to Proposition 92 also includes provisions which allow the
assure continued public confidence, accused judge and the commission to agree to a public
Our State Constitution provides 'for a Commission on reprimand as well as provisions which stagger the terms
judicial Performance which 'investigates charges against of commission members.
judges and makes recommendations to the Supreme This proposition was drafted in part by the Commissi,on
Court, including censure .or removal from the bench on Judicial Performance itself, with the help of the
when appropriate. Judicial Council and the California Judges Association. All
The Supreme Court has the final word, but the eom- agree that the primary job of the commission is to protect
mission does the real work. Trouble is, the nine-member the public from judicial misconduct. All believe this
commission, including five judges and two attorneys, does amendment represents a sensible accommodation of the
its work in complete secrecy. The press and the public are public interest.
barred from proceedings and any knowledge of the We're proud of our judges"and the fine work they do.
charges or facts in the case. But every public official, no matter how high the office,
Between 1960 and 1987, only 25 of the 7,185 complaints must ultimately be accountable to the public. When the
lodged with the commission resulted in public punish- integrity of our courts comes under que, stion, we can ill
ment. Even if a judge has already been publicly tried and afford to be bound by a rule which concludes in every
convicted of a misdemeanor, the disciplinary proceedings case that the public and pres~ are better off in the da~tk.
of the commission based on the same misconduct are Such absolute secrecy is the antithesis of democracy.
closed to the public, prOvide a little sunlight in tl~is critical area of govern-
Judges should not be sul~ject to public suspicion based ment. Vote yes on Proposition 92. ..
on a mere complaint but once formal charges are filed, ED DAVIS
perhaps the public should know. That is what happens in State Senator, 19th District
24 other states. That is how cases are handled involving BILL LOCKYER
doctors, lawyers, and other professiOnals. State Senator, lOth District
Proposition 92 proposes to open disciplinary proceed- TOM McCLINTOCK
ings against judges in a limited but reasonable way~ It Member oftheAssembly, 36th District
Rebuttal to Argument in Favor of Proposition 92.
I agree with the proponents that we need complete effective in its present state. Their poor record is under-
faith in our judges and therein lies our difference. The standablewpresently there are. 5 judges, 2 lawyers, and 2
proponents do ~not go far enough in their proposal in laypeople on the commission who recommend to the
changing' the commission on judicial performance. If Supreme Court (more lawyer-justices) to censure or
you're going to amend the Constitution then do it right remove a brother.
Change it to 5 laypeople (women and minorities should
the first., time. be represented), 2 judges, and 2 lawyers and give them
Too many ignorant and incompetent lawy.ers are ap- some teeth ,by letting them have the sole power to
pointed as judges who too often become arrogant in their Censure or remove rogue judges. Only then would the
security of immunity. The record of the commission on public,s confidence be restored in their judicial system.
judicial performance, given by 'the proponents, i.e., only VOTE NO on Prop 92. The legislators need to place
25 out of 7,185 complaints resulted in public punishment another measure on the ballot with the above recommen-
in 27 years speaks for itself wimpy--merely a wrist- dations.
slapping public entity that is-neither useful nor cost STEVE D. WILSON, Ph.D.
58 Arguments printed on this page are the opinions of the authors and have not been checked for accuracy by any official agency G88 ii
Argument Against Proposition 92
The Commission on Judicial Performance consists of 5 by voters, the Governor has the opportunity to appoint
judge~: 2 lawyers and 2 nonlawyers serving terms of 4 replacements.
years. The function of the commission is to investigate A lot of money is at stake in California's court system.
alleged'judicial misconduct and take appropriate action. Multimillion-dollar lawsuits are pending. The potential
for corruption certainly is present.
The Commission on Judicial Performance may clear a
judge of any wrongdoing or admonish a judge if miscon- Perhaps more important, .however, is the need to
control the arrogance of too many judges. We need a
duct is found. The commission may also recommend that mechanism for instilling and ensuring humility and re-
the California Supreme Court censure or remove a judge spect for the law in those lawyers who manage to gain
from office, appointment to judicial office.
When one considers how judges gain office, it becomes Given that local attorneys are afraid to run against
quite evident why California needs an active, indepen- appointed trial court judges and that voters seldom
dent Commission on Judicial Performance. receive much information when it comes time to approve
Judges of the trial courts in California's 58 counties or reject appellate court justices, the Commission on'
(called justice courts, municipal courts and superior Judicial Performance is left to hold judges accountable
courts) are supposed to be elected; however, the State and ensure that ours is a system of laws and not men.
Constitution provides that vacancies may be filled .by That brings us to Proposition 92. This measure would
appointment of the Governor. When a new judgeship is stagger the terms of the 9 members of the commission
created or when a local judge retires, a vacancy exists and and establish a two-term limit.
the Governor makes an appointment. Once appointed, A two-term limit is desirable for many government
the new judge will never be on the ballot unless a local positions, although, in this case, a one-term limit would be
lawyer has the unmitigated gall to run against the appoin- better.
tee and give local voters a choice in the matter. Staggering terms is NOT desirable because periodically
Judges of the higher, appellate courts (the court of replacing the entire commission could allow new mem-
appeal and the California Supreme Court) are appointed bers to replace the entire staff and completely revise the
by the Governor, confirmed by a Commission on Judicial operation, if necessary.
Appointments and serve~ the unexpired pOrtion of the Voters should reject Proposition 92 and the Legislature
12-year terms held by their predecessors. At the next should place on the ballot another measure that would
gubernatorial election, appellate court judges .(actually establish a one-term limit and provide for more than 2
'called "justices") appear on the ballot for approval or nonattorne~ts on the'commission.
rejection by voters. If appellate court justices are rejected STEVE D. WILSON, Ph.D.
Rebuttal to Argument Against Proposition 92
Since its creation in 1960, the Commission on Judicial both opponent and Proponents desire greater, public
Performance has responded to complaints involving the accountability. The differences in perspective appear
conduct of judges. While the judges of California are not minor.
perfect, they have forged ~a tradition of excellence of Proposition 92, which is the product of numerous open
which we can be proud. Proposition 92 seeks to ensure hearings in the Legislature, was drafted with the expert
California's position as a national leader in the law. assistance of the Commission on Judicial Performance
and is designed for the sole purpose of making the
Occasional breaches of judicial conduct are inevitable Commission more responsive to the needs of the public.
but no major or systematic problem exists in California. Proposition 92 is not intended to allay the concerns of
Accordingly, Proposition 92 has been drafted with the
every disgruntled litigant, or resolve every potential
objective of assuring continued public confidence in a problem with the judiciary, but is a sound move in the
fine system through increased openness, right direction.
After 28 years it is appropriate that some 'adjustments Vote yes on Proposition 92.
be made to the operation of the Commission on Judicial ED DAVIS
Performance. State Senator, 19th District
The argument against Proposition 92 indicates that the BILL LOGKYER
opponent shares some of the same objectives as those who State Senator, lOth District
support Proposition 92. While it is difficult to determine TOM MGCLINTOGK
the most appropriate degree of scrutiny, it is clear that Member of the Assembly, 3tlth District
I: G88 Arguments printed on this page are the opinions of the authors and have not been checked for accuracy by any .gfficial agencY 59
Official Title and Summary Prepared by the Attorney General
VETERANS' PROPERTY TAx EXEMPTION. LEGISLATIVE CONSTITUTIONAL AMENDMENT. Under existing
law, the State Constitution exempts up to $1,000 of the assessed value of real property from the property tax ff 'the
owner is an honorably discharged member of the armed forces, or the parent or unmarried spouse of a dece~ied
veteran. This measure deletes the additional requirement that the veteran'must have been a California resident upon
entry into the armed forces or on November 3, 1964. Summary. of Legislative Analyst's estimate of net state and local
government fiscal impact: Beginning in 1989-90, this amendment would reduce property tax collections. The revenue
loss probably would be less than $50,000 per year. Cities, counties and special districts would bear approximately' 60
percent of the loss. The remainder would affect school districts and community college districts. Existing law would
require the State General Fund to offset the losses to the schools and the colleges, beginning in 1989-90.
Final Vote Cast by the Legislature on SCA 16 (Prop0sition93)
Assembly: Ayes 74 Senate: AYes 32'
Noes '0 Noes !.
Analysis by the Legislative Analyst
Background '
California veterans are entitled to claim a $1,000 prop-
erty tax exemption. To qualify, the person:
(1) Must be an active or honorably discha~"ged mem-
ber of the armed forces.
(2) Must have either entered the service from Califor-
nia, or l~een' a resident in this state On a specific
date.
Parents or an unmarried spouse of an eligible deceased
veteran also can qualify for this exemption.
Proposal
This constitutional amendment deletes the residency
requirements for the veterans' property tax exemption.
Thus, a veter~_n or the parent or unmarried spouse of a
deceased veteran who claims the exemption would not
need to meet the residency requirements in order to
qualify for the exemption.
Fiscal Effect "
This amendment Would reduce property tax collections
beginning in 1989-90. Relatively few persons claim this
exemption because a homeowner is not allowed to claim
both this exemption and the homeowners' exemption on
the same property. As a result, this exemption is primarily
claimed on boats, airplanes and second homes.-Conse-
quently, the resulting pr'operty tax revenue loss probably '
would be less than $50,000 per year.
Cities, counties and special districts would bear approx-
imately 60 percent of the revenue loss. The remainder of
the loss would affect local school and community college
districts. Under existing law, the State General Fund
would offset the losses to the schools and the community
colleges, beginning in 1989-90.
6O C~8 f
Argument in Favor of Proposition 93
' Proposition 93 would bring theC/difornia Constitution, as
it relates to ~,eterans' property tax exemptions, in line
with two recent United States Supreme. Court rulings.
The decisions in Hooper v. Bernalillo County Assessor
(1985) and Attorney General of New York v. Eduardo
Sota-Lopez (1986) struck dOwn as unconstitutional similar
residence requirements imposed by other states as a
condition for state-offered benefits.
Based on the decisions in these two cases, it is clear .that
the residence requirement in the California Constitution
for veterans' property tax exemptions is unconstitutional.
However, until either an appellate court strikes down the
California requirements or the Constitution is amended,
California assessors must continue to enforce the resi-
dence requirements in granting property tax exemptions
· to veterans.
In order to eliminate residence requirement and to
-bring the California Constitution into conformity with the
Supreme Court rulings, I urge a "yes" vote on Proposition
93.
WADIE P. DEDDEH '
State Senator, 40th District
ERNEST J. DRONENBURG' JRi
Chairman, State Board of Equalization
ANDREW STEFFANIC
California State Commander, American Legion
No argument against Proposition 93 was filed
Text of proposed law appears on page 123
II G88 Arguments printed on this page are the opinions of the authors and have not been checked for accuracy by any official agency
4 Judges
Official Title and Summary Prepared by the Attorney General
JUDGES. LEGISLATIVE CONSTITUTIONAL AMENDMENT. Permits judges of. courts of record to accept
part-time teaching positions that are outside the normal hours of their judicial position and do not interfere with the
regular performance of their judicial duties. Prohibits judicial officer from earning retirement service credit from a
public teaching position while holding judicial office. Summary of Legislative Analyst's estimate of net state and local
government fiscal impact: Will have little, if any, fiscal impact on the state and local governments.
Final Vote Cast by the Legislature on ACA 17 (Proposition 94)
Assembly: Ayes 63 Senate: Ayes 37
Noes 2 Noes 0
Analysis by the Legislative Analyst
Background
The California Constitution prohibits judges of the
Supreme Court, the courts of appeal, superior courts, and
municipal courts from accepting other public offiCe or
employment, including teaching at public institutions,
during their judicial terms. These judges may, however,
teach at private institutions. The California Code of
Judicial Conduct sets standards regarding the compensa-
tion judges may receive from participating in outside
activities.
Under existing law, the state provides retirement ben-
efits for these judges based on their age and the length of
their judicial service.
Proposal
This constitutional amendment permits judges of the
Supreme Court, the courts of appeal, .superior courts, and
municipal courts to teach part time at public institutions,
provided that the activity is outside the normal hours of
their judicial positions and does not interfere with the
performance of their duties. The measure prohibits judi-.
cial officers from gaining additional retirement credit
from a public teaching position.
Fiscal Effect
This measure would have little~ if any, fiscal impact on
the state and local governments.
Text of Proposed Law
This amendment proposed by Assembly Constitutional ·
.... Amendment 17 (Statutes of 1988, Resolution Chapter 70)
expressly amends the Constitution by amending a section
thereof; therefore, existing provisions proposed to be
deleted are printed in ~tril~cc, ut ty~c and new provisions
~' :" ' ~ proposed to be added are printed in italic t~tPe to indicate
' : that they are new.
PROPOSED AMENDMENT TO ARTICLE VI, S}~CTION 17
SEC. 17. A judge of a court of record may not prac-
tice law and during the term for which the judge was
selected is ineligible for public employment or public
office other than judicial employment or judicial office,
except a judge of a court of record may accept a part-time
teaching position that is outside the normal hours of his
or her judicial position and that does not interfere with
· the regular performance of his or her judicial duties .
while homing office. A judge of thc :upcr~c,r ov mun~c~pa!
cc, ur~ a trial court of record may, however, become
eligible 'for election to other public office by taking .a
leave of absence without pay prior to filing a declaration
of candidacy. Acceptance of the public office is a resig-
nation from the office of judge.
A judicial officer may not receive fines or fees for
personal use.
A judicial officer may not earn retirement service credit
from a public teaching position while holding judicial
office.
G88 63~
Argument in Favor of Proposition 94
The primary purpose of Proposition 94 is to amend the ing judges as lecturers and professors for many ye~i's and
state Constitution to allow a judge of a Court of record to the experience has been overwhelmingly positive for
accept a part-time teaching position which does not these schools and their students.
interfere'with his or her judicial duties. This measure also In order to remedy this inequity, Proposition 94 would
makes two technical changes which would: (1) prohibit allow judges to accept part-time teaching positions', at
any judge from earning retirement service credit from a public institutions provided that the work does not
public teaching position while holding judicial office, and interfere with the regular duties of the judge's posit~ion,
(2) clarify the law requiring all judges of trial courts of and the work is undertaken outside the normal hours for
record to take a leave of absence withOut pay 'in order to that position.
run for election to other public office. Judges are regulated by the Canons of Judicial Conduct
The Constitution prohibits judges of courts of record which require that the judge place primary emphasis
from accepting public employment or public office out-
upon his or her judicial position. A failure to adequal!ely
side their judicial positionduring their term of office. This and competently discharge judicial duties, can lead to
prohibition has been interpreted to mean that a jUdge removal from office; Californians thus can be assured I:.hat
cannot accept a teaching position at a public school, but. utilizing judges as teachers in public schools will be
may accept one at a private school. The prohibition beneficial to the public and pose minimal potential for
applies during the time the judge is actually in office and abuse.
during the entire term for which the judge was selected, We respectfully' hsk you to vote yes on PropositiOn 94.
even if the judge has resigned part way through the term.
PETER R. CHACON
The practical effect of this provision has'been to allow Member of the Assembl~t, 79th District
students at private universities and colleges to benefit
V. GENE McDONALD
from the knowledge and experience of judges, but to fudge
deny to the students at public educational institutions the Presideng California Judges ~4ssoeiation
contact and exposure to this valuable source of knowl- r. TERRY ANDERLINI
edge and expertise. Private institutions have been attract- Presideng State Bar of California
Rebuttal to Argument in Favor of Proposition 94 ~-
The provision in Proposition 94 which permits judges to Unde~ Proposition 94, it might be possible to sure a
teach part time for pay at public institutions only as long judge whose part-time teaching position at a public
as the job "does not interfere with the regular perfor- institution is interfering with his or her full-time posi'tion
mance of his or her judicial duties . . ." is practically on the bench. But what attorney ~would take the case?
unenforceable. . · What questioning of the judge would be allowed in the'
Under existing law, a judge who allows any activities to lawsuit? What other judge would want to decide the case?
prevent him or her from~ performing the duties of the Given the staggering backlog of criminal and civil cases
judicial office could be removed by the California Su- pending in California's courts, we should not authorize
preme Court on recommendation of a Commission on judges to take part-time jobs in public schools or colleges.
Judicial Performance. This almost never happens. ' On November 8, please exercise your best judgment
Technically, judges of trial courts in California are concerning the measures and candidates on the ballot.
elected by local voters. I,n reality, though, a trial court' VOTE and encourage everyone you know to vote (pref,
judge is ordinarily appointed by the Governor and stands erably your wa~y!).
election only if a local attorney runs against the Gover- GARY B. WESLEY
nor's choice. Attorney at Law
64 Arguments printed on this page are the opinions of the authors and have not been checked ~or accuracy by any official agency
JUdges` 94.I
Argument Against Proposition 94
Proposition 94 is'a proposal by the Legislature to,amend idea to allow judges t0 teach part time.
our state'Constitution to permit a judge to teach part Judges have an immense ~tack of homework every day.
time for pay at public institutions as long as the job "is And, while attorneys sometimes wonder whether some
outside the normal hours of his or her judicial position judges have done [heir homework, 'allowing judges to
and does not interfere with the regular performance .teach 'Part time at .public institutions can only' make
..... matters Worse. Teaching requires many hours of prepa-
of his or her judicial duties ..... " ration and judges just do not have the time.
The proposed amendment reflects a concern that · A "no" vote on Proposition 94 will retain the' prohibi-
judges not permit part-time teaching positions to 'inter- ti0n'against judges teaching for pay at public institutions.
fere With their full-t/me jobs on the bench. Hox3ever, The Legislature should offer' voters at the next eledtion a
.' neither existing law nor .the proposed, amendment re- measure that would prohibit judges from teaching at
stricts judges who teach part time in private institutions, private institutions as.welL ' .
such as the law schools at the University of Santa Clara, Certainly; many judges, are marvelous people and
, the University of San Francisco'and the University of San teachers who bring precious insight to the classroom;
Diego. however, tmless and until the number of judges across-the
· Why should we'amend our State Constitution to create state is increased dramatically, judges will not be able to
one rule for judges who wish to teach at public institu- find .the time to both teach and handle their heavy
caseloads.
~ tions and 'maintain another rule for judges who Wish to
With regard to my remark about attorneys sometimes
teach at private institutions? .
Allowing judges to teach part time is either a go0didea wondering whether some judges have'done their home-
- work, I can only hope that the remark is taken in the
or a bad idea. kindly spirit in which it was Offered!
Given the enormous volume of criminal and civil cases
GARY B. WESLEY
filed in California's courts, it~is probably, on balance, a bad Attorney-at Law
Rebuttal to Argument Against Proposition .94
The arguments against ProPosition 94 are misguided~ NOT reduce or eliminate the number of cases filed.
First, this measure WILL NOT create one set of rules Instead, it will hurt our students by depriving them of the
for those judges who teach' at' public schools and another practical experience judges Can bring to the classroom.
set for those who teach at private schools. Instead, judges Many private schools emPloy judges to teach on a
will be subjected to the same rules on part:time teaching part-time basis. These schools-recognize the importance
regardless of where they may choose to teach. This is of having judges interact with students in the classroom.
because all judges must follow the rules of judicial Judges are "specialists" in the law and the rules-and
.conduct. These rules require judges to place primary procedures of the court.
emphasis upon their judicial duties. Judges can be re- Improve our public school system. Permit students in
moved from officefor poor performance. This ~hreat Will public law schools to benefit from the experience judges
can offer them.
serve as an effective safeguard from potential abuses that Vote "yes.''~
might otherwise occur.
Second, the opposition asserts that on balance it is a bad PETER R. CHACON
Member of the Assembly, 79th District
idea to let judges teach part time because it will worsen
P. TERRY ANDERLINI
the already enormous nUmber of court cases filed. Yes, President, State Bar of California
there is an. enormous number of cases filed in our courts. ' v. 'GENE McDONALD
Continuing a Prohibition on after-work contact between Judge ·
judges and law students in public schools, however, WILL President, California Judges Association
688 Arguments printed on this page are the opinions of the authors and have not been checked for accuracy by any official agency 65
Hunger and Homelessness Funding. Initiative Statute
Official Title and Summary Prepared by-the AttorneY General
HUNGER AND HOMELESSNESS FUNDING. INITIATIVE STATUTE. Creates public corporation to disburse
funds to counties, other political subdivisions of the state, and nonprofit organizations. pursuant to countywide plans,
to provide emergency and transitional services for hungry and homeless persons, and for low-income housing as.
specified. Funding to Come' from neW fines for the violation of existing laws and regulations r61ating to housing and
food preparation, and bonds secUred by the revenue from these fines. Includes other provisions. Summary of
Legislative Analyst's estimate of net state and local government fiscal impact: The revenue to be collected from new
fines is unknown because. (1) the measure does not specify, the amount, of each fine and (2) the measure lets cilties
and counties decide the number of fines given Out. Possibly,-several millions of 'dollars could be collected each year.
Analysis by the Legislative Analyst
Background Infraction Tickets
Services for the Homeless. · State and local govern- This measure creates new fines for violations of certain
ments and private charities in California serve the home- health and safety laws dealing with building stand~rrds
less through a variety of programs. These' programs and food preparation. Violations of these laws may be
provide housing, food, and other Services such as health charged as infractions, which are lesser crimes than
care, ~_ misdemeanors. For example, most traffic violations are
Health and Safety Laws.' Generally, local govern- infractions. As with traffic tickets, the person' charged
ments enforce health and safety laws. Some of these laws could pay the infraction ticket or go to court to argue the
deal With building standards and food. preparation in citation.
restaurants and other places where food is prepared or This measure limits the fines to. no more th~m $250 per
processed. State law sets penalties for violations df these, day for-each violation. It requires the state to work with
laws. The penalties include fines of up to $1,000 and jail local courts to make sure the fines are reasonable.
sentences of up to one year for the-first time someone
breaks these laws. Cities and counties may keep some of This measure al~o lets cities and counties charge vilola-
the money collected from .these fines, tots an additional fee to cover the costs of processing the
Cities and counties 'enforce these health and safety laws tickets.
in different ways. Us. ually they order the owner to correct Requirements for Spending the Money
violations within a set time period. If the problem-is not
corrected in timer the city or county can do several This measure creates a public corporation called the
different things. For example, it can take away the "Corporation for California." It would b~ an agency of
person's license to operate, close the business or bm'lding, state government with a 15~member- board of directors.
or take.the person to court. In court, the judge can order Its membership would include the State'Treasurer, 4
the person to correct the problem, fine the person, ol put' members appointed 'by the Governor, and- 5 members
the person in jail. appointed by each house of the Legislature.
Cities and counties Would collect the fines. They would
Proposal .. keep a certain share and send the remainder to the
This measure has three major partsi corporation. This measure sets out the following reqctire-
· Infraction Tickets. It creates new penalties for ments for the use of these funds:
violations of laws that deal with building standards · Cities and counties would keep at least' 10 pbrcent,
'and food preparation. Cities and counties would but not more than 25 percent, of the money to cover
enforce these new penalties by giving infraction their enforcement costs.
tickets (citations)to persons who violate these laws. · The corporation would give counties up to 70
'· .Requirements .for Spending the Money. It creates percent of the money to provide temporary housing
the "Corporation for California" to give out funds for and food for .those in immediate need, to expand
services to the hungry and homeless. It also specifies health' and food programs and employment services,
how the corporation and ci~ and county govern- 'and to provide low-cost housing. Ci~ies could rec~ive
.ments would use the money from the infraction part of these funds.
tickets. In general, the money would pay for services · The corporation would give public or private agen-
for the hungry and homeless, and for low-income ties up to 10 percent of the money to pay for var:ious
housing. .. programs to provide low-income housifig.
· Bonds. It allows the new corporation to sell bonds. · The corporation would keep up to 10 percent of the
The money from the sale of the bonds would pay for_ money for administrative expenses, research; and
various low-income housing programs. The corpora- demonstration projects. It would a!so provide grants
tion would use some of the money collected from to private nonprofit organizations for programs to
tickets to pay off the bonds, improve services, to the. hungry and home].ess.
66 ~ G88
Issuance of Bonds by (~orporation 'Fiscal Effect
This measure permits the corporation to sell bonds. The - The £mes from the health and safety infractions would
in0neY from the sale of the bonds could be used to paY for 'pay for the various housing and service programs autho-
various programs to build or. fix up housing for low- rized by this measure. The total amount of these fines is
income people. The corporation would use some of the unknown because (1) the measure does not say exactly
ticket money it collects to pay off the bonds. These bonds how much each "ticket" would cost and (2) the measure
Would' be guaranteed by the corporation, not by the state lets cities and counties decide how many tickets to give
government, out. It is possible· that several milliohs of dollars could be
collected each year from these· new fines.
Text of PropOsed Law
This initiative measure is submitted to the people in accordance with order to carry out the intent of the People.
the provisions of Article II, Section 8 of the Constitution. 8699.1. Definitions. For the Purposes of this chapter, the following
This initiative measure amends sections of the Penal Code, adds definitions shall apply:
sections to the Government Code, argends, repeals, and adds sections to. · (a ) "Affordable," with respect to housing costs within this chapter,
the Health and Safety Code; therefore, existing sections proposed to be shall mean housing costs not exceeding 25 percent of gross income.
· deleted are printed in s~ikcg~:~ ty~c and new provis~ons proposed to b~ ' (b) ''Area median income"shall mean the median family inco~ne of
' a geographic area of the stat-e, as annually estimated by federal agencies'
added are printed in italic type to'indicate that they are new. pursuant to Section 8 of the United States Housing Act of 1937, as
' - PROPOSED LAW amended, or as.otherwise estimated pursuant to the provisions of Health
and Safety Code Section 50093(b). ' ·
CALIFORNIA HUNGER AND HOMELESSNESS ACT (c) "Board" shall mean the bo, ard of directors of the Corporation for
The People of ihe State of California do enact as follows: California.
SECTION 1. ' Findings and Declarations. The People of the State of (d) "Bond" or "Bonds" shall mean bonds, savings bonds, warrants.,
California hereby find and declare all of the following: notes; bond anticipation notes, commercial paper or other evidence~ of
· (a) Hunger and homelessness in California, particularl~l among' indebtedness, or lease, installment purchase, or bther agreements or
children, the elderly, and Vietnam-era veterans, have reached epidemic certificates of participation therein.
proportions. More and mo~e of the residents of this state are unable to
adequately house or feed themselves and their families. (e) "Corporation" shall mean the Corporation for California.
(b) One in every ten Californians, including more than ~ne million . '(f) "Homeless person" or "the homeless" shall mean a person or
children, rely on emergency food programs for bare sustenance, while persons lacking the financial resources, mental capa~'ty, or community
thousands more are turned away. A n estimated 200,000 Califg~rnians are ties needed to obtain housing, and shall include a person or persons at
homeless, immediate risk of becoming homeless..
(c) Innovative steps to address the immediate and long-term prob- (g) "Hungry person"or "the.hungry"shall mean a person or,persons
lems of hung~r~ and homele~sness a~e.necessary in order to provide lacking the financial resources, mental capacitor, or community tigs
assistance and prevent th~ spread of crime and disease· needed to obtain a nutritionally adequate diet, .and shall include
(d) A cost-effective and 1.ocally implemented program of housing, ' person or.persons at immediate risk of becoming hungry.
nutrition, health screening, job referral, and employment training must (h ) "County"shall mean a county of this state, except that where the
be~'developed to stop hunger and homelessness' in California. This board shall elect to disburse funds to another political subdivision of
program must build upon existing programs and volunteer efforts. ' this state pursuant to the provisions of Section 8699.41.(a), "county7
(e) This initiative will help alleviate the problems of hunger and shall mean Such other political subdivision.
homelessness without raising taxes or imposing new taxes on thee People '8699.3. Amendment and Repeal. This chapter may be amended or
of California. repealed by the procedures set forth in-this section. If any portion of
SECTION 2. Section 19e of the Penal Code is hereby amended to ~ subdivision (a) is declared invalid, then subdivision (b) shall be the
read: . ~ exclusive means of amending or repealing this chapter.
19e. The following offenses are subject to the provisions of subdivi- (a) This chapter may be amended to further its pueposes by ~tatute,
sion (d) of Section 17: Sections 330, 415, 555, and 853.7, of the Penal passed in eachhouse by rollcall, vote entered in the journal, two-thilds
Code; subdivision (m) of Section 602 of the Penal Code; subdivision (b). of the membership concurring, and signed by the Governor, if at least
of Section 25658 and Sections 25661 and 25662 of the Business and 12 days prior to passage in each house the bill in its final form has been
Professions Code; Sections 27150.1, 40508, and 42005 of the Vehicle Code, delivered to the board for distribution to the news media and to. every ·
Section 14601.1 of. the Vehicle Code based upon failure to appear; person who has requested the board to send copies of such bills to him
Section 31002 of the Health and Safety Code, and any other, offense or her.
'which the~ Legiglature makes subjec, t to the provisions of subdivision (d) (b) This chapter may be amended' or repealed by a statute that
of Section 17. Except where a lesser maximum fine is expressly provided becomes effective only when approved blt the electors.
for violation of any of such sections, any such violation which is an
infraction is punishable by a fine not exceeding two hundred fifty dollars Article 2. Corporation for California.
($250). ~ ~ 8699.5. CreatiOn of Corporation.
Except for Section 14601.1 of the vehicle Code, based upon failure to (a) There is hereby created within the Business, Transportation, and
appear, a conviction for any offense made an infraction under subdivi- Housing Agency the Corporation for California (hereinafter, the "Cor-
sion (d) of Section 17 shall not be gr6unds for the .suspension, poration"); which shall provide funds to the counties or other political
revocation, or denial o,f any license, or for the revocation of probation or subdivisions of this state for services for hungry and homeless persons,
parole of the person convicted., and may additidnally provide funds to qualified private nonprofit
' SECTION 3. Chapter 7.9 (commencing'with Section 8699) is added agencies for demonstration and pilot prog.raras assisting hungry and
to Division I of Title 2 of.the Government Code, to read: homeless persons. The Corporation constitutes a public instrumentality
CHAPTEB Z9. HOUSING AND NUTBITION ASSISTANCE LAW and a political subdivision, of the statg 'and the exercise by the'
Corporation of the powers conferred by this chapter shall be deemed
Article 1. General Provisions and held to be the performance of an essential public function. The
8699. Title; Purpose and Intent. This chapter shall be knoum and corporation shall not be subject to laws or regulations which,govern the
may be cited as "The California Housing and Nutrition Assistance rights, duties, operations, or taxation of corpordtions in this state..
Law. 7 It is the intent of the People to provide through this chapter a (b) The Corporation shall be administered bit a board of directors
method fo'r providing the counties of'this state with additional funds consisting of the following voting members:
for the purpose of alleviating the problems of hunger and homelessness (1) Four members appointed .by the Governor, three of whom shall
in California. To this end, it is the purpose of this chapter to' establish be persons having the following qualifications: two, who shall be
the Corporation for California and to empower this Corporation to issue
bonds, disburse funds, and take such other action specified herein in Continued on page 123
G88 67
-Hunger and Homelessness Funding. Initiative StatUte'
Argument in Favor of Proposition 95
HUNGER 6 ItOMELESSNESS /S UNACCEPTAfLE IN CALIFOR- Hunger & h0melessness is... a 61-~/car-old woman Whose husband,
' recentl~t died, following a prolonged illness which depleted the coui~le s.
NIAproposition-- 95 will help get hungry and homeless people off thesavings:She can no longer afford the rent on the apartment they once
streets and into a job and permanent h, ousing without spending one shared, and now finds herself wandering the streets in sear_ch of food
dollar of tax money/ and shelter.
Proposition 95 will provide, a range of services for those Who are How will Proposition 95 work?
hungry and homeless. The money will come from fines imposed on Proposition 95'is an innovative new measure which would impose a
slumlords and hnsanitary food' establishments--not from your tax dol- fmc--similar to a traffic ticket--on lawbreakers Who violate health,
lars! safety and building codes. Money from the fines will go to local
Proposition 95 will m~ke sure this money goes to those pepole whogovernments and nonprofit charitable organizations--those most able to
need help-not to some ineffective state bureaucracy! make a difference
How serious is the problem? Proposition 95 is cost-effective and comprehensive. The program will
.Hunger and homelessness have reached el~idemie proportions in provide:
California, partieularly among children, the elderly and Vietnam era · emergency food and shelte~
veterans: · job counseling
· One in ten Californians, including more than one million children, · emergency rent assistance
rely on emergency food programs, while thousands more are · drug and alcohol treatment
turned away. · health screening ' ' ' '
· An estimated 250,000 Californians are- homeless-over 25% are · ~hild care
families and children--most are frightened and neTM to the streets. Proposition 95 will create a new California Savings Bond in small
. Most hungry and homeless-people are victims of circumstance--andenominations of $100 or less..Just as small investors once funded a war
illness, unemployment, an injury--things that could' happen to anyone effort, Californians will help win the war against hunger and homeless-
at any time. . , ness by investing in California Savings Bonds.
' Hunger & homelessness is... a pregnant teachers assistant who Proposition 95 enjoys Strong bipartisan support. It will' attack, the
cannot wo'rk until after delivery and her husband, a carpenter, who problems of hunger and homeles§ness without spending one dollar of
hurt his back. One dag their money is gone. Theft end up sitting on a tax money.
bus bench, wondering where the~t will live and what theft will eat 'VOTE YES ON PROP'OSITION
Hunger & homelessness is... a mother of two children, running CONW/iY H. COLLIS ._
from a violent husband Who phy, sicall~t abuses his fa_milg She has run
Meraber, State Board of Equalization
out of time at the local women s refuge. With nowhere to go and no Proponent on behalf of Californians Working Together
mon~, the mother and her children are living .in the.same car they to End Hunger and Homelessness '
escaped in. For food, they stand in line at a soup kitchen. VALERIE HARPER
Hunger & homelessness is ... a Vietnam veteran who suffers Actress
seizures £rom his war experience, whose ben_efit checks did not arrive Advocate for the Hungry and Homeless
because he changed addresses and now finds himself hungry and living REVEREND JOSEPH A. CARROLL
in a park. Presideng S~ Vincent de Paul~Joan Kroc Center
Rebuttal to Argument in Favor of Proposition 95 .
Homelessness is unacceptable. BUT Proposition 95 ~s ineffective, PROPOSITION95:
unfair and wasteful.., and eouli:l make the problem even worse. · Automatically fines and Unfairly penalizes.even minor code-viola-
THE HOMELESS WONT BE HELPED BY.. lions in restaurants, homes, grocery stores and apartments wit'hout
· creating a huge new government bureaucracy with dozens 0f allowing time for correction.
political appointees and highly paid staffers. Fully' 25% of funds · Singles out small businesses, entrepreneurs and property owners to
could be spent for county administration, plus millions more .for pay for a nationwide problem without reqUiring most big corpora-
state staff and administration; ' lions to pay a dime to help the homeless.
· burdening local taxpayers and governments with heavy neTM legal Under Proposition 95, even local grocers and restaurants pwviding
and court costs; · excess food for the hungry are penalized-as are school cafeterias and
· creating an unworkable penalty system using mandatory quotas tosoup kitchens. Did.thegt cause the homeless problem?
raise 50 to 90 million dollar~ annually. This sys. tem is strongly'We can do a better job of helping the homeless. VOTE "NO"ON
opposed .by the same environmental health inspectors required to PROPOSITION 95.
administer it. JEFF PALSGAARD
Proposition 95 could make it harder.to help the homeless b~ giving President, California Environmental Health Association
state government an excuse to wash its hands of the Problem. STANLEY KYKER
58% of the homeless arb mentally'ill, alcoholics or drug addicts. Executive Vice President, California BestaurantAssocia:tion
Proposition 95 will be ineffective at helping these individuals and givesRONALD 'C. SCHULTZ,-Ph.D., R.S.
only lip service to rehabilitation and job training. Professor of Health Science · '
68 Arguments printed on this page are the opinions of the authors and have not been checked for'accuracy by any official agency G88
Hunger and Homelessness Funding. In, itiative statute.' 9
Argument Against Proposition'95
Finding solutions to the'problems of the homeless is a critical eonce, rn rental properties, for even the. most minor violations--stich as a
to every Californian. But Proposition 95 is a costly, unfair, and' leaking faucet or missing light bulb. Owners and managers will be
ineffective way of addressing this serious social issue. 'given no warnings or time to comply--fines will be issued automat-
Proposition 95 creates an expensive new government bureaucracy ically to meet the law's quotas.
and unfairly penalizes a few to pay for Society's responsibilities.· There are OTHER HIDDEN COSTS. Local taxpayers will pay
Local grocers, restaurants, innkeepers, apartment owners and even .additional costs for processing inspection and arrest warrants~ and
homeowners are the target for $50 MILLION TO $90 MILLION IN Prosecuting violators through the court system.
NEW.-FINES THAT MUST 'BE IMPOSED--to meet the law's quo- Does this sound like an effective way of helping people in need of a
tas~by local building and environmental health inspectors in every home or medical care?
community of the state. We've heard these promises before--how one morenew governmeht
ONE OF EVERY THREE DOLLARS raised can go to pay millions in -Program.will help fill an important social need or fund a social program.
SALARIES, BENEFITS, OVERHEAD AND RESEARCH costs for this Remember the campaign promises made about how the lottery would
bureaucracy~not to the homeless. · savepublic education in' California? .
Worse still, it does not effectively deliver the services most desper- Proposition 95 is unfair and it hurts entrepreneurs and small business,
ately needed to break the cycle of h'omelessness--job' training and as well as consumers and renters who will eventually pay higher prices
and rents to-cover the Costs .of these fines. Innkeepers, comer grocery'
placement, substance abuse counseling and health care for mental and store owners, family restaurateurs and property owners will be forced to
physical illness.
pay for a problem that belongs to us all--with millions wasted on an
Here are the facts:
· ' Proposition 95 :creates a new state agency that has virtually 'no unnecessary new government bureaucracy. ·
accountability for how it raises and spends public money. It has the .We urge you to vote NO on Proposition 95. It's a well:meaning but
power to issue bonds, spend taxpayers' money, impose quotas for misguided p~0posal for California.
· fines and establish costly rules and regulations. ~DON C. BEAVER
i Fourteen new political appointees and an executive director--guar- - Presideng California Grocers Association
anteed $78,000 annually in salary--will direct the new bureauc- TRICE HARVEY '
racy. Who knows how'many lawyers and other staff will be added? . Member of the Assembly, 33rd District
Each of the 58 counties can also bstablish new committees, headed Registered Sanitarian
u~ by nine more political appointees, to implement Proposition 95. JEFF PALSGAARD
· ~nese fines will be levied on grocery stores, restaurants,~inns, or Presideng Californ'ia Environmental Health Association
Rebuttal to Argument Against Proposition 95
WE CAN HELP CAL[FOBNIA'S HUNGRY 6 HOMELESS. · Proposition 95 ~s innovative. It attacks the causes of hunger and
Proposition 95 is an innovative and cost-effective attack on hungerhomelessness. It provides funding for job training, drug and alcohol
and homelessness--without using tax dollars or creating a big new treatment, health care and mental health counseling, in addition to
bureaucracy. Proposition 95 will provide direct assistance to the hungry emergency food and shelter. .
' With each passing day the problem only grows worse and the solution
and homeless and will help thousands of people, become productivebecomes more costly to us all. By acting now we can begin to put an end
members of society'.
to the crisis of hunger and homelessness.
Here ar6 the facts:
Prdposition 95 will begin to move hungry and homeless people from
· Proposition 95.is fair:.Its funding come. s from fines against negligent the streets and into a job and permanent housing without increasing
slumlords and unsanitary food establishments found guilty of serious taxes ....
violations of health and safety codes. There is no tax indrease, and VOTE YES ON PROPOSITION 95..
no responsible business person will pay any added costs. Only TOM BRADLEY
lawbreakers who endanger our health and safetywill be penalized. Mayor, Los Angeles
· Proposition 95 is cost-effective. Instead of creating a big new state WILLIAM CAMPBELL "
bureaucracy it specifies that services for the hungry and homeless be state Senator, Mst District
provided by local governments and nonprofit agencies. In fact,
· · ROBERT W. STRINGHAM
Proposition 95 has a strict limit on administrative costs and'specff- Presideng California Association of
ically autho0zes only two.staff positions. ~ Food and Drug Officials
G88 Arguments printed on ~ page are the opinions of the authors and have not been checked for accuracy by any official agency ,69
Official Title and Summary. Prepared by 'the Attorney General
COMMUNICABLE DISEASE TESTS. INITIATIVE STATUTE. Requires courts in criminal and juvenile cases, upon
· finding of probable cause to believe bodily fluids were possibly transferred, to order persons charged with certain~ sex
offenses, or certain assaults on peace officers, firefighters, ~or emergency medical personnel, to provide specimens' of
blood for testing.for acquired immune deficiency syndrome (AIDS), AIDS-related conditions and other communi-
cable diseases. Provides ~notification to specified Persons of test results. Requires medical personnel in correctianal
facilities to'report inmate exposure to such diseases and notice to personnel who come in contact with such inmates.
Provides confidentiality, of information reported. Summary of Legislative Analyst's estimate of net state and local
government fiscal impact:The costs of judicial proceedings to local governments and laboratory costs to local and state
governments could range up to $1 million annually depending on cost of courtroom hearings, the nature of the tests,
and the number of persons subject· fo them.
Analysis by the Legislative Analyst
Background kept confidential. A person may not be ,tested for anti-
Communicable .Diseases. State law gives health offi- bodies to fhe HIV without 'his or 'her written 'consent,
cials the authOrity to take certain actions to prevent the unless the testing is part of a scientific investigatio~t in
spread of communicable diseases Such as diphtheria, which blood samples are obtained anonymously. With
typhoid, tuberculosis, "and various venereal diseases, few exceptions',, no one may disclose the results of an HIV
among others. For example, health authorities may isolate antibody test except for physicians who have been aUtho-
certain individuals irrfected with a communicable disease, rized in writing by the person tested. Ahy°ne who makes
if they feel it is necessary in order to protect the health of an unauthorized disclosure may be subject to civi], or
others, or they may quarantine individuals who have criminal penalties. In addition, no one can be compelled
been exposed to an infectious disease. However, the law to identify an ir/dividual who has been tested for ttIV.
currently makes no provision for individuals to be tested antibodies in any criminal or other governmental pro-
for any disease against their will. Further, a person's ceeding.
health status is generally held confidential by health These provisions also apply to inmates housed in st:ate
authorities. For example, health authorities who treat, a prisons, County jails, and juvenile detention facilities who
person for venereal disease may contact others who have may be infected with the HIV or .any commtmicable
been sexually involved with that person and advise them disease.
to see a physician for examination, but~'officials will not '
disclose' the identiW of the person with the venereal Proposal
disease... This measure allows 6ourts to require that cerl:ain
AIDS. Acquired immune ' deficiency syndrome individuals be tested for HIV infection and other eom-
(AIDS) is a disease that impairs the body's normal ability municable diseases without-their consent, and. permits
to resist serious diseases and infections. The disease is limited disclosure of the'test results, in two situations:
caused, by a virus--the human immunodeficiency viru~ 1. Victims 'of certain sex crimes may obtain a court
(HIV)--that is spread through intimate sexual contact or · order requiring the person charged with the crime to be
exposure to the blood 9f an infected person. At the time tested for the HIV antibodies-and other communicable
this analysis was prepared (June 1988), there .was no diseases, if the court determines' that there is reason to
readily available method to detect whether _a person believe that bodily fluids may have been exchanged
actually hhs HIV, but a test does exist to detect whether during the alleged crime.
a. person 'has developed antibodies to the. virus. The 2. Peace officers (including city Police officers,_deputy
presence of the HIV antibody indicates that the~ person' sheriffs, members of the California Highway Patrol, cot-
has been infected with the virus. However, a person may , rectional officers, and certain other types of law enfo~tce-.
have been infected with the HIV and 'still. have negative ment officers), firefighters, or emergency medichl work-
test results for HIV antibodies, because it usually takes ers who have been bitten, scratched, spit upon, or
about six weeks, but can take up to six months or longer, ·.otherwise involved in a potential exchange of blood[ or
for the antibodies to develop in response to the infection, other bodily, fluids by someone interfering with their
A person infected with the HIV may or may not develop duties may obtain a court ord~.r requiring the indiviclual
AIDS after a period of.years. There is no known cure for to be tested for HIV antibodies and other communicable
AIDS, which is ultimately fatal, diseases, if the individual has been charged in a criminal
Although health officialS have the authority to take the complainL and if the 'court determines that there is
same actions to prevent the spread of'AIDS as for other reason to believe that a transfer of bodily fluids may have
communicable diseases; specific laws govern HIV testing occurred. -·
and confidentiality. They specifically prohibit'involuntary Under the meaSure, the court determines which com-
HIV testing, and requi~e that results of voluntary tests be municable disease tests, in addition to the HIV antibody
70 ' G88
test, should be administered. Fiscal Effect
-Copies of the test results are to be given to the person The measure would result ,in (1) costs to local govern-
requesting the court 6rder, to the person tested, and, if ments, for court proceedings to determine whether a
the person tested is in prison, in jail, or in a juvenile person should be tested for 'HIV infection, or for other
detention facility, to the' officer in charge of his .or her communicable diseases, and (2) laboratory and adminis-
detention or' incarceration.
The measure also provides that if medical personnel in trative costs to local governments and the state to con-
duct the blood tests, and to notify the .person requesting
prisons, jails, and juvenile detention facilities learn that an the test and the person tested ofthe results.
inmate of the facility has been exposed to the HIV or
other communicable 'diseases, they must inform the of- . The total cost of the initiative'would depend on the
number of peace officers, firefighters, emergency medi-
fleer in charge of the faCility. The officer in charge must
then inform all staff and volunteers who.may come in cai personnel; and victimS of sex crimes .who request
c6ntact with that inmate that the inmate has been court-orderedtesting, the.length of the courtroom hear-
exposed. ' ings, and the number and type Of laboratOry tests ordered
Anyone who deliberately discloses the identity and ' by the courts. Based on available data on the number of
health status of the person who was 'tested for HIV- sex crimes committed each year, the number of assaults
antibodies or other, communicable diseases, beyond the against peace officers, firefighters and emergency medi--
disclosures required by this measure, is guilty of a misde-
mea~nor, punishable by imprisonment incounty jail for up laboratory costs for blood 'tests, it is 'estimated that the
to six months, or by a fine of up to $1;000, or by both: combined state and local costs of this measure could
imprisonment and a fine. range up to $1 million annually.
Text of' Proposed Law
This initiative measure is submitted to the peoPle in .accordance with detained, to the officer in charge and' the chief medical officer of the
the provisions of Article II, Section 8 of the Constitution. facility in which such person is incarcerated or detained.
This initiative measure adds sections to the Health and Safety code; ' 199.9Z Assaults on Officers. Any person charged in any criminal
complaint filed with a magistrate or court and any minor with respect
therefo?e, the new provisions proposed to be added are printed in italic · to whom a petition has been filed in juvenile court; in Which it is alleged
type to indicate that they are new. in whole or in part that' the defendant or minor interfered with the
PROPOSED LAW' official duties of a peace officer, firefighter, or emergency medical
personnel by biting, scratching spitting, or transferring blood or other
SECTION 1. Adoption of Chapter. bodily fluids on, upon, or through the skin or membranes of a peace
A new Chapter 1.20 commencing with se6tion 199.95 entitled "AIDS officer, firefighter, or emergency medical personnel'shall in addition to
Public Safety andTesting Disclosure" and new sections 199.95, 199.96, any penalties provided lnj law be subject to an order of a court having
199.97, and 199.98 are added to Part I of Division i of the Health and jurisdiction of the complaint or petition requiring testing as provided in
Safety Code to read as follows: . this chapter.
· 199.95. Purpose. The people of tKe State of California find and The peace officer, firefighter, emergeffcy medical personnel or the
declare that AIDS, AIDS-related conditions, and other communicable employing agenctd, officer, or entity may petition the court for an 'order
diseases pose a major threat ,to the public health and safety, authorized under this section.
The health and safety of the public, victims of sexual drimes, and The court shall promptly conduct a hearing upon any such petition.
peace officers, firefighters, and custodial personnel who may come into If the court finds that probable cause exists to believe that a possible
contact with infected persons, have not been adequately protected by transfer'of blood, saliva, semen, or other bodily fluid took place between
law. The purpose of this chapter is to require that information that may the defendant or minor and the peace officer, firefighter, or emergency
be vital to the health and safety of the public, victims of certain crimes, medical personne~ as s~pecified in this section, the court shall order that
~ certain defendants and minors, and custodial personne~ custodial the defendant or minor provide two specimens ofbloodfor testing as
medical personne~ peace officers, firefighters and emergency medical provided in this chapter.
personnel put at risk in the course of their official duties, be obtained Copies of the test results shall be sent to the defendant or minor, each
and disclosed in an appropriate manner in order that precautions can
peace officer, firefighter, and emergency medical personnel named in
be taken to preserve t~heir health and the health of others or that such the petition and his or her emploging agency, officer, or entity, and if
persons-can be relieved from groundless fear of infection '. the defendant or minor is incarcerated or detained, to the officer in
It is the intent of ~his chapter to supersede in case of conflict, existing charge and the chief medical officer of the facility in which such person
statutes or case law on the subjects covered including but not limited to is incarcerated or detained..
the confidentiality and consent provisions contained in. chapters 1.11, 199.98. Testing.
1.12, and 1.13 of Part I of Division '1 of the Health and Safety Code.
199.98. Sexual Crimes. Any defendant charged in any criminal (a) The withdrawal of blood shall be performed in a medically
complaint filed w, ith a magistrate or court with any violation of Penal approved manner. Only a physician, registered nurse, licensed coca-
Code Sections 261, 261.5, 262, 266b,.266c, 286~ 288~ or 288a and any minor tional nurse, ,licensed medidal technician, or licensed phlebotomist may
with respect to-whom a petition has been filed in a juvenile court withdraw blood specimens for the purposes of this chapter.
alleging violation of any of the foregoing laws, shall be subject to an (b) The court shall order that the blood specimens be transmitted 'to
order of a court having jurisdiction of the complaint or petition a licensed medical laboratory and that tests be conducted thereon for
requiring testing as provided in this chapter, medically accepted'indications of exposure to or infection by acquired
If an alleged victim listed in the complaint or petition makes a immunity deficiency syndrome (AIDS) virus, AIDS-related ~onditions,
'written request for testing under this section, the prosecuting attorney, and such communicable diseases for which medically approved te~ting
or the' alleged victim may petition the court for an order authorized is readily and economically available as determined by the court.
under this section. (c) Copies of test results which indiCate exposure to or infection by
- The court.shall promptly conduct a hearing upon any such petition. AIDS, AIDS-related conditions, or other communicable diseases shall
If the court finds that probable cause exists to belidve that a possible also be transmitted to the State Department of Health Seroices. .
transfer of blood, saliva, semen, or other bodily fluid took place between (d) The test rbsults shall be sent to the designated recipients with the
the defendant or minor and the alleged victim' in an act specified in this following disclaimer:
section, the court shall order that the defendant or mi-nor provide two "The tests were conducted in a medically approved manner but tests
specimens of blood for testing as provided in 'this chapter, cannot determine exposure to or infection by AIDS or other communi-
Copies of the test results shall be sent to the defendant or'minor, each .cable diseases with absolute accuracy. Persons receiving this test result
requesting victim and, if.the .defendant or minor is incarcerated or Continubd on page 127.
G88 71
27L1·(h/2 CommUnicable Disease Tests. Initiative Statute·
Argument in Favor of Proposition '96
·
Proposition 96 is a victim's rights measure and a public AiDs or the HIV virus. This Will make such-not{fication
health measure, consistent with the procedures noxv in place for o[her
Proposition 96 is clearly constitutional and nondiscrim- communicable diseases, This will allow for appropriate
inatoiy, providing for reasonable procedures of cOnfiden- . precautions in the housing and transportation of such
tiality. ' inmates so asto reduce ~he' risk to both employees and
Proposition 96 has been developed to correct a grave other inmates.
· injustice that existing law 'permits to be perpetrated · Those who are the victims of violent crime have a right
against women 'and children who are victims of sexual to kn, ow if they have been exposed to possibly t~atal
assaults; publ, ie safety officers, (police, fire, emergency disease(s). Even if such knowledge may not alter the
medical) Who are victims of physical assaults; and em- course of the disease in-their own body, it can pr0teet
ployees and inmates of prisons,~jails, and juvenile faeilifies family members Or others whom an unwary victim might
who may be exposed to possibly fatal disease (s). otherwise expose to the disease.
Proposition 96 will permit a judge to order a person Our 'California Legislature has failed to correct 'this
Charged with sexual assault to be tested for sexually grave injustice. We, the people, must do so with our Votes.
transmittable diseases. At the request of the victim (s) of Vote yes on Proposition 96. Let' the victims of sexual
sexual assault, the results of that test will be made known assaults know that we don't want them to be further
to them. If the victim is a child, the -parent or guardian traumatized by the system;
u)ill receive the results. . 'Vote yes on Proposition 96. Let our public. Safety
Proposition 96 will permit a judge 'to order a person officers knoW.that we support themas they go about their
charged with assault upon a publie'safety officer (police, hazardous duties of providing for our Safety.
fire, emergency medical)to be tested for communicable Vote yes on Proposition 96. Vote for the protection of
disease (s), if.during the assault the officer was exposed to victim's rights and public health--perhaps your own or'
blood or other bodily fluids. The results of.the test will be that of your loved ones.
made known to the victim officer, or, ff he or she is SHERMAN BLOCK
incapacitated, to the employing agency. · Sheriff, Los Angeles County
Proposition 96 will permit the medical staff in prison~, MONROE RICHMAN, M.D. '
jails, and juvenile facilities to notify the person responsi-. Commissioner, Los Angeles County Commission on AIDS
ble for the care and safety of persons in that facility, ED DAVIS
whenever it is determined that an inmate is infected with - State Senator, 19th District
Rebuttal to Argument in Favor of Proposition '96 ·
Proposition. 96 is neither a victim's rights measure nor' a virus was transmitted. Proposition 96 doesn't do tlhat.'
public health measure. 'It is a wasteful, unnecessary Instead,' under the'guise of protecting women and chil-
-measure which responsible public health and law en- dren, Proposition 96 would waste millions on useless tests
forcement authorities oppose, for people accused of crimes,
The victims of violent crimes and public safety officers* The Legislature is working now on laWs that appiy
when there truly is a risk of exposure. Thos'e laws, and
do have a right to know if they have been exposed to a laws which give crime victims and public safety officers
possibly fatal disease. Instead of.doing that, Proposition 96 the testing and counseling they need, are. what we should
would scare' them into thinking they have been exposed ~ have' instead of the misguided waste that Proposition 96
when they could not possibly have'.been exposed. The calls for.
AIDS virus is transmitted through sexual contact and Proposition ~6 is a mistake.
intravenous needle sharing, not casual contact between Vote no on Proposition 96.
citizens and public safety officers, MICHAEL HENNESSEY
Violent crime victims and public safety officers who
Sheriff, City and County of San Francisco
could have been exposed have aright to know ff the virus ROBERT J. MELTON, M.D., M.P.H.
was transmitted to them. Since the AIDS virus isn't Presideng Health Officers'Association of California.
transmitted through every sexual contact or every needle MARCUS A. CONANT, M.D. '
-stick, people who truly may have been' exposed need to Chairman, California Department of Health Services,
be given testing .and counseling so [hey can know ff the 'Tas~ Force on AID& 1983-1988
72 Argume_r/ts printed on this page are th~ opinions of the authors and have not been checked for accuracy by any official agency G88
Communicable DiSease TestS. ,Initiative Statute 96
Argument Against .Proposition 96
Proposition 96. is another 'unneeeisary, heavy:handed to have testing and counseling made available to them ff.
approach to ~the AIDS epidemic, they are concerned about being exposed. But PropoSition
AIDS presents special challenges in the field of law' 96 won't do that, either.
enforcement. The' State Legislature has been working Proposition 96 'says. that persOns accused of sex-~elated
with law enfOrcement and health officials to devise -crimes can be tested without consent. Since the AIDS
responsible legislatign on these issues.· Proposition 96 virus can't be transmitted in many sex crimes, many
Would be counterproductive'to these promising efforts.~ victims will be needlessly alarmed.
' ' ' Proposition 96 says that ff any medical person wo~'king
Don't be fooled. This initiative wouldn't help crime P ~
victims or law enforcement Officials. Instead, it would in a jail believes someone has the AIDS virus, the worker·
spread ignorance about AIDS and would waste millions of must tell the person ir/charge, who must tell all employ-
- ecs who might have contact with the infected person.
critical tax dollars on useless tests. ,
Proposition 96 would foster the 'irrational fear that This is foolish because casual contadt can't possibly trans-
· mit the virus. Once the information goes to so many
, AIDS can be transmitted through certain crimes, or people, medical confidentiality can't.be maintained. In-
through the normal course of law enforcement. California mates or others may mistreat people with the .virus.
citizens should be giving crime victims, police officers, ,Worse still, workers who could be exposed, like medical ·
firefighters and emergency personnel all of the support workers wot.king with needleS, might be less careful with
we can, not instilling fears that they're being exposed to people who have not' been named as carrying the virus.
. AIDS. The men and women who risk their lives prOtecting the
Under Proposition 96, any ditizen accused of interfering public safety--and citizens who have been the victims of
· with.a fire, polic& or emergency medical worker can be crime--should not be frightened into thinking that they
tested for the AIDS virus against their will. have been infected by AIDS when they haven't been.
Those tests won't help anyone. Medical experts agree 'Vote NO on. this ill-advised initiative.
that AIDS is spread through sexual contact or intravenous Vote NO on Proposition 96.
needle-sharing, not through casual contact, such as be-' .
tween citizens and medical, fire and police 'workers. MICHAEL HENNESSEY
· Sheriff, City and County of San Francisco
pUblic 'safety workers have 'the right to expect that ff
ROBERT J_. MELTON, M.D., M.P.H.
they have been exposed to the AIDS virus, testing and Presi-deng Health Of Jl-cers'Association of California
counseling will be provided to them, But Proposition 96 MARCUS A. CONANT, M.D.
won't do that. Chairmam California Department of Hea~th Services,
· Like law enforcement 'workers, crime victims deserve Task Force on AIDS~ 1983-1988
Rebuttal to Argument Against Proposition 96
Proposition 96 ~learly articulates well-defined proce- poliCe, fire, or emergency medical workers. It provides
dures designed to offer victims of sexual assaults, public for court-ordered testing of persons who are Criminally
safety officers, and employees and inmates in our adult charged. ,
and juvenile correctional facilities a measure 6f protec- In no case does Proposition 96' concern ~itself with casual
tion against many potentially fatal diseases, contacts between persons. There must be exposure ·to
In those cases wherein such persons may have already blbod, semen, or other bodily flUids as a result of a
been exposed, it will enable them to act in a manner that .criminal act.
Would minimize exposing their loved ones or others with Vote ~,es-'on proposition 96. Let the women and chil-
whom they might come 'in contact.
'Rather than foster an irrational 'fear of AIDS as the dren who are victims of sexual assaults know that we
support .them.
opponents postulate, Proposition 96 will offer to a sexual Vote yes on Proposition 96. Let our 'public safety
assault victim or public safety officer the peace of mind of '. Officers know that-you care about their well-being.
knowing whether or not they have been exposed to any
communicable or sexually transmittable disease. Virtually SHERMAN BLOCK
all such diseases are treatable, and they are ~1 covered by Sheriff, Los Angeles County
Proposition 96. MONROE RICHMAN,
As is typical in such cases, the opponents misstate the Commissioner, LOS Angeles County Commission on AIDS
'factual content of Proposition 96. It does not ~mandate ED DAVIS
AIDS tests for any citizen ~accused of interfering with State Senator, 19th District
688 Arguments printed on 'this page are the opinions of the authors and have not been checked for a~ccuracy by any'official agency 73
State Oecupahonal Safety and Health Plan..,
{ InitiatiVe Statute : '.-- ·
Official Title and .Summary Prepared by the Attorney General
,STATE OCCUPATIONAL SAFETY AND HEALTH.'PLAN. INITIATIVE STATUTE. Federal law permits states to
enforce occupational safety and health Standards in. private sector employment pursuant to federally approved state
plan. California has had such a state phn and has 0eeupational safety laws regulating private and public employment.
In 1987, the Governor took_action to withdraw the plan and to redu_ee its funding. This measure req~uires funds to be
budgeted for the state 'plan and requires steps be taken to prevent withdrawal of federal approval .of the plan or, if
withdrawn, ~to require submission of new plan, Other changes are made. Summary of Legislative Analyst's estimate
of net state and loc .al~ government fiscal impact: The cost to state government depends on the results of legal action
on the issue of the state's present obligation to .administer private sector enforcement. If it is held that the Governor
legally terminated the private seetor~ Cai:OSHA program, then, assuming the previous~ level of federal matching funds
is made available, the annual net increase.in General Fund costs could exceed $19. million, which would be .offset by
revenue from fines of approximately $1.6 million annually.~ If it lis held that the state already has.an obligation to
administer the private sector program ~notwithstanding the Governor's aetion~ then annual State General Fund costs
could be approximately $700,000 to administer a mine inspection program.
-.. . . Analysis by the'Legislative Analyst ..
Background : exposure- to toxic substances, and (2) seek the maxin~um
Under the 1970 Federal Occupational Safety and level of federal funds to support the costs-of administering
Health Act (OSHA), programs have'been established to the state plan.
protect the life, safety and health of workers. These The measure also authorizes the state to enforce ,,;tare
programs are operated either by the federal government~ workplace health and safety Standards in situations where
or by an. individual, state under a federally approved plan, the federal government, is actively enforcing' federal
The federal government pays about half of the costs of standards (referred to as "concurrent jurisdiction"). This
· ' opeiating approved state programs. ' would be allowed, however, only if specifically permitted
'California has operated its own. program--referred to by federal law.
as Cai-OSHA--since 1973. Under Cai-OSHA, the state .
Department of Industrial Relations' (DIR) enforces work- Fiscal Effect
place standards and regulations for both the private and· The fiscal effect of this measur~ would depend on, how -
public sectors. In 1987, however, the Governor requested the' California Supreme Court rules on· the state's obliga,
withdrawal of the private-sector component of the state tion to c6nduct a private-sector Cai-OSHA program
plan and elimihated fun~ding for that component. This 'If fhe Court Finds·No Existing Obligation to.Operate
action was challenged, and a state appellate court ruled the Program. If the court rules that the Governor legally
that the·state must continue operation of the private- terminated the private-sector Cai-OSHA program, this
sector program. At the time of this writing (June 1988), measure would impose·new costs on the state by requir-
this decision was 'on appeal to the' California Supreme ing it to restore the program. Reestablishing the program
Court. In the meantime, the· federal· government has would cost about $23 million annually. About~ half of these
been operating its own private-sector workplace enforce- costs ($11.5 million) would be paid ·from the .~;tate
meht program in the state. Federal wOrkplace standards General Fund and the balance from the federal funds.
are not as strict as the state's, and currently the federal -This estimate 'assumes that the state's Previous lew,1 Of
enforcement program has fewer staff than the'state had Cai-OSHA activity would, be sufficient to minimize risks
in 1987. to workers, and that the state would receive matching
In addition, a CalifOrnia court ruled in 1986 that state federal fUnds. In addition tO the $11.5 million in state
law prohibited DIR from' enforcing" state ·workplace to reestablish the Cai-OSHA program, the State also could
health and safety standards where the federal govern- incur costs due to the "concurrenfjurisdiction" provision.
ment is actively enforcing federal standards. This decision If the state authorized the enforcement of state work.·
r~sulted in the state disc. ontinuing enforcement of state place health and safety Standards for mines and tunnels, it
standards for mines and tunnels, because the federal would incur annual General Fund costs of·about $70(]~,000.
government was actively enforcing its standards. - ' ' Thus, total state costs under'this measure could exceed
. $12 million annually: The reestablishment of. a priva.te-
Proposal . sector Cai-OSHA program also wOuld result in additJ'.onal'
This measure require.s the Governor and DIR to tak. e state revenues from the collection of fines imposed on
whatever steps ate necessary to restore state operation Of Violators of health and safety laws..It is e~timated that
the private-sector Cai-OSHA program.' The measure 'also these additional General Fund revenues Would total
requires the Governor to: (1)·propose sufficient funds in '~approximate!y $1.6. million annually.
the budget submitted to.the Legislature to minimize the . If the Court Finds an Existing State Obligation tO
risk 'to workers from industrial injuries, illnesses and Operate the Program. If the court rules that the st-qte is
74 ' ' G88.
already legally obligated' to fund' the private-sector Cai- have a fiscal impact. If the state aUthorized the enfOrce-
OSHA program, the program would be reestablished ment of state workplace health' and safety standards for
regardless of this measure: Consequently', the Cai-OSHA .mines and tunnels, it would incur annual General Fund
provisions of this measure would have little or no effect, costs of about $700,000.
The "concurrent jurisdiction" provision, however, Could
Text of Proposed Law
This initiative measure is submitted to the peoPle in Section 4, of the California_ Constitution; state )urisdic-
accordance with the provisions of Article II, Section 8 of tion over worker safety and health should not be limited,
the Constitution. eliminated br otherwise restricted, unless absolutely re-
This initiative measure amends and adds sections to the quired bythe Federal Constitution.
Labor Code; therefore, new provisions proposed to be SECTION 2. Section 50.7- of the' Labor Code is
amended to read:
added are printed in italic type to indicate that they are 50.7. (a) The Department of Industrial Relations is .
new. , , the state agency designated to be responsible for admin-
PROPOSED LAW ' istering the state plan._for the development and enforce-
CALIFORNIA OCCUPATIONAL SAFETY AND ment of 0ccupational safety and healthstandards relating.
HEALTH RESTORATION ACT to 'issues covered by corresponding-standards promul-
gated under the federal Occupational Safety and Health ~
SECTION 1. The people of Californiq' find and de-~ Act of 1970 (Public Law.91-596). The state Plan shall be
clare that: consisient with the provisions of state law governing
(1) Californians have the right to be effectively pro- occupational safety and health, including, but not lim-
tected from injury, illness, and death in ~the workplace, ited to, Chapter 6 (commencing with Section 140) and
a~id from th~ hazards of exposure to toxic substances on Chapter 6.5 (commencing with Section 148) of Division 1,
the job and. in the community, and Division 5 (commencing with Section 6300), of this
~2) The restoration of adequate state standards and code.
enforcement policies to reduce exposure to cancer-causing (b) The budget and budget bill submitted pUrsuant to.
substances, chemicals that cause birth defects, and other Article IV, Section 12 of the California. Constitution~ shall
toxic materials is in the. interest of all Californians. include in the item for the support of the Department of
Industrial Relations amounts sufficient to fully carry out
(3) Catastrophic releases of such contaminants into the pUrpbses and provisions of the state plan and this
our communities can best be prevented through the -
code in a manner which assures that the risk of industrial
restoration of effective state safety and health practi~es injury, exposure to toxic substances, illness and death to
in the workplace, including proper equipmentand'main- employees Will be minimi£ed.
tenance policies, employee training, and safe,handling of (c) Because Federal grants are available, maximum
toxic materials.' , Federal'funding shall be sought and,-to the extent
(4) We disapprove of the elimination in 1987 of possible, the cost of administering the state plan shall be
Cai~OSHA,' the California Occupational Safety and' paid by funds obtained from federal grants.
Health Administration, and the transfer of control over (d) The Governor and the Department of Industrial
worker safety and health to the federal government. Relations shall take all steps necessary to prevent with-
(5) Cai~OSHA has.a superior record to Federal OSHA drawal of approval for the state plan. by the Fedbral'
in regulating hazardous .industries and occupations such. government. If Federal approval of the state plan has
as construction, manufacturing, transportation, electron- been Withdrawn before passage of this initiative, or if it'
ics, chemical, mining, utilities, service, health, care,' retail is withdrawn at any time after passage of this initiative,
and entertainment, the Governor shall submit a new state plan immediately
Over the years Cal/OSHA has served as a safety so that California shall be approved and shall continue to
-a~nd health model for other states: have access to Federal funds.
(7) A weaker safety and health system .means in- SECTION 3. Section 6303.5 is added to the Labor
' creased d~ath, illness, disabling injuries, pain and suffer- Cbde to read:
ing for the Working people of California. 6303.$. Nothing in this division shall be construed to
(8) It is more cost effective for California employers to limit t/te jurisdiction of the state over any employment or
retain dtate control over workplace health and safety -place of employment by reason of the exercise of occupa-
matters. .. tionat safety and health jurisdiction by any federal
(9) The co~t of restoring Cal/OSHA to the state is agency if federal jurisdiction is being exercised under a
minor (a fraction of one percent of the state's budget) federal law which expressly authorizes concurrent state
especially when compared to the amounts spent on jurisdiction over occupational safety or health issues.
bureaucratic-activities of a.less essential nature. More2 SECTION4. To further its purposes, this initiative
over, almost ha.lf of Cat~OSHA's budget would be paid may -be amended by Statute passed in each house by a
for by federal grants.' '-two-thirds vote.
· (10) It ig the purpose of this Act to restore Ca'lifornia SECTION 5. If any Section; part, clause ob phrase of
control ober private sector safety and health, which the this measure is for any reason, held ihvalid or un6onsti-
state has provided for since 1913, and 'has administered tutional, the remaining portions shall not be affected but
since 1973 through Cai~OSHA. Pursuant to Article XIV, shall 'remain in full force and effect.
G88 75
· '] 97 state OCcupational Safety and Health. Plan.
. . ' Initiative Statute .. .,
Argument in Favor of Proposition 97 '
· Each year, 11,000 Americans die in work-related accidentk imminent dangers of death or serious ~inju~y. Federal' OSHA
Twb million more Suffer disabling job-related injuries or ill- requires a time-consuming federal court procedure before it can
nesses, stop an imminent threat.
· The American Lung Association. of California, League of DANGEROUS OCCUPATIONS that were closely regul~.ted
Women Voters, California Medical Association, Sierra Club, the by Cai-OSHA are poorly controlled by Federal OSHA, including
California Labor Federation and many other organizations have those in construction, oil re£meries, logging, 'utilities and trans-
joined together to restore California's respected job safety ' portation. .
program. PROSECUTION of those who willfully violate safety laws :and
· For over 70 years California led tl~e nation in protecting our kill or maim workers rarely occurs under Federal OSHA. From
citizens frOm workplace health and safety hazards. In 1973 these -1975 .to 1985 California district attorneys prosecuted .over 200
regulations were brought together under the California Occu- criri~inal cases resulting from Cai-OSHA investigations. Between
pational Safety and Health Adminis.tration, Cai-OSHA. Cai- 1970 and 1987 Federal OSHA investigations resulted in only 14
OSHA was the model of an effective-state job safety program, such prosecutions.
winning praise from business and labor, leaders, and health In June 1988, the U.S. General Accounting Office, a gow~rn-
professiOnals.. - . ' · i· . ment w,,atchdog agency, told' Congress that under Federal
OSHA, workers in Califorrfia no longei have the benefit of all
In 1987, state funding for Cai-OSHA regulation of private . the Occupational safety and,health standards and exposure limits
'industryworksites was eliminated. An inferior Federal OSHA used in the state program. .
program took over.
· ' - Nearly evew major daily newspaper in California has called
A comparison of Cai-OSHA and Federal OSHA clearly proves
that our ,state plan did a vastly better job of safeguarding'the for the retention of Cai-OSHA.
health of all Californians. ~ Leaders from both political parties, including Lieutenant
CANCER PREVENTION AND TOXIC CONTAMINATION Governor Leo McCarthy and U.S..SenatOrs Alan Cranston and
--Federal OSHA does not regulate exposure to 170.toxics that Pete Wilson, support the restoration of Cai-OSHA.
were controlled by Cai-OSHA. For an additional 95 chemicals, Californians are entitled to' the. superior protections of Cai-
OSHA. Join us in renewing an agency, that saved lives, pre:
federal regulations allow .greater exposure than Cai-OSHA vented inju~,e,s a,n,,d protected-the environment from to:~ics.
permitted. These include toxics that'cause cancer, birth defects,
-and sterility. Toxic contamination threatens everyone, not only Please vote YES. on Proposition 97, to restore California's
workers· Cai-OSHA also had special m~dical and cancer units to Occupational Safety and Health program.
control exposure .to. toxics. Federal OSHA has no comparable JOHN F. HENNING
program. Executive Secretary-Treasurer, California Labor.
INSPECTIONS OF HAZARDS AND ACCIDENTS' During Federation, AFL-CIO
the first nine months after Federal OSHA took over, total MICHAEL PAPARIAN
State Director, Sierra Club California
workplace inspections dropped by 65% compared to Cai-OSHA
inspections in the same nine-month period one year earlier. LAURENS P. WHITE, M.D.
Cai:OSHA could shut down equipment, or job sites posing Presiden~ California Medical Association
Rebuttal .to ArgUment in Favor of Proposition '97
-The proponents' claim that federal OSHA is an inferior MENT'S IMPRESSIVE TRACK RECORD, 'WE WOULD
program is wrong. ,. NOT CONSIDER STARTING OUR OWN DUPLICATIVE
. IN THE LAST SIX MONTHS OF 1987 UNDER FEDERAL WORKER SAFETY PROGRAM.'--Charles Serraino, New
OSHA, THE RATE OF WORK-RELATED INJURIES AND ' Jersey Commissioner of LaBor. '
ILLNESSES IN CALIFORNIA DECLINED· FROM THAT OF Proponents are'distorting the 'facts and .arguing from half
THE LAST SIX MONTHS OF 1986 UNDER CAL/OSHA. truths. Federal OSHA has the authority to. secure work stoppage
' when a hazardous, situation is detected. It is empowered t0 go
Federal OSHA has Conducted a successful safety and health into any business at..any time to prevent danger to employees. It
program in a majority of states for moie ~than 15 years and has · doesn't need more paperwork. It gets the job done with
conducted ·a successful program in California for the past year. experience and common sense.'
Dedicated pr0fes~sionals of federal OSHA has broad enforce- Proposition ~/0 has nothing to do with worker safety. It' has
ment authority and have brought.to bear in California the full· everything to with big government, more bureaucrats, and
force and effect of federal law, backed by. the powers of the higher taxes. -
federal courts. .. Please vote NO on Pri)Position 97.'
LISTEN TO A STATEMENT FRoM ANOTHER STATE
WITH LONG EXPERIENCE UNDER FEDERAL OSHA: GEORGE DEUKMEJIAN
Governor
"IT HAS BEEN OUR EXPERIENCE IN NEW JERSEY ROBERT STRANBERG
THAT THE FEDERAL SAFETY AND HEALTH INSPEC-
Chief, State Division of Occupat~ional Safety and Heali!h
TION PROGRAM HAS DONE A GOOD JOB PROTECTING . .
OUR. WORKERS. GIVEN THE FEDERAL GOVERN- JOHN I-IA¥
' · Former Presiden~ California Chamber of Commerce
76 Arguments~ printed on this page are the opir~ions of the authors and have not been checked for accuracy by any official agency (.~
State Occupational'Safety and Health Plan.
Initiative.Statute 97
Argument Against Proposition 97
PRoPosITION 97 ASKS STATE TAXPAYERs TO PAY FOR' CUT GOVERNMENT 'WASTE AND DUPLICATION? THE
A SERVICE THAT THEY ARE ALREADY FUNDING WITH GOVERNOR DID THAT AND NOW THOSE WHO SUPPORT
THEIR FEDERAL TAX DOLLARS. WHY SHOULD CALI- THIS PROPOSITION WANT TO STOP HIM.
FORNIA TAXPAYERS HAVE TO PAY FOR THE SAME VOTE "NO" AND TELL THESE BIG GOVERNMENT
SERVICE TWICE? ,.
Proposition~97 will waste millions of taxpayer dollars and add ADVOCATES'THAT YOU WANT WORKER SAFETY BUT
NOT DUPLICATION.
hundreds of bureaUcrats to the government payroll without Government already costs enoughand taxes are already high
increasing worker safety in the Workplace one bit. enough, without establishing duplicative programs' to provide
· No one disputes the fact that'government has a responsibility services we are already receiving.
to protect employees 'in the workplace. To. do the job, we need
one good worker safety program. We don't need two duplica- Voting for Proposition 97 is like asking the sales Clerk at the
tive ~ones. YOUR "NO" VOTE WILL PREVENT DUPLICA- grocery 'store to let 'you pay for the same groceries twice!
TION IN GOVERNMENT AND PRESERVE WORKER California workers already have a fine worker safety program.
SAFETY. Why pay again for the same protection?
California now has a good worker safety progr .am. 'Like 27 VOTE "NO" ON PROPOSITION 97.
other states, including New York, New Jersey and 'Illinois, our GEORGE DEUKMEJIAN
worker safety program 'is administered by the federal govern- Governor
ment. Since the enforcement aspect of California's program was - ROBERT STRANBERG'
turned over to federal authorities, the rate of occupatio, na!· Chiefi, St~ite Division, ofOccupaiional Safety and Health
injuries and illnesses_ has actually.declined. JOHN HAY
HOW MANY TIMES HAVE YOU-HEARD PEOPLE, ESPE- '
Former President California Chamber of Commerce
CIALLY ELECTED OFFICIALS, SAY THAT WE 'NEED TO
Rebuttal to Argument Against Proposition 97
· Proposition 97 does-not waste any state tax dollars. ' ' face greater exposure to toxics that can cause cancer, birth
In fact, penalties against violators of the law generated a defects and sterility.
substantial percentage of CaI-OSHA's budget. The, state budget 'A 1987 study by a U.S. government investigatory agency.
amounts to about $1,600 for every Californian; only 25¢ went to criticized Federal OSHA's "total paralysis" in fulfilling its duties.
Cai-OSHA. And Proposition 97 would bring ba6k over $11 The National Workplace Safety Institute concluded this sum-
million annually in federal funds that Cai-OSHA used to receive, mcr that "a Construction worker in a federally regulated state is
Proposition 97 makes good business sense. CaI-OSHA's th?ce times more likely to die on the job than.onein California."
stronger health and safety standards saved Californians money Please consider these nonpartisan reports and help restore
by helping control medical, insurance and welfare costs. California's Occupational Safety and Health Administration by
Ori June 21, 1988, the Sacramento Bee newspaper reported: voting "Yes" On Proposit~0n 97.
"There has been a dramatic drop in safety inspections at CAROL FEDERIGHI"
California job sites since California's worker safety program President League of Women Voters of California
was abolished last year, a congressional panel was told HEWITT F. RYAN, M.D.
Monday." President California Society of lnduMrial
The U.S: General Accounting Office has said Cai]OsHA had Medicine and Surgery
stricter toxic limits and "quicker action'' bn hazards that could' IRA REINER
threaten death or injury. Under Federal OSHA; Californians ' District Attorney of Los Angeles County
G88 Arguments printed on this page are the opinions of the authors and have .not. been checked for accuracy by any official agency ~ 77
8 Sch°ol Funding. Initiative Constitutional Amendment..i.. 'and Statute
Offieihl Title and SUmmary Prepared by the Attorney General
SCHOOL FUNDING. INITIATIVE CONSTITUTIONAL AMENDMENT AND'STATUTE. Amends State ConstitU-
tion by establishing a minimum level of state funding for school and community college districts; transferring to such
districts, within' limits, state revenues '.in excess of state's appropriations limit; and exemptihg excess funds- from
-appropriations limit. Adds provisions to Education Code requiring excess funds .to be usedsolely for instructional
improvement and accountability and requiring schools to report student achievement,, dropout rates, expenditures
per student, progress toward' reducing class size and teaching·loads, classroom dis·ciplin~, 'curriculum, quality
teaching, and other school matters. Contains other provisions. Summary of Legislative Analyst's estimate of net st~vE
and local government fiscal impact: Meeting the required minimum funding level for schools and cdmmtmity coll~MS
districts will result .in State General Fufid costs of $215 million in. 1988-89. No. excess state revenues are expected. ~r~.
1988-89 for transfer to s~hools and community colleges, Local administrative costs are estimated to be $2 miilion..tb%
$7'million a year for preparation and.distribution of School Accountability Report Cards. NO fiscal, effect can be
identified for the required prudent reserve fund.
Analysis by the Legislative AnalYst
Background colleges is not less than the percentage that was
The state provides funding· for public schools and allocated to them in 1986-87.
community colleges, adjusted each year to reflect · The secondmethod would require the state to ensure
changes in inflation and student enrollment, that public schools and community colleges receive
Under the California Constitution, most government from state and local tax revenues the same total
entities (including the state and local school districts) amount of funds received from these sources in 'the
have.h limit on the amount of tax revenues they can prior year, adjusted for changes in inflation ~tnd
appropriate each year; adjusted annually to reflect increases in enrollment.
changes in inflation and population. WheneVer a govgrn- ' The measure permits the enactment of legislation', .by a
ment entity does not appropriate all of its tax revenues, two-thirds vote, to suspend ~the' minimum funding re-
these ,excess revenues" must be returned to taxpayers, quirement for one year.
-. Distribution of Excess Revenues. This measure re~
Proposal quires any excess revenues to be distributed to .public.
This measure makes changes in the .way the state funds schools and community colleges rather than returr/ed to
public schools and treats excess revenues.' Specifically; the .taxpayers. The measure limits the amount the state may
measure does the following: disffibute each year to 4 percent of. the minimum school
· Establishes a minimum level of funding for public funding level. In 1988-89, this limit would be about $500
schools and community colleges. . million. Any remaining amount above this limit would be
· Requires the state to spend any excess revenues,' up ' returned to taxpayers.
to a specified maximum, for public schools and-_ If exces~s revenues are. diStributed in any year, l:he
com. munity colleges. Other provisions of the measure measure requires that the state's appropriations limit be
would (a) increase the state's appro, priations limit so increased by this amount in the next year. Any excess
that these funds may be. spent·and (b) raise the' revenues that public schools or community .colleges re-
minimum level of funding, for public schools and ceive would permanently increase their minimum fu~ad--
community colleges by the amount of excess reve- mg levels.
nues they receive. . .The measure'requires Public 'schools and commtmity
· Requires the Legislature to establish a state reserve colleges to use these additional funds for "instructional
fund. improvement and accountabt$ity." It also requires that
· Requires school districts to.prepare and distribute these funds be in addition to---rather than a replacement
"Sch~ool Accountability Report Cards" each year. for--other funding and b'e kept in a separate account.
Minimum Funding Level. Starting in 1988~89, this The'distribution of excess revenues to' p.ublic schools
measure requires the state to' provide a minimum level of would not be reqUired in any year in which the Superin-
funding for public schools and community colleges, tendent of Public Instruction and the Director of Finance
The measure specifies-two methods for determining determine that both of the following conditions have
what the minimum funding level should be and requires been met:
the state to' use the method that results in the large~" · The annual expenditure per student in California is,
amount, equal to or greater,than the average annual exp,en-
· The first method wo/xld require the state· to ensure diture per student of the 10 states with the highest
that the percentage of State General Fund revenue annual expenditures per. student, for elementary and
that is allocated to. public schools and community high schools.
78 .
· · · The average class size in California is equal to o~ less State' Reserve Fund. ThUg measure requires the Leg-
than the average class size of the 10 states with the islature to establish a prudent state reserve fund each'
lowest class Size for elementary and high schools, year~ The measure does not specify the amount of the
· Similarly, the distribution of excess revenues to eom- reserve.
munity colleges would not be required in any year in '-
which the Chancellor of the California Community C01- Fiscal Effect' ~.
leges and the Director of Finance determine that the ' Minimum Funding Level. This measUre would result
annual expenditure .per student in California is equal to in State General Fund costs of abOu[ $215 million in
or greater than the annual expenditure per student of the 1988-89. This .Would bring funding for public schools and
10 states with the highest annual, expenditures per stu-. community colleges to the same .percentage· level they
dent for community colleges., had in 1986-87. There_ would be unknown increases in
.' School Ae~countability RePort Card. This measure re- General pund costs in the future to maintain school
quires the Superintendent of Public' Instruction tO ap-. funding at .the. minimum funding level.
point and consult With a task force to develop a model Excess Revenues. It is unclear at this time whether
School Accountability Repor[ Card by March 1, 1989. The the state will have exces~ r~venues in 1988-89. If there are
model report card would contain information on a variety ··
of school 'conditions, including.-student achievement, such excess revenues in 1988-89 or in future years, they
Would be distributed to public schOols and community
dropout ·rates, expenditures, class size, teachei assign-
ment, textbook quality, student ser~ces, school· safety, cOlleges, up to the specified annual maximum--S500
teacher evaluation and staff development, classroom dis- million in 1988-89. _ - .
cipline, and instructional quality. ~ Report Cards. -It would cos/ local schools from $2
This measure requires each public school district to million to $7 million each year to 'prepare and distribute
issue an annual School Accountability Report Card for the School Accountability Report. Cards.
each of its schools,' beginning in 1989-90. The measure State-Reserve Fund. The requirement to establish a
does not require school districts to adopt the ~statewide state reserve fund would have no fiscal effect .because the
model but, at a minimum, each report card must contain state already maintains a reserve fund and the measure
information on the conditions listed above, does not specify an amount that niust be allocated to it.
Text of Proposed Law
This initiative measure is submitted to the people in accordance with Section, to be returned by a revision of tax rates or fee schedules within
the provisions of Article II, Section 8 of the Constitution. 'the next two subsequent fiscal years, shall be transferred and allocated
This initiative measure expressly mends the Constitution by amend- pursuant to Section 8.5 of Article XVI up to the maximum amount
ing and adding sections thereto, and adds section~ to the Education permitted by that section.
' (b) Except a~ provided in subdivision (a) of thi~.Section,
Code; therefore, existing sections proposed to be deleted are printed in revenues received by any entity of government in excess of that amount
:L-'2rcc~u'~ ,')'Fo and new provisions proposed to be added are printed in which is appropriated by such entity in compliance with-this Article
italic type to indicate that they are new. during the fiscal year shall be returned by a revision of tax rates or fee
PROPOSED LAW schedules within ~he next two subsequent fiscal years.
· SECTION 5. Section 8 of Article XVI is hereby amended to read as
SECTION 1. This Act shall be·known as "The ClassrOOm Instruc- follows: ·
tional Improvement and Accountability Act" . SECTION 8. School Funding Priority
SECTION 2. Purpose and Intent. The' People of the State of Cali- (a ) From all state'revenues there Shall first be set ap~t the monies to
fornia find and declare thiit: b~ applied by the state for support of the public s~chool system and
(a) California schools are the fastest growing in the nation. Our public institutibns of higher education.
schOOls must make room for an additional 130,000 students every year. (b) Commencing with the 1988-89 fiscal year., the monies to be
(b) Classes in California's schools have become so seriously over- applied by the state for the support of school districts and commu~nity .
crowded that California now has the largest classes of any state in the college districts shall be not less than the greater of:
nation. ~ . (1) The amount which, as a percentage of the State General Fund
(c) This act will enable Californians to once again have'one of the revenues which may be appropriated pursuant to Article XII!B, equals
best public school systems in the nation, the percentage of such State General Fund revenues appropriated for
~ (d) This act will not raise taxes, school districts and community college districts, respectively, in fiscal
· (e) It i~ the intent of the ·People of California .to ensure that our~ year 1986-87; or
schools spbnd money where it is most needed. Therefore, this Act will (2) The amount required to ensure that the total allocations to school
· require every local s~hool b6ard to prepare a School Aceduntability districts and community college districts from the State General Fund
Report Card to guarantee accountability for the dollars spent, proceeds of taxes appropriated pursuant to Article XIIIB and allocated
(f) This Act will require that excess state funds be used directly, for · local proceeds of taxes shall ndt be'less than the total amount from these
classroom instructional improvement by providing for additional in- · sources in the prior year, adjusted for inCreases in enrollment, and
structional materials and reducing class sizes, adjusted for changes in the cost of living pursuant to the provisions of
(g) This Act will establish a prudent state reserve to enable Califor- Article XIIIB.
nia to set asid~ funds when the eqonomy is strong a~d prevent cutbacks (c) The provisigns of subdivision (b) of this Section may be sus-
.or tax increases in times of severe.need or emergency, pended for one year by the enactment of an urgency statute pursuant 'to
' SECTION 3. Section 5.5 is hereby added to ArticleXIIIB as follows: Section 8 of Article IV, provided that no urgency statute enacted under
SECTION 5.5. Prudent State Reserve. Th'e Legislature shall estab- this su.bdivision may be made part of or included 'within any .bill
list a.. prudent' state reserVe fund in such amount as it shall deem enacted pursuant to Section 12of Article I
reasonable and necessary. Contributions'to, and withdrawals from, the SECTION 6. Section 8.5 of Article XVI is hereby added as follows:
fund shall be subject to the provisions of Section 5 of this 'Article. SECTION 8.5. Allocations to State School Fund
SECTION 4. Section 2 of Article XIIIB is hereby amendedto read a~ (a) In addition tO/the amount required'to be applied for 'th~ support
follows: of school districts and community colleges pursuant to Section 8(b), the
.SECTIOI~2. Revenues in Exces~ of Limitation. ContrOller shall .during each fiscal .year transfer and allocate all
(a) All revenues received by the state in exces~ of that amou~it which . revenues available pursuant to subdivision (a) of Section 2 of Article
is appropriated, by the state in compliance with this Article. an,d which_ .. ·
WOuld 'other~i)ise 'be req~iire~ pursuant to subdivision (b) of this Continued on page 127
98 'Sehooland StatuteFunding' Initiative COnstitutional' Amendment'
Argument in Favor of Proposition 98
Proposition 98, the School Funding for Instructional polltici~ms for help. Year after year they said, "We'd like
Improvement and Accountability Initiative, is a ~well- to help, but we just can't agree among ourselves."
thought-out plan for California's schools to once again be We are asking you to step in and reestablish Public
among the very best in-the nation, proposition 98 will not education as a first priori~ in our state.
raise' taxes; it just tells the politicians how to spend state . We '~ecognize that there 11 never be enough money for
funds to make our schools better. . -, ~' everything. · .
· Today, classes are 'overcrowded. California packs '. But, since our elected leaders in Sacramento can:not
more students into its schoolrooms than any other ' seem to agree on how to spend existing tax dollars, 'the
state. And 140,000 more yo.ung people are entering sch°olteaehers and the PTA have written a plan for
our schools each and every year., school funding, instructional improvement, ~,nd
· We eanft give enough attention to essential subjects accountability.
and we ve had to eliminate some courses entirely. · Proposition 98 takes school financing out of polities
· We have far too few counselors to help our youth by ensuring a minimum ftmding level for schools
plan their educational and job futures, and to work which the Legislature and Governor must honor
with those who show signs, of delinquency and drug exeeltfin fiscal emergencies.
abuse. · Proposition 98 requires that ff there is a state budget
In the-last ten years the percentage of local property surplus over and above the government-spending
tax- dollars used to SUpport local schools has decreased 'limit, the-money that goes for education can only be
used for instructional improvements, paying teachers,
from 43 % to 32%. The percentage of our personal income
spent on public education has declined from 4.6% to or reducing class size.
3.3%, which means a loss of $1,000 a year per student: · Proposition 98 makes schools accountable by requir-
Those are only a few of our schools problems. But lng that each school make public a progress report on
they're big ones. And Unless we, ~the voters, do Something . test scores, dropout rates, classroom discipline, class
about them, our state's economy and every Galifornian's size, instructional materials, the quality of instruction
well-being will suffer.- and school leadership.
It wasn't always this way. We're proud that over 1,000,000 Galifornians signed ,our
By '1910, a provision was added to 'the California ' initiative and put it on the ballot. 'Proposition 98 give,,; us
Constitution whieh,,required that the Legislature first set a chance to make our schools number one again.
aside fundg for the support of the public seKool system." Please vote "YES" on Proposition. 98, the School Fund-
Beginning in the 1920s the State Gonstitution required ing for Instructional Improvement and Accountability
a miriimum amount of money be spent on each student. Initiative.
And over the years the specific dollar amount spent on . ED FOGLIA
each child was adjusted for inflation. ' ~ Presideng California Teachers Association
All that has changed. · - HELEN: H. LINDSEY
Every ye.ar for the last ten years, Our' schools asked the President, California State PTA
Rebuttal to Argument in Favor of_ Proposition·98
Despite the claims of its supporters, Proposition 98 will bigger budgets don't necessarily buy better schools. Many
do nothing to improve the quality of education in Cali-' 'of the most effective reforms taking place in our elass-
fornia. It will not improve, student performance or make rooms today--such as more homew6rk, greater parental
teachers and administrators more-accountable. It will involvement, increased discipline and more. rigorous
likely cause an increase in your taxes, courses-do not take additional'money. They are the
PropositiOn 98 is an attempt by the teachers' unions and result of increased commitment by principals, teachers,
the educational bureaucracy to guarantee a certain level' students and parents. . . '
of state funding for K-12th-grade schools and community If California hopes to retain its place as a leadership
colleges--regardless .of any other vital state and local state, we need to provide oUr students with quality
needs, and regardless of whether they are doing a good education--but ProPosition 98 will do noth.ing to tielp us
job in spending those funds and teaching our children, meet this goal.
This year, California will invest more than $20 billion in VOTE NO ON PROPOSITION 98.
°ur K~12th-grade schools--an inorease of nearly $8 billion GEORGE DEUKMEJIAN
in the past five years~ Total school,fundinghas increased ~,yer~or
78 percent during this time periodmfar in exce~s of GEORGE CHRISTOPHER
inflation. With,this level of support, many people believe Chairman, Califo~ia Commissio~r on Educational Qu~lity
that California s schools should be doing b,e. tter. ' RICHARD P. SIMPSON.
The proponents of Proposition 98 don t realize that Executive Vice Presideng California TaXpayerS'Association
80 ArgUments printed 6n this page are the opinions of the authors and have not been checked, for accuracy by any official agency G88'
School Funding. Initiative Constitutional Amendment
,. . and'Statute' .[ ]:-
Argument Against PropositiOn 98
Education is already California's top budget priority, reasonable limit on state spending imposed by a vote of
Over 50% of all the dollars that you pay ·into the state's the people. In just a few years, Proposition 98 would
General Fund are spent on schools. SINCE 1982, CALl- surely require a major tax increase..
FORNIA'S PUBLIC SCHOOLS HAVE RECEIVED A . And for what? Proposition 98 will certainly increase the
'INCREASE IN FUNDING, WHILE STUDENT EN-' level of school bureaucracy, but does it guarantee that
HAS RISEN ONLY 14%. Average teacher your children 'will receive better schooling? Absolutely
are now the fifth highest in the nai:ion, not!
· If you want to continue to increase funding.and quality
1982, the Governor and the 'Legislature ·.have of education without r~sing taxes and without cutting
schools, with funding increases every year. other services such as health care, transportation and
Proposition 98 would place a provision in the Cbnstitution public safety; then vote "NO"
which mandates a certain level of school funding even if on 'Proposition 98.'
it means cutting other serVices, such as health care for GEORGE DEUKMEJIAN '
· ' Governor
senior citizens, funds to fight' drug trafficking o~ pro- GEORGE CHRISTOPHER
grams to reduce traffic congestion. Chairman, California Commission on Educational Quality
'PropoSition 98 would place all other important state . 'RICHARD P. SIMPSON
services .at risk. Proposition §8 would throw away the Executive Vice Presideng California Taxpallers'Association
Rebuttal to-Argument Against Proposition 98
By including hundreds of millions of dollars spent 0ri 28. South Carolina 36. Kentucky 44. Alabama
' 29. Arizona 37. Indiana 45. Tennessee
state universities and colleges, opponents of Proposition , 30. Texas 38. Georgia 46. Michigan-
98 attempt to make it Seem that all is well in our public 31. Louisiana 39. Ohio 47. Washington
elementary and high schools. 32; Arkansas 40. North Carolina. 48. Idaho
But using "statistics" cannot hide the simple truth, g3. New Mexico 41. Hawaii 49. Utah
· - 34. Mississippi 42. Alaska 50. California
Today'we spend just one real dollar more- per itudent 35. Colorado 43. Nevada
per day .in our schools than 10 years ago. Proposition 98 ordy guarantees schools as much money
That puts. California 48th among the 50 states in as they received in the last year adjusted to pay for new
percent of personal income spent on schools.· children and inflation. It does .not raise taxes.
We rank dead last on average class size. It reforms the system by requiring' that extra money is
1. Vermont 10. Nebraska 19. Maine only spent for instructional imProvement.
2. Wyoming. 11. North Dakota 20. Oklahoma And it sets up a comprehensive program which holds
3, Connecticut . 12. Montana 21. Pennsylvania educators accountable for the job they do /~nd the tax
4. Masiachusetts 13. South Dakota 22. Illinois dollars they spend.
5. New yOrk 14.. We~t. Virginia 23. Virginia.
6. Kansas 15. Iowa 24. Maryland' BILL HONIG
-7. Rhode Island 16. Wisconsin 25. Florida ' State Superintendent of Public Instruction
8. New Jersey 17. De~aware 26. Minnesota RAY TOLCACHER
9. New Hampshire 18." Missouri 27. Oregon Presideng Association of California School Administrators
G88 Arguments printed on this page are the opinions of the authors and have not been checked for accuracy by any official agency 81
- ' Inltlat,ve' ConStitutional Amendment 'and statute '
Official Title and Summary prepared.by the Attorney General
CIGABEWFE AND TOBACCO TAX. BENEFIT.FUND. INITIATIVE CONSTITUTIONAL AMENDMENT AND
STATUTE, Imposes additional, tax. upon cigarette distributors of one' and one-fourth cents (i¼ cents) for e~aeh
cigarette distributed. Imposes tax upon distributors of other tobacco products which is equivalent.' to e0mbined rate
of tax imposed On cigarettes. Directs State Board Of Equalization to determine this tax annually.' Places moneys.raised
in special account which emu only be used for: treatment; researeh of tobaeeo-ielated diseases; seh0ol and eommunity
health education programs about tobacco; fire prevention; and enVironmental conservation and damage
programS. Declares revenues not subject 'to appropriations limit. Summary 0fLegislative Analyst's estimate of
state and local government fiscal impact: Will raise additional state revenues of approximately $300'.million in
(part year) and $600 million in 198~-90 (first'full year). These revenue increases would decline gradually
subsequent.years. Annual administrative eosts are estimated ~at $500,000 in 198849 and $300,000 in subsequent years.
There would be no substantial net effect on sales and exeise tax revenues to the state, eries, and counties.
Analysis by the'.Legislative Analyst
Background .. divided between programs that (1) protect, restore,
Current law imposes a state excise tax which amounts . enhance, ~or maintain fish, waterfowl, and other
wildlife'habitat areas~ and (2) improve state and local
to 10 cents .for each pack of 20 cigarettes. This tax is.
collected by the State Board of Equalization. Seventy park and recreation resources.
percent of the'l~roceeds are distributed to'the' State · General Purposes. The remaining 25 percent may
be used for any of the .specifi.c purposes described
General Fund, and .the remainder to .~ities and counties, above.
Proposal The measure requires all funds to be. Used to supple-
ment current services, not to fund existing service levels.
This measure imposes an additional excise tax on' In addition, this measure amends the California Con-
cigarettes which amounts to 25 cents for each pack of 20 stitution to provide that'the appropriation of revenues
cigarettes. The total' excise'tax, therefore, would be 35 from the additional taxes imposed by this 'measure is not
cents for each pack.'In addition, it imposes a new excise subject to either the state .or local appropriations limits.
tax on other types of tobacco products, such as cigars, The measure ~vould become effective on. Januar~ 1,
· chewing tobacco, pipe tobacco, and snuff. The rate of this 1989.
tax would be determined .by the .Board of Equalization,
and would be _equivalent to the total excise tax on Fiscal Effect
cigarettes. - This measure would r~ise additional state revenue:~ of
The measure'requires the revenues from the'addition~al approximately $300 haillion in 1988-89 '(part year) and
taxes to be spent for the following purposesi. $600 million _in 1989--90 (first full year). These ~evenue
· Health Education. Twenty percent must' be 'used increases would' decline gradually in subsequent years.
for the preventiOn and reduction of tobacco .use, In addition, this measure would-have two offsetting
primarily among children, through~ school 'and com- effects on state iGeneral .Fund and-local ~eVenues. Fh'st,
munity health education programs~ the measure would' increase sales tax ~evenues. This is
· Hospital Services. Thirty-five percent must be used because, the sales tax 'is imposed on the _total price of
tO pay hospitals for the treatment of patients Who tobacco prodhcts, including the increased exeis~ .tax.
cannot afford to pay, and for whom paymeht will not ' Second, the measure would reduce'revenues from the
be made through private coverage .or federally existing 10-cents-per-pack cigarette excise tax, because
funded programs. The me~cal' care services qualify- some consumers would reduce their purchases of tobacco
ing for pa .Yment are not limited to the treatment of prodUcts in response to the ,higher taxes. These revenue
tobacCo-related illnesses, effects would offset each other; and there would be little
· Physician Services. Ten' . percent must 'be used to or .no net effect on the State General Fund or.on ,local
. pay physicians for medical care services provided to.- revenues. - " .
specified -patients who cannot afford to pay, as de- .Administration of the surtax on cigarettes and tobacco
scribed above, products would increase annual cbsts to the State Board
· Research. Fivd Percent must' be used tO 'fund of Equalization b.y approximately $500,000 in 1988-89 ;md
tobacco-related disease research. ': $300,000 in subsequent years~ These costs, would be reim-
· Public Resourci~s. Five -percent must be equally. bursed out of.the proceeds of the additional taxes.
Text of Proposed Law
This initiative meksure is submitted to the people in accordance with approp~ationfor program~for the prevention and reduction ofiobacco
the Provisions of Article II, Section 8 of the Constitution. use, primarily among children, through school and communi~ heMth
This initiative measure expressly amends the Constitution by adding education programs.
a section thereto, and adds sections to the Revenue and Taxation Code; (2) The Hospital Services Account, which shall only be available for
therefore, new provisions proposed to be added are printed in italic · appropriation for payment to public and private hospitals licensed
pursuant to subdivision (a) of Section 1250 of the Health and Safety
type to indicate that they are new. Code for the t~eatment of hospital patients who cannot afford to pay for
PROPOSED LAW ~ that treatment and for whom payment for hospital serVices will not be
made through private coverage or by any program funded in whole or
SECTION 1. This measure shall be known and may be cited as the in part by the federal government.
Tobacco Tax and Health Protection Act of 1988. (3) · The Physician Services Account, which shall only be available for
SEC. 2. The people fiend an'd,'declare as follows: appropriation for payment to physicians for'services to patients who
(a) Tobacco use is the single most preventable cause of death and cannot a~fford to pay for' those seroice~, .and for whom payment for
in America. physician services will not be made.through private coverage or by any
Tobacco~related diseases create immdnse suffering and personal program funded in whole or in part by the federal government.
' (4)..The Research Account, which shall only be available for app~o-
a staggering economic cost which all Californians have to pay. priation for tobacco-related disease research. '
Tobacco-related diseases are a'major burden on state and local (5) The Public Resources Account, 'whi. ch shall only be available for
by requiring them to provide medical care a'nd health appropriation in equal amounts for both of the f~llowing:
serVices. '. · (A Programs to protect, restore, enhance, or maintain fish, water-
~d) Tobacco use causes substa~ntial environmental damage, and fowl,)and wildlife habitat on an &qually funded basi's~
property damage and loss of life due-to fire. · (B) .Programs to enhance state and local park and recreation, re-
(e) To reduce the incidence of cancer, heart, and lung disease and to sources.
reduce the. economic costs of tobacco use in California, it is the intent,of (6) The Unal!ocated Account, which shall be available for appropri-
the people of California to increase the state tax on cigarettes and ation for'any purpose specified in subdivision (a).
tobacco products and do all of the following: 30123. (a) In addition to the tax imposed upon the distribution of
(1) Reduce smoking and Other tobacco use among children, cigarettes by this'chapter, there shall be imposed upon ebery distributor
(2) Support medical research into tobacco-related cancer, heart, and a tax upon the distribution of cigarettes at the rate of twelve and
lung diseases, oae-half mi!ls ($0.0125) for each cigarette distributed. .
(3) Treat people suffering from tobacco-related diseases. (b) There shall be'imposed upon every distributor a tax upon the
(4) In recognition of the uncompensated costs of tobacco-related distribution of tobacco ~roducts, based on the wholesale cost of these
illness, support treatment of patients who cannot afford to pay foe products, at a tax rate, as determined annually by the State Board of
serVices. Equalization, which is equivalent to the combined rate of tax imposed
SEC. 3. Section 12 is added to Article XIII B of the Constitution, to on cigarettes by subdivision (a) and the other provisions of this part.
read: . 30124. (a) With the exception of payments of refunds made pursu-
SEC. 12. ,Appropriations SUbject to-limitation" of each.,entitY of ant to Article 1 (commencing with Section 30361) of Chapter 6, and
governmen~t shall not include appropriations of revenue from the reimbursement of the State Board of Equalization for expenses incurred
Cigarette and Tobacco Products Surtax Fund created by the Tobacco Tax in the administration and collection of the tax imposed- by Section
and Health..Protection Act of 1988. No adjustment in the appropriations 30123, puisuant to its powers-vested by this part, all moneys raised
limit of any enti~ of government shall be required pursuant to Section pursuant to the taxes imposed by Section 30123 shall be deposited into
3 as a result of revenue .being deposited in or appropriated from ~the the fund as provided in subdivision (b).
Cigarette and Tobacco Products Surtax Fund created by the Tobacco Tax . (b) Moneys shall be deposited in the fund accordi~,g to the following
and Health Protection Act of 1988. formula:
SI~C. 4. Article 2 (commencing with Section 30121) is added to - (1) Twenty percent shall be depos(t~l in the Health Education
- Chapter 2 of Part 13 of Division 2 of the Revenue and Taxation Code, to Account. .
read: (2) Thirty-five percent shall be deposited in the Hospital SerVices
Account.
Article 2.. Cigarette and Tobacco Products Surtax (3) Ten percent shall be deposited in the Physician SerVices Account.'
30121. - For purposes of this article: (4) Five percent shall be deposited in the Research Account.
~(a) "Cigarettes" has the same meaning as in Section 30003, as it read (5) Five percent shall be deposited ,in the Public Resources Account.
on January 1, 1988. ' (6) Twenty-five percent shall be deposited in the Unallocated Ac-
(b) "Tobacco products" includes, but i~ not limited to, all forms of count.
cigars? smoking tobacco, ~hewing tobacco, snuff and any other articles (c) Any amounts appropriated from any account specified in subdi-
~r products made of, or containing at least SO percent, tobacco, but does vision (b) which is not encumbered within the period predcribed by law
not include cigarettes, shall revert to the account from which it was appropriated.
(c) "Fund" means the Cigarette and Tobacco Products Surtax Fund 30125. Funds expended pursuant to this article shall be ~used only for
created by Section 30122. the purposes expressed in this article and shall be used to SUpplement
30122. (a) The Cigarette and Tobacco' Products Surtax Fund is existing levels of serVice and not to fun`d existing levels of serVice.
~ hereby created in the'State Treasury. The fund shall consist of all 30126. The annual determination required of the State Board of
revenues deposited therein pursuant to this article. Moneys in the fund Equalization pursuant to subdivision (b) of Section 30123 shall be made
may only be appropriated for the following purposes: . based on. the wholesale cost of tobacco products as of March 1, and shall
(1) Tobacco-related school and community health ~d. ucation pro- be effectibe during the state's next fiscal year.
grams. 30128. This article shall take. effect on January 1, 1989. ·
(2) Tobacco-related disease r~search. ,30129. ,Thee tax'imposed by Sectiqn 30123 shall be imposqd on every
(3)' Medical and hospital care and' treatment of p~tient~ who cannot cigarette and tobacco product in the possession or under the control of
afford to pay for those services, and for whom payment will not be every dealer and distributor on and after 12:01 a.m. on January 1, 1989,
made through any private co?erage or by any program funded in whole pursuant to rules and regulations promulgated by the State Board of
or in part by the federal government. · 'Equalization.
(4) Programs for fire prevention,, environmental conservation; pro- 30130. This article may be amended only by'vote of four-fifths of the
tection, restoration, enhancement, and maintenance of fich, waterfowl, membership Of both houses of the Legislature. All amendments to this
and wildlife habitat areas; and enhanc/ement of state and local park article must be consistent with its purposes.
and recreation purposes. SEC. 6. If any section of this measure, or ,part thereof is for any
(b) The fund consists of ~ix separate accounts, as fOllows: reason .held to be invalid or unconstitutional, the remaining sections
( l f The Health Education Account, which shall only be available for shall not b~ affected but will remain in full force and effect.'
Cigarette and Tobacco Tax. Benefit Fund.'
InitiatiVe Constitutional Amendment and Statute
Argument in Favor of Proposition 99
The alarming' report released M_ay 16, 1988, by' the U.S. PUTS EVERY INDIVIDUAL AND FAMILY IN JEOPARDY.
Surgeon General confirmed 'that the ADDICTIVE. DRUG, A YES VOTE FOR A 25-CENT TAX ON EVERY' PACK OF
NICOTINE, FOUND IN CIGARETTES is as habit forming and CIGARETTES will protect our wildlife and parklands.
addictive as cocaine, and heroin. "We must take steps to prevent Throughout California fires and devastation threaten wildlife
young people from beginning to smoke," the report states. "We and recreational park facilities. A YES VOTE ON
· must insure that every child in every school in this country is TION 99 will authorize funding for fire protection,
educated as to-.the HEALTH RISKS AND ADDICTIVE NA-. and enhancement of California's parks and open land.
· TURE OF TOBACCO USE." . NONSMOKING CALIFORNIANS SHOULD NOT
A YES VOTE ON PROPOSITION 99 will place an additional~ TO PAY HIGHER -TAXES AND INSURANCE
25-cent tax on every pack'of cigarettes and guarantee strong · BECAUSE SMOKING CAUSES FIRES AND DISEASE.
antismoking programs in our schools.· ers should pay their fair share. A 25-cent tax on every pack of
That's why the out-of-state tobacco Companies are spending cigarettes is a small price to pay.
millions ofdollars to defeat· PROPOSITION 99 the Tobacco Tax. VOTE YES ON 99 to educate .children about the dangers of
They know that with the growing number of people who kick smoking.
the habit and the 320,000 people who die annually from VOTE YES ON 99 for medical care roi people who cannot
tobacco:related d~.'..bases, THE TOBACCO COMPANIES MUST afford health care. · · '.
HOOK 5,000 NEW YOUNG SMOKERS EVERY DAY JUST TO VOTE YES ON 99 for continued research into tobacco-
KEEP CIGARETTE SALES AT THEIR PRESENT.LEVELS. related diseases.
. Tobacco companies know that passage of PROPOSITION 99 ~ VOTE YES ON 99 for wildlife protection and restoration of
will hurt cigarette Sales. They will spencIwhatever it takes to get parklands.
a "No" v6te even ff it means sacrificing the health and Safety of P.S. The people who care about your health and welfare--
young' people. THE .AMERICAN CANCER SOCIETY, AMERICAN
A YES VOTE FOR A 25-CENT TAX ON EVERY PACK OF LUNG ASSOCIATION, AMERICAN HEART ASSOCIATION,
CIGARETTES will also raise an additional 30 million dollars PHYSICIANS, DENTISTS, HOSPITALS, NURSES, EDUCA-
each year for medical research to help find a cure and treat- TORS, ENVIRONMENTAL, CITIZEN AND CONSUMER
· ment for cancer, emphysema, lung and heart diseases caused by GROUPS~are sponsoring this initiative and urge you to vote
smoking. YES ON PRO, POSITION 99.
A YES VOTE FOR A 25-CENT TAX ON EVERY PACK ~OF '~ JESSE STEINFELD, M.D.
CIGARETTES will pay for medical care for those who cannot Surgeon C, eneral (Ret.)
afford it and take some of that burden off the taxpayer. . NEIL G. ANDREWS, M.D. ·
California's health care crisis is forcing some hospitals, clinics, ' ' Presideng Am~rlc. an Cancer SocietY, California Division
trauma centers and emergency rooms'to close. Cities and towns ' PATRICIA A. SGHIFFERLE
throughout California cannot raise the money necessary to keep ~ Regional Direvtor, The Wilderness Societit~
them open. THE CLOSING OF HEALTH CARE FACILITIES California/Nevada Region
· Rebuttal to Argument in Favor of PropOsition 99
If you want tb triple a tax, invite more cn_'me, treat many tr,adition of fairness? '~ ' '
hard-working Califo'rnians unfairly, punish some of your · It would unfairly burden lower-income Californi,ans. Taxes
neighbors and hand over more money to many wealthy doctors, ..like this take a bigger chunk of a poor filmily s income.
you'll vote for Proposition 99. That's called "regressive." Even a 1986 report of the
Read Proposition 99 carefully. Y0u'll see what· serious prob: American Hospital Association acknowledges tobacco taxes
lems it creates for Californians. "tend to. produce a regressive distribution of the cost of
Here are just five of the many reasons to oppose Proposition _ government Programs:"
99: - · · It would enrich the medical industnj with hundreds of
· It would invite serious crime. New pressures will be put on millions of dollars. A 1987 study indicated one in four
police. Officials in 13 states recently joined in a hotline to' doctors surveyed already is a ·millionaire.
combat the growing problem of cigarette smuggling. The No On taxes.
California .State Sheriffs Association and 'the 'California. No on crime.
Peace Officers Association oppose Proposition 99.
· It would provide a p6tential new cash source for. street No on Proposition 99.
gangs anct other briminals. Smugglers could avoid up to PAUL GANN
$200,000 in taxes On a truckload of Cigarettes bootlegged Presideng. The People's Advocate
from another state. Resulting illegal profits~ could finance VINCENT CALDERON
the purchase of drugs or guns that could be used against National Chairman, Latino Peace Officers Association
innocent citizens. -'~ v~VILLiAM BAKER
· It would single out and penalize the behavior of one group Member of the Assembly, '15th District.
of people who are breaking no laws. Is that in' the American Vice chairman, Waits and Means Committee
84 A~guments printed on this page are the opinions of the authors and have not been checked for accuracy by any bffieial agency ~88
Cigarette and Tobacco Tax.' Benefit FUnd.
" Initiative Constitutional Amendment and Statute
I
1
Argument Against Proposition 99
PropOSition. 99. is a £50-percent tax increase and' special income Americans' than other taxes. Tobacco taxes are more
interest giveaway disguised as a' health initiative. It is 'not aunfair than taxes on gasoline, beer or wine.
smoking ban.' -' .Groups representing the needy, minorities, business and
Proposition 99 will encourage crime, discriminate against one labor opposed last year's proposed federal excise tax increase
group of Californians, penalize some lowei-income families and and Congress rejected it. Similarly, a State tobacco tax increase
reward its major.promoters hundreds of millions of dollars, failed to get one vote in the California Legislature last year.
Proposition 99 would establish several historic firsts: . .The promoters of ProPosition 99 have billed it as a health
· This ballot meaSUre will encourage crime in California. research initiative. Yet, onlyfi've pennies ofeach new tax dollar
' Large tax increases ontobacco products in other states have wouM go to heal. th .research--the smallest allocation, ih the
triggered bootlegging, highjacking, vandalism and other initiative.'
criminal behavior. They 'create a financial bonanza for The promoters of Proposition 99 ha~,e billed it as a health
street gangs and organized crime. The California State education initiative as well. The. promoters'say,some of the new
Sheriffs Association and the California Peace. Officers -education money would be,used ,to finance major local an,d
Association know the facts and oppose ProPosition 99. '- statewide media campaigns. Don t be misled. Even the state s
· This ballot measure was designed to pay off many'of its largest teachers organization tOok no position on 'this initiative.
promoters. Most taxes benefit all citizens. But California s Earmarking Proposition 99 funds for a health education ac-
medical industry would pocket at least $292 million o£these count could result, in a cut in the l~vel of financial support for
projected taxes each year. And those least able to afford it .reading,,. math and other basic classroom Subjects. '
would feel the sharpest, impact of these riew taxes. Propo- . 'Don t be. fooled by trendy, noble-sounding rhetoric. Bead
sition 99 would create an unacceptable precedent for' other Proposition 99 carefully. The promoter~ want you to penalize
' self-serving ballot measures spon,s,ored b,y,, special interests one group of Californians, impose an unfair tax that falls hardest
seeking new tax dollars for their special agendas. ' on lower-income families, and put millions'ofdollars into their
· This ballot measure was drafted by one group td,punish by .pockets--while encouraging crime.., all at the Same time.
taxation, the behavior of another. Proposition 99 s promot- Proposition 99 is less than meets the eye.' Voters should reject
ers would impose their values on everyone, penalizing one Proposition 99. '
segment of society for' its conduct. Who will 'be punished PAUL GANN
next? Can new taxes on beer, wine, coffee or even red meat President, The Pebple's AdvoCate
and eggs be far behind? VINCENT CALDERON
Proposition 99 is an excise tax. It hits one group of citizens for National Chairman, Lati~no Peace Officers Association
what they buy, not what they earn. In 1987 the Congressional RICHARD FLOYD
Budget Office reported that excise taxes such' as tobacco taxes Member of the Assembly, 53rd District
proposed by Proposition 99~ are a greater burden on lower- Chairman, Governmental Organization Committee.
Rebuttal to Argument Against Proposition 99
TOBACCO COMPANIES WON'T TELL YOU THE TRUTH That's why antismoking education and training is so important.
about why they oppose Proposition 99. 'THE TRUTH IS IT TAKES MONEY TO DELIVER MEDI-
THE TRUTH IS they oppose increasing tobacco taxes be- CAL CARE. Proposition 99 provides'additional resources to care
cause THEY WILL LOSE' MONEY. Every other argument for those in need.
against Proposition 99 is a sraokesereen. THE TRUTH IS $32 MILLION EVERY YEAR SUPPORTS
THE TRUTH IS CIGARETFE SALES WILL DECLINE. RESEARCH ON TOBACCO-RELATED DISEASES. It may be
Fewer children will start smoking and more adults will stop. "only pe .nnies' to tobaeeocompanies, but it is four. times what
'THE TRUTH IS erime'is not the issue. Bootlegging from the National Cancer Institute spent in California last year.
low-tax tobacco-growing states up the East Coast was a problem WHOM DO YOU TRUST? The out-of-state .tobacco indUstry
in the 1970s~ No ldnger. ILLEGAL DRUG TRADE IS MORE ~ after more profits? Or the American Cancer Society, American
ATTRACTIVE TO CRIMINALS AND GANGS THAN SMUG-. Lung Association and American Heart Association? VOTE YES
CLING CIGARETTES. ON 99.
THE TRUTH IS the State Board of Equalization enforces the JOHN VAN DE KAMP " '
tobacco taxes. This is generally no~ a police matter. Attorney General, State of California
THE TRUTH IS TOBACCO COMPANIES EAGERLY SELL CAROL KAWANAMI
C!GARETFES NO MATrER HOW POOR THE BUYER. They Immediate Past President, American Lung Association
advertise heavily to minority and low-income youth. The RICHARD V. LOYA
result---55% of' Blacks die from the 'major smoking-related Coordinator, California Association of School Health
diseases, and smoking among Hispanic teem.is skyrocketing. EduCators and Health Teacher~
G88 - Arguments printed on this page are the opinions of the authors and have not been checked ~for a~cttracy by any offici~ agenc); 85
I1001'" "
' Insurance Rates,' Regulation.- Initiative StatUte
Official Title and Summary Prepared' bY the Attorney General "
INSURANCE 'RATES, REGULATION. INITIATIVE. Provides minimum 20 percent reduction in certain rates for'
good drivers from January 1, 1988, levels. Requires companies insure any good driver in counties where company :Jells
automobile insurance~. Requires ongoing minimum 20 percent good-driver differential. Funds automobile insurance
_fraud investigations, prosecutions.. Provides consumers comparative, automobile insurance prices. Ap[51ies laws
prohibiting discrimination, price-fixing, and unfair practices to insurance companies. Requires hearing, Insurance
Commissioner approval for aUtomobile, other property/casualty,-health insurance rate changes. Establishes Insurance
Consumer Advocate. Increases enforcement, penalties for fraudulent health insurance ~sales to seniors. Cancels
conflicting provisions of Propositions 101, 104, and 106 including attorney contingent fee limits and prohibits future
laws setting attorney fees unless approved by voters or Legislature'. Authorizes insurance activities by banks. Summary
of Legislative, Analyst's estimate of net state and local government fiscal .impact: Would increase stare'administrative
costs by $8 million, for Department of Insurance and $2 million for 'Department of Justice in 1988-89, varying
thereafter with workload, to be' paid by additional-fees-on the insurance~ industrY. ·Would 'increase costs for
Department of Motor Vehicles' by $100,000~ Would reduce state revenues from the gross premiums tax by about $20
million in first year ff no, other changes are madb in insurance rates., Would increase revenUes for Department of
Insurance by over- $500,000 annually from fees paid by insurance companies for fraud investigations.
Analysis by the Legislative Analyst ' .
Background Rates. Currently, the Department of'Insurance, does not
Various types hr insurance are sold in califOrnia, includ- review and approve insurance rates before they take
ing automobile, liability, fire, health and life. In 1987, effect. Instead, the Department of Insurance can req~est
insurance companies collected about $50 billion in pre- insurance companies to justify such rates after they take
miums from the sale of insurance. In turn, they paid about effect,, as part of the rate examination process or in
$1 billion to the state in a tax on these premiums, re,sponse to complaints from consumers. Historically, the
scope, and frequent)/ of rate examinations has been
Motor vehicle insurance is' one ~)f the major types of limited. '
insurance purchased in the state. It accounted'for about . Current Method of Settling Claim~. Currently, the
$12 billion (24 percent) of all premiums collected during, party Who is "at fault" in an accident is responsible ·for
1987. Such insurance may include protection for: paying compensation for both bodily injury and property
· Liability and property damage (which covers claims damage. ~ '
for bodily injury and property damage to others If a claim for damages is filed and one or more of the
when the.insured person was at fault); . - parties involved in-an accident is insur~d~ insurance
· Medical (which covers the insured persohand others companies attempt to determine who is at fault. These
in the automobile, regardless of fault, for "excess" 'claims are UsUally settled by negotiations or by court
medical expenses, meaning those e~penses not coy- action. After it is determined which Party is at fault, the
ered by other insurance);, insurance company' of that parW pays the damages, nol~ to
· Collision' (which covers collision damage to the insu- exceed the limits of. the insurance policy.
red's car regardless of the fault of the insured); Attorney Fees. Attorney fees in motor vehicle'e.cci-
· Comprehensive (which covers damage other than dent cases are usually based on a per4entage of the
collision, such as fire, theft, glass breakage and van- amount the client recovers and are' referred to as con-
dalism, tO the insured's car); and tingency fees." The fees are fixed by a contract between
· Uninsured and underinsured motorist (which ~overs the attorney and client.· There are no dollar limits on
claims for bodily injury and/or property damage contingency fees in these cases.
caused by a motorist who is at fault and who has no Proposal
insurance or inadequate insurance). In summary, this me~ure:
Rate-Setting by Insurance Companies. 'Currently, in-
· Requires insurance Companies to reduce motor vehi-
surance co.mpa/ties set..rates for various types of insur- cie insurance rates for "good drivers" and make~
ante, .using a number of factors. For motor vehicle other changes related to motor vehicle insurance.
insurance, these factors generally include the age, sex, · Requires the Department of Insurance to review and
marital status, driving r~cord, type of vehicle and home approve certain rates and subsequent change:; to
address of the insured. The insurance companies also take those rates for certain types of insurance.
into consideration other factors such as their claims · Affirms the current at-fault sys. tem of motor vehicle
· experience, income and expenses. Insurance: companies liability and thereby may' restrict the implementation
are not required to tell the public what relative weight of other systems,' such as no,fault insurance.
they give to these factors when setting rates. In addition, -· Provides that attorney fees for all types of cases are to
insurance companies are not subject to' the state's __.~anti- ' b~ negotiated by the attorney and the client, and are
trust laws .... not to be set by .law.
Role of the ~Department of Insurance in Reviewing. Continued on pag,", '128
' ' -, Text of Proposed'Law.
This initiativemeasure is submitte~l to the people in accordance with lng. conflicts of interest and prOviding an' independent, impartial
the provisions of Article II, Section 8 of the Constitution. decisionmaker. · "
'-This initiative measure amends, repeals, and adds sections to the (h) To guarantee consumers the right to prompt and fair compensa--
Insurance Co. de, adds and repeals sections of the Financial Code, adds tion for legitimate insurance claims and to deter unfair~ insurance
sections to the Government Code, Business and Professions Code; and practices.
Civil Code; therefore, existing provisions proposed to be deleted are (i) To open the boo'ks of'insurance companies to vigorous public
printed in :~.'~.~za'-'-'. -~T.C and new provisions proposed to be added are scrutiny of those aspects, of their operations relevant to the. public
printed in italic type to indicate that they are new.. interest. '
' ' PROPOSED LAW ~j) To protect seniors from unscrupulous practices in the sale of
health care insurance.
SECTION 1. Short Title ~.. ' ' (k) To prevent unfair discrimination in pricing and availability of
This act shall be known' as.. the "Insurance RefOrm and Consumer - insurance.
Protection Act of 1988." - (l) To P~ovide sitfficient resources to law enforcement for the vigor-
SECTION 2. Findings and Declaration~ ous investiga.tion and. prOsecution of fraudulent automobile insurance
The People.of the State of California find and declare as follows: claims. · '
(a) Californians have the n'ght to fair and reasonably .priced insur- SECTION 4..Fairness in Automobile Insurance
ance and to. ~honest, .nondiscriminatory treatment by insurance compa- Article 6 is added to Chapter I of Part,3 of Division 2 of the Insurance
nies. COde to read as follows:
(b) 'Good drivers have been penalized by the unfair practices .of ' ArtiCle'6
insurance companies that place stereotypes ahead of the individual · Fairness in Private Passeng'er
driver's record in determining insurance.premiums and that leave good ' 'Automobile Insurance
drivers unable to purchase insurance from the company of their choice. 11629.601 Scope. The provid'ions of this article shall' apply to~any
(c) The cost of automobile insurance for good drivers has risen automobile liability policy, auto.mobile physical damage policy, and
sharply. Present rates are at least 20 percent higher than needed for automobile collision policy, as those terms are defined in'Section 660,
adequate rates and reasonable profit· and any combination thereof, delivered or issued for delivery in this
(d) Insurance is, essential to the health, safety, and prosperity, of 'state insuring.a single in, dividual or individuaLe residing in the same
every Californian and to the growth of the state's economy., household, as named insured, under which the insured vehicles therein
(e) The insurance crisib has jedpardized our standard of living, designated are of the following types only:
damaged small and large businesses, drained precious resources from (a) A motor vehicle of the private passenger or statiOn wagon type.
civic activities, 'charitable groups, and public services, and needlessly that is not used as a public o~ livery convetian, ce for passengers nor
exposed all Californians to economic risks and uncertainties, rented to'others;
(f) Current law has left California consumers unprotected in their (b) Any other four-wheel motor vehicle With a load capacity of 1,500
dealings with powerful insurance companies. The result has been pounds or less which is not used in' the occupation, .profession, or
excessive rates, unfair contracts, and predatory sales practices. Too often ". 'business of the insured, provided, however, that this article shall not
,the victims have been the most vulnerable members of our society, apply (i) to any policy issued under an ·automobile assigned risk plan,
(g) Insurance rates are presently.made b_y a process that is closed to (ii) to any policy insuring more than four automobiles, or (ii{) to any
the public, lacks accountability, and leaves consumers powerless, policy ~overing garage automobile sales agency, repair shop, service
(h) The. insurance industry is unjustifiably exempt from antitrust station, or parking place operation hazards; or
laws. Insurers are free to fix prices, divide' markets among themselves, ' (c) A motorcycle.
and engage in a wide range' of anticompetitive practices that are illegal 11629.602 Definitions. As used in this article, the following defini-
in any other business· . . tions shall apply:.
(i) The widespread failure of insurance companies to make insurance (1) '_'Automobile insurance rating plan" means the system of classi-
available at reasonable prices demonstrates the need· to reform and fication by which the rate for a given ve. hicle is determined.
modernize the sydtem of insurance regulation in California and to open (2) "Basic automobile insurance"'means a policy providing motor
insurance markets to increased competition, vehicle liability insurance, as that term is defined in Section 16450 of
(j) Because insurance is essential to the people of California, it is the Vehicle Code, automobile physical damage insurance, and automo-
necessary and proper that state government protect its citizens from bile bollision insurance, or any combination thereof The commissioner
unfair insurance rates and practices· may, by regulation, prescribe proviqions of basic automobile insurance
,. (k) It is appropriate that the cost of providing this protection to policies to facilitate price-comparison.
California consumers be borne completely by insurance companies and (3) "Good driver'"means any person who has held a valid-operator's
not b~ the general public in taxes. -- license for at least three years preceding the application for insurance
(1) Automobile insuranCe fraud is a major contributor to automobile and who:
insurance costs. Law.enforcement agencies have inadequate resources to (a ) Has not had morb than one teaffic violation point count in the
investigate and prosecute suspected fraudulent claims effectively, preceding three years and not had any accidents in which he or she was
SECTION 3. Purposes Of Act. . principally at fault in the preceding three years;
The people enact this act tO'accomplish the following purposes: · (b) Has not been convicted of (1) fraud or attempt to defraud
- (a) To promote the principle of personal responsibility, to guarantee involving an automobile insurance policy, .(2) driving under the
that automobile insurance rates primarily reflect the record, of the ·influence of alcohol or drugs, (3) violation of Sections 20001, 2000£,
insured, and to establish the right of good drivers to purchase automo- £O003, £3103, £3104, 2315£, or 23153 of the Vehicle Code or for offenses of
bile insurance in the open' market at fair prices, a substantially similar nature committed in California or in another
(b) To provide good drivers an immediate 20-percent. rollback of jurisdictioh, or (4) of theft of a motor vehicle; and '
automobile insurance rates. ' (c) Whose insured vehicle substantially complies with the require-
(c) To guarantee good drivers a £0 percent discount in automobile ments of Division 12 of·the Vehicle Code (commencing with'Section
insurance· ' ' 24000).
(d) To open· insurance' markets to increased competition a~d thereby 11629.603 Right of Good Drivers to InsuranCe· (a) Every insurer'
to provide an abundant ~upplff of insurance products and ~services at shall offer, basic automobile insurance on any vehicle for which a good
reasonable, stable prices, and to provide consumers with the informa- driver is the principal operator in anti county in which the insurer
tion necessary to take advantage of the competitive market, accepts applications for automobile insurance.
· (e) To create an open, publicprocess of ratemaking that will restore (b) Every insurer shall file with the department, in such form a~d
accountability, integrity, and confidence in the ~tate's ability to protect using'such media as the commissioner may btt regulation prescribe, its
its citizens.' . . rates for basic automobile insurance· Sf~ch rates may vary 'a~cording to'
· (f) To'provide an effective advocate dedicated to the promotion and classifications contained in an approved autbmobile insurance' rating
protection of consumer interests 'in order to balance the historic plan, but the insurer must provide a rate for eve~ good driver in the
domination of the regulatory process by the insurance industry. .. county. ' ' ~
(g) To safeguard the integrity of the regulatory Process by prevent- ~, Continued on page 130
G88 ' .... 87
Argument in Favor of Proposition 100
This is the year for insurance reform. · ness~s, chiM care centers and nonprofit organizations
Confused about which of the five propositions to support? against unjustified ·rate increases in auto, health, home-
Don't be confused.' ,PROPOSITION 100 GUARANTEES owrier, liability and other, typey of insurance.
REAL, LONG-TERM REFORM AND RATE REDUCTION. · Unlike the other insurance initiatives, Proposition 100 will
Two initiatives, give reductions to-drunk drivers! .. ' assure that drunk and reckless drivers will not be allowed
Three initiatives were written by the insurance'companies! ' to escape .responsibility for the tragedies they cause. It
~ .p?eserves, unchanged, the rights of Victims and their fam-
~ PROPOSITION 100 WAS WRITTEN BY CONSUMERS/ ilies to contract freely with the attorney of their choice to
Propositioh 100 is supported by M, ADD, Consumer Federa-, ensure that they are fully compensated for their injuries. It
'tion of America, Insurance Consumer Action Network, National also protects av ictim's right to full reimbursement for all
Insurance Consumer Organiz~ttion, Congress of California Se~ necessai'y treatment by all licensed doctors. '
niors and-Common Cause. . PROPOSITION 100 is overdue! Look at the facts: ·
And'only one initiative--propOsition 106--will make sure that · Insurance compahies in- California have been more profit-
good drivers, NOT'RECKLESS and DRUNK DRIVERS, get'the able than' insurance companies t~oughout the entire
reductions they deserve. ·nation.
oNLy'PROPOSITION 100: · Over the last two years, California auto insurance rates have
· . Guarantees ."good drivers" an immediate 20% reduction skyrocketed over 40%! And last'year, the insurance indus-
~ a'nd)Cuture 20% discounts in insurance rates. Premiums will try made a record net profit of over $13.7~ billion nalfion-
be based On your driving recoi& How you drive is more wide. In 1986, 'they made dver $12.7 billion and fourteen of
important than where you live, or on which side of the the top insurance companies paid absolutely no~federal
street., income tax--not one penny!
· Eliminates the unique special-interest exemptionfr°m the · Insurance compani.e,s are now free to charge whatever the
anti-trust taW for insurance companies. They will be gov- market will bear. It s time to change the rules. -
erned by the same anti-trust laws-that now apply to other Several "insurance reform" initiatives appear on your ballot
major indu?ies. Competition will increase by permitting but only~ Proposition 100 GUARANTEES REAL REFORM of the.
banks to sell insurance. . . . indust~--without~ giving premium reductions to drunk or,
reckless drivers! You have a real choice. - . '
~ Cracks down ~n unscrupulous practices in the sale and
advertising of senior health care· (medigap) insurance. Don't let DRUNK.DRIVERS or INSURANCE COMPANIES
California seniors will no longer be prey to 'abusive and OFF THE HOOK! ·
fraudulent sales tactics. Cut your rates by 20%--vote YES on Proposition 100!
· Mandates insurance companies provide law enforcement PATRICIA RAMIREZ
with the funds ne~ssary to ~investigate and prosecute State Administrator, Mothers Against Drunk D~ving
fraudulent auto claims. Rather than deal witli the problem,, (MADD)
insurance companies are content to pass these costs on to CA~L JONES
consumers. ~r,0position 100 will force them t° help in this Director, Congress of California Seniors '
crackdown. ~ JOH~ VAN DE KAMP
· Protects consumers, schools, local governments, small busi- Attorney General of California
_. Rebuttal to Argument.in Favor of Proposition' 100
DON~T BE FOOLED 'BY PROP 100. IT'S A LAWYER SO ITS PROMISE OF LONG-TERM RATE REDUCTION IS
INITIATIVE. PROP 100's REAL ·PURPOSE IS TO PROTECT FALSE!
ATTORNEY INCOME. VOTE NO ON PROP 100. ~ PROP 100 will raise rates for two-thirds of California
Trial attorneys are pushing PROP 100 to block any meaning- drivers by 22%. AcCording to a study by the State Depar~aent
ful reform of our failing ~tuto insurance system--a system that of Insurance of a proposal similar to Proposition 100, rates of
forces hundreds of thousands.of minor accidents to be litigated, two-thirds of drivers will increase by effectively eliminating
UNNECESSARY LEGAL COSTS' ARE DRIVING UP THE rating based on the safety record of your neighborhood and
forces-suburban and rural drivers to subsidize motorisl:s in
COST OF INSURANCE! high-risk areas. -
PROP 100, written and primarily funded by lawyers, is a Finally, this measure allows the troubled banking industry to
special-interest initiative design'ed to protect the substantial risk your assets by moving into. the insurance business. Big banks
income trial- lawyers make from litigation, are the second largest backer of PROP 100.
The measure prohibits regulation of.attorney contingency DON~ LET THE TRIAL LAWYERS TRICK YOU. VOTE
fees at this election--which routinely ac_count for 33% to 40% of NO ON PROP 100.
a victim,s award--and bars voters from fundamentally reform- HENRY J. VOSS
lng our auto insUrance system at this election. President, California Farm Federation'
The number, of auto accident-related lawsuits filed in Calffor- ~ ED DAVIS
nia has increased by a staggering 81% in-the past five years, State Senator, 19th District _ . ' '
according to the Judicial Council of C ,alffornia: .Vice Cha~': Senate Judiciary Committee
PROP 100 DOES NOT CUT COSTS OUT OF THE SYSTEM, ~ ' BETTY sMrrH
--- ....... _ ...... ~ ...... - - - ..... .Former Chair, California_ Democratic 'Party
88 Arguments prin~ed on. this page are the opinions of the authors and have not been cl~ecked'for a~curacy by any official agency G88 [
Insurance Rates, Regulation. Initiative Statute'
,,~. Argument Against P~oposition 100
· ~ NO ON PROP 100. - Insurance's budget by 33% and add many additional b~ureau-
DON'T BE FOOLED BY THI~ LAWYERS': INITIATIVE. crats to its staff. ' '
PROP 100's real purpose is to protect trial lawyer income. PROP · California tri~l lawyers tell you that PROP 100 will give you
100 will not reform California's auto insurance system and it 'rate reductions without reducing the 'cost-of providing auto
cannot provide long-term rate redtictions., insurance.
PROP 100, the trial lawyer initiative, would: DON~ BE FOOLED BY THE TRIAL LAWYERS' EMPTY
· Cancels provisions in other initiatives on this ballot regu- PROMISES. -" ·
lating attorneys fees andprohibits any future regulation of PROP lO0's rate reduction is illUsory and temporary. Without
such fees unless approvedby the voters or the Legislature. cost-cutting measures to stabilize ratesover the long term, there
· Raise insurance Premium rates for the majority of Califor- can be no true reform of California's auto insuiance system. The
nia drivers in the l~ng run by effectively forcing insurers to trial lawyers' PROP 100 will only add time, expense--and the.
ignore the driving safety record of your neighborhood, and need for more lawyers--to the auto insurance system in Cali-
forcing you to subsidize drivers that have the highest fornia.
insurance losses. A State Department of Insurance study The only way to bring about lbng-term stabilization of auto
recently-predicted that abolishing such rating factors will insurance rates is to cut .the underlying costs driving up the
raise rates for two-thirds of the state's drivers by an averageprice of insurance: the cost of insuring against uninsured'
of 22%. . · ' . motorists, rampant fraud, and, most importantly, soaring legal
· Bar voters fro/n adopting a no-fault auto insurance system ' costs in auto accident cases. .
at this election that would provide more money to injured PROP 100 DOES NOT REDUCE THE COST OF PROVID-.
· victims more quickly and effficiently'than does the current ING INSURANCE.
' system~and cut out the need for attorneys in many cases. PROP 100 PROMOTES THE PRIVATE AGENDA OF TRIAL
· Establish a costly government bureaucracy that does noth- ATFORNEYS AT THE EXPENSE OF CALIFORNIA DRIV-
· ERS AND TAXPAYERS.
ing to make insurance more affordable.
~ · Allow the financially troubled banking industry to endan- DON'T BE FOOLED.
ger your savings by selling.insurance. WE URGE YOU TO VOTE NO ON PROP 100.
· Give enormous new authority to a state "insurance czar." HENRY J. VOSS
The trial, lawyers'initiative does virtually nothing to attack President, California Farm' Federation
the underlying costs driving up auto insurance rates. 'Instead, it ED DAVIS
Would create the same type of bloated bureaucracy that has State Senator, 19th District
been disastrous in states like NeW Jersey. . ' Vice Chair, Senate Judieiar~d Committee
According to the Legislative Analyst, the regulatory bureauc- BETTY SMITH
racy mandated in PROP 100 will inflate the Department of Former Chair, California Democratic Part~
Rebuttal to Argument Against Proposition 100
Proposition 100 gives good drivers a 20% discount, requires · Ensures YOUR auto insurance rates are primarily based on
premiums be based on YOUR driving record and repeals the YOUR driving record.. "
insurance industry's unfair exemption from antitrust laws.. · Eliminates the insurance industry's special interest exemP-
Written by leaders of the insurance reform struggle in tion from. antitrust laws. Insurance Companies will be
California--Insurance Consumer Action Network, Attorney subject, to the same. laws that govern every other, major
industry.
General John Van de Kamp and Assemblyman Lloyd Connelly · Protects se/riots from health insurance abuses.
--Proposition 100 is supported by the most diverse ,coalition. of · Holds drunk and reckless drivers accountable for their
any insurance reform measure on your ballot~, including: actions. That's why CALIFORNIA MOTHERS AGAINST
CALIFORNIA MOTHERS AGAINST DRUNK DRIVING DRUNK DRIVING (MADD) SUPPORTS Proposition 100
(MADD)' 'and OPPOSES Propositions 101 and 104.
Congress of California Seniors -- To guarantee all the rights, reforms and protections provided
Common Cause in Proposition 100, it must receive more votes than Propositions"
' LEAGUE OF CALIFORNIA CITIES 101, 103, 104 and 106.
Consumer Federation of 'America Vote for real insurance reform.
National Insurance Consumer Organization - YES on PROPOSITION 100!
And, for the first time in California history, consumer orga- STEVEN MILLER
nizations have been joined by financially equipped allies,-like President, Insurance Consumer Action Network (ICAN)
bankers and lawyers, who provide the resources necessary to J. ROBERT HUNTER, JR.'
fight the insurance industry's $30 million campaign war chest! President, National Insurance Consumer Organization
Proposition 100 means genuine insurance reform:' (NICO)
· GUARANTEES an immediate 20% reduction to all good STEPHEN BROBEGK
drivers. . Executive Director, consumer Federation of America (CFA)
~ G88 'Arguments printed on this page are the opinions of the authors and have not been checked for accuracy by 'any official agency 89
Automobile AcCident Claims and Insurance Rates.
· Initiative. Statute
- Official Title and Summary Prepared by the Attorney General
AUTOMOBILE ACCIDENT CLAIMS AND INSURANCE RATES. INITIATIVE STATUTE. Reduces bodily injury,
uninsured motorist rates to 50 percent of October 31, 1988, or October 31, 1987, level, Whichever is lower, adjusted for
medical inflation. Limits motor vehicle accident recovery~for noneconomic losses such as pain and suffering to 25
percent of economic 10sses,'as defined. Prohibits attorney contingent fees greater than 25 percent of economic los.scs,
as defined. Limitations not applicable to survival, wrongful death· actions or actions involving serious and permanent
injuries and/or disfigurement: Provisions expire December 31, 1992. Summary of Legislative Analyst's estimate of net
state and local government impact: Would increase state administrative costs by about $2 million in 1988-89, varying
thereafter with workload, to be paid by additional fees on the insurance industry. State and affected local governments
would have unknown savings from reduced insurance rates and loss limitations. Possible reduction in court costs ~md
court revenues could result from limitation on claims for noneconomic damages. Would reduce state revenues from
the gross premiums tax by about $50 million a year for next four years ff no o.ther changes are made in insurance rates.
Analysis by the Legislative Analyst
. Background insurance companies to justify such rates after they take.
Various types of insurance are sold in California, inclUd- effect, t as part of the rate examination process or in
lng automobile, liability, fire, health and life. In 1987, response to complaints frOm consumers. Historically, the
insurance companies Collected about $50 billion in pre-" scope and frequency, of rate examinations has been
miums from the sale of insurance. In turn, they paid about limited.
Current Method of Settling Claims. Currently, the
$1 billion to the state in 'a tax on these premiums, party who is "at fault" in'an accident is responsible for
Motor. vehicle insurance is one of the major types of paying compensation for both bodily injury and property
insurance purchased in the state. It acCOunted for about damage.
$12 billion (24 percent) of all premiums collected during If a claim for damages is filed and one or more of the'
1987.'Such insurance may include protection for: parties involved in an accident is insured, 'insurance
· Liability and property damage (which covers claims companies at. tempt to determine who is at fault.' These
for bodily injury and property damage to others claims are ~usually settled by negotiations or by court
when the 'insured person was at fault); action. After it is determined which party is at fault, the
· Medical (which covers the insured person and others insurance company of that party pays the damages, not to
'in the automobile, regardless of fault, for "excess"· exceed the limits of the insurance policy.
medical'expenses, meaning those expenses not cov- Attorney Fees. · Attorney fees in motor vehicle a.cci-
ered by other insurance);
· CollisiOn (which covers collision damage t° the in- ~dent cases are usually based on a percentage of the
amount the client recovers and are referred to as "con-
.sured's car regardless of the fault of the insured); ~, tingency fees." The feesare fixed by a contract.between
· Comprehensive (Which covers damage other than the attorney and client. There are no dollar limits on
collision, such as fire, theft, glass breakage and van- contingency fees in these cases.
dalism, to the insured's car); and
· Uninsured andunderinsured motorist (which covers Proposal '~
claims for bodily injury and/or property 'damage In summary, this measure:
caused by a motorist who is at fault and who has no · Requires insurance companies to reduce the bodily
insurance or inadequate insurance), injury liability and. uninsured motorist portions, of
Rate Setting by Insurance Companies. Currently, in- motor vehicle insurance rates and makes ot:her
suranee companies set rates for various types of insur- Changes related to motor vehicle insurance,
ante, using a number .of factors. For motor vehicle · Limits claims for noneeonomie losses (such as "pain
insurance, these factors generally include the age, sex, and suffering") and attorney contingency fees, and
marital status, driving record, type of vehicle and home · Expires at the end of December 1992.
address of the insL~red. The insurance companies also-take
into consideration other factors Such as their claims Rate Reductions
experience/income and expenses. Insurance companies This measure require~ insurance companies to reduce
are not required to tell the public what relative weight their rates for the bodily injury liability and uninsured
they give to these factors when setting rates. In-addition, motorist components of motor vehicle insurance policies.
insurance companies are not subject to the state's anti- These components account for roughly 40 percent of total
trust laws.' motor vehicle insurance premiums. SpecifiCally, the ~raea-
Role of the Department of Insurance in Reviewing sure requires that rates for policies issued on or ~tfter
Rates.-Currently, the Department of Insurance does not November 9, 1988, be reduced to the lower of the
ieview and approve insurance rates before they take following:
effect. Instead, the Department of Insurance can request Continued on page 135
Text of Proposed Law
This initiative measure is submitted t6 the people in accordance with (4) Unless the claim is subject to the provisions of S~ction (3146 or
the provisions of Article II, Section 8 of the Constitution. 6146.6, a statement that the fee is not set by law but is negotiable-
This initiative me~asure amends and adds sections to the Business and between attorney and client. ·
Professions Code, adds sections to the Civil Code,. Code of Civil (5) If the claim is subject to the provisions of Section 6146 Or 6146.'6
Procedure, and Insurance Code; therefore, existing provisions proposed a statement that the rates set forth in that section are the maximum
to be deleted are printed in st~e~'~c and new provisions.proposed limits for the contingency fee agreement, and that the attorney and
to be.added are printed in it, ali~e to indicate that they are new. client may negotiate a lower rate..
PROPOSED LAW (b) Failure to comply with any provisio~n of this section renders the
agreement voidable at the option of the plaintiff, and the attorney shall
SECTION 1. (a) We the people of the State of California hereby .thereupon be entitled to collect a reasonable fee.
find and declare that insurance-coverage of liability for bodily injury (c) This section shall not apply to contingency fee co~traets for the
arising out of the use of motor vehicles has b~come unaffor_dable to recovery of,workers' compensation benefits.
many individuals.and businesses. SEC. 4. Section 3333.6 is added to the Civil Code, to read: .
(b) We the people.also find and declare that the high cost of this 3333.6. (a). For the purposes of this section:
coverage is the result of the bodily injury reparations system in effect (1) "Bodily injury" means injury to a person which arises out of the
today. · · · use of a motor vehicle'as a motor vehicle and any sickness or disease that
(c) In order to address these concerns, we'the people further find and results from the injury. Bodily injury .does not mean injury o~curring
declare that it is necessary a~d proper to (1) reform the reparations during the use of a motor vehicle but not arising.out of that use.
system as set forth in the-statutes of this state and as'developed in ~ (2) "Economic losses" means objectively verifiable monetary past
numerous court decisions, and (2) as a. direct result, reduce by 50 and future losses not compensable from other SOurces, including
percent premiums for coverage of liability for bodily injury provided by medical expenses, loss of earnings, including future loss, burial costs,
policies covering liability arising out of the use of any motor vehicle, loss of business, loss of employmen( opportunity, and costs of obtaining
(d) With thdse goals in mind, we the people do hereby enact this necessary substitute domestic services, excluding services rendered by
initiative measure., relatives, members of the injured person ~s household, or others under
SEC. 2: Section 6146.6 'is added to the Business and Professions age 16. No other losses ~r damages Shall be considered economic losses.
Code, tO read: (3) "Motor vehicle" means any vehicle designed primarily for use on
6146.6. (a ). For the purposes of this section: streets and highways and subject to motor vehicle registration under the
(1) '~Bodily injury" means injury to a person which arises out of the laws of California.
use of a motor vehicle as a motor vehicle and any sickness or disease that (4) "Noneconomic losses" means all losses excelJt those specifically
results from the injury. Bodily injury does not mean injury occurring defined as "economic losses" in paragraph (2), including, but not
during the use of a motor vehicle but not arising out of that use. limited to, subjective, nonmonetary losses such as pain and suffering,
(2) "Economic losses" me~ns objectively verifiable past and future inconvenience, mental suffering, emotional distress, loss of society, loss
monetary losses not compensable from other SOurces, including medical of companionship, loss of consortiura, injury to reputation, humiliation,
expenses, loss of earnings, including future loss, burial costs, loss of or any combination of the above.
business, loss of ~mployment opportunity, and costs of obtaining (5) "Person" means a natural person and not a corporation, partner-
necessary substitute domestic'services, excluding services rendered by ship, association,, or trust. -
, relatives, members of the injured person's household, or others under (6) "Use of a motor vehicle" means operating, maintaining, loading,~
age 16. No o~her losses or damages shall be considered economic losses, or unloading a motor vehicle.
(~) "Motor vehicle" means any vehicle designed primarily for use on (b) No person or entity may recover noneconomic losses in excess of
streets and highways and subject to motoz vehicle registration under the 25 percent of economic losses for bodily injury resulting from or caused
~ laws of Californza. by an accident arising out of the use of a motor vehicle unless the person
(4) "Person"means a natural person and not a corporation, partner- seeking recovery, as a direct result of the accident, has suffered an
ship, association, or trust. . injury resulting in either of the following: .
(5) "Use of a motor vehicle" means operating, maintaining, loading, (1) Serious and irreparable permanent disfigurement.
or unloading a motor vehicle. . (2) Any injury which is both serious and permanent. An injury is
(b) A n attorney shall not contract for or collect a contingency fee for "serious" for the purposes of this paragraph only if it substantially
representing any person seeking damages in connection with a claim for prohibits the injured person from resuming substantially all of his or
bodily injury, which is not both serious and permanent as defined in her normal activities. An injury is "permanent" only if its effects
subdivision (b) of Section~ 3333.6 of the Civil Code, or which does not cannot be eliminated by further time for recovery or by further medical
involve serious and irreparable permanent disfigurement, presented to treatment and care, including surgery, or both.
an insurer Providing coverage of liability for bodily injury arising out (c) This Section does not apply to either survival actions provided for
of the use of a motor vehicle, in excess of 25 perce~nt of the economic' under Section 573 of the Probate Code or wrongful death actions.
losses recovered. (d) This section only applies to causes of action arising from
(c) This section does not apply to either survival actions provided for - accidents that occur on or after November 9, 1988, and on or before
t in Section 573 of the Probaie Code or wrongful death actions. December. 31, 1992.
(d) This section only applies to causes of act¥on arising from SEC. 5. Section 425.14 is'addedto the Code of Civil Procedure, to
accidents that occur on and after Novembel 9, 1988, and on or before read:
December 31, 1992. 425.14. (a) For purposes of this section:~
SEC. 3. Section 6147 of the'Business and ProfesSiOns Code is (1) "Bodily injury " means injury to a person which arises out of the
amended to read: use of a motor Vehicle as a motor vehicle and any sickndss or disease that
6147. (a) An attorney who contracts to represent a plaintiff on a results from the injury. Bodily injury does not mean injury occurring
contingently fee basis shall, at the time the contract is entered into, during the use. of a motor vehicle but not arising out of that use.
a duplicate copy of the contract, signed by both the-attorney (2) "Economic losses" means 'objectively. verifiable monetary past
the plaintiff, or his guardian or representative, to the plaintiff, or to and future losses not compensable from other sources, including
plaintiffs guardian or representative. The contract shall be in medical expenses, loss of earnings, including future loss, burial costs,
writing and shall inc~lude, but is not limited to, all of the following: loss of business, loss of employment opportuni~, and costs of obtaining
(1) A statement of the contingency fee rate which the client'and necessary substitute domestic services, excluding services rendered
attorney have agreed upon. relatives, members of the injured' person's household, o~ others under
(2) A st~itement as to how disbursements and costs incurred in age 16. No other losses or damages shall be considered economic losses.
connection with the prosecution or settlement of the claim will affect , (3) "Motor vehicle" means any vehicle designed primarily for use on ·
the contingency fee and the client's recovery, streets and highways and subjeqt to motor vehicle registration under the
(3). A statement as to what extent, if any, the plaintiff could' be :laws of California.
/equired to pay any compensation to the attorney for related matters (4) "Noneconomic losses" means all losses except those specifically
that arise out of their relationship not covered by their contingency fee defined as "economic losses" in paragraph ~2), including, but not
co~a~c~t. This may include 'any amounts collected for the plaintiff by the limited to, ~subjective, nonmonetary losses, such as pain and. suffering,
att~ ' Continued on pag,~ 136
G88 ' '91
' Argument in Favor of Proposition 101
Only one auto insurance initiative-on this ballot can' dramatically izing in "ambulance chasing" f~'~ filing meaningiess lawsuik,', by
reduce your premiums and provide for legal reforms which end trial limiting their contingency fees to 25% in those cases.
lawyer:promoted lawsuits and fraudulent insurance claims... California consumers can no longer afford to be at the mercy of the
PROPOSITION 101. ' "Devil's Duo"'unscrupulous triallawyers and those insurance compa-
· Your YES vote on Proposition 101 mandates an insurance premium nies which prey upon California motorists with high premium increaSes!
· reduction AVERAGING ONE-THIRD for al! California motorists Proposition 101 provides significant rate reduction while protecting the
and limits future increases to the cost of living, rights of honest California motorists.
While the average California consumer will receive an approxi~nate
· Your YES vote on Proposition 101 means that insurance will be 1/3 cut in auto insurance premiums from Proposition 101, those
affordable and familieg with teenage drivers and uninsured motor-motorists, driving cars with little or no .comPrehensive or collision
ists will now be able to. purchase insurance coverage, insurance may_ receive rate reductions of almost 50%. This significant
· Your YES vote 'on Proposition t01 stops the rip-off which occurs reduction is especially helpful to seniors and people driving older cars.
when someone yells "whiplash" and sues for megabu~ks. . As an added benefit, the reduction Proposition 101 ,provides is
· Your YES vote on Proposition 101 stops those greedy individualsapplicable t0 local and state governments'and school districts. This
who have institutionalized the slogan, "Hit me--I need the money.-" means more funds will be available for programs instead of being paid
· Your YES vote on Proposition 101 ensures that all oUt-of-pocketout for insurance.
expensds for medical bills, lost wages (inehding future loss), lost FOUR INITIATIVES ON AUTO INSURANCE APPEAR ON THIs
business opportunity, etc. are paid in full. BALLOT. NO MATTER HOW YOU VOTE ON THE OTHER INITI-
Proposition 101 is easy to understand and it is also fair! It mandates a ATIVES, BE SURE TO .VOTE YES ON THE ONE INITIATIVE
50% cut in bodily injury and uninsured motorist liability insurance WHICH WILL CUT YOUR INSURANCE PREMIUM 1/3--PROPO-
premiums. This means that you will receive a .reduction in yom SITION 101.
premium between 22% and 45% depending on your driving record, VOTE YES ON PROPOSITION 101.
type of vehicle driven and the insurance coverage you carry. Thank you.
. Average reductions for California consumers will be about 35%.. RICHARD POLANCO
Every registered personal and commercial on-road vehicle in the Member of the Assembly, 55th.District
state will receive this reduction.. Chair, Consumers for Low. er Auto Insurance Rates
This significant cut in premiums occurs because, when a "'fender JOHN SEYMOUR
bender/minor injury" accident happens, Proposition 101 limits claims State senator, 35th District
for noneconomic loss (pain and suffering) to 25% above the real Orange County
econo~mi,',c loss. According to the California Attorney-General, Proposi-MIKE BOOS
tion 101 s limitations ARE NOT in effect when an accident involves Member of the Assembly, 46th District
serious and permanent injuries or survivors' rights when a death occurs. Assembly Speaker pro Tern
Proposition 101 also reduces the incentive for those lawyers special- 'Los Angeles
Rebuttal to Argument in Favor of ProPosition 101
LOOK WHO'S TALKING: Proposition .101 was drafted and is insurance companies get the extra profits.
supported by insurance companies, Official records of the California Drivers with perfect records are treated no better than drunk and
Secretary of State show that as of July more than $1.7 million, over 92% reekless.driversl Because general damages would be reduced ff you or a
of Proposition 101's budget, was contributed by one insurance company family member-were injured by a dnmk driver, the amount you collect
from the driver's insurance would be reduced by as much as 66%. And
and its holding company. That's why Proposition 101 is great for you may still have, t0 hire a lawyer and go to court to collect.
,insurance companies and bad for consumers. Proposition 101 s promised premium reduction applies only to ~wo
If you are hurt in'an auto aqeident'Proposition 101 requires you to use portions of your premium, lmuranee companies can raise the rest of
your premium as much as they want. . ' '
· your sick leave i'roposition 101 is a windfall for auto insurance companies; it's nol: real
· your vacation time reform. VOTE NO ON'PROPOSITION 101.'
· your health insurance JOHN VAN DE KAMp: '
~ your workers' compensation Attorney General' State of California '.~
· your state disability GLORIA MOLINA
before you get a dime from the insurance _company of the person who Los Angeles City Councilwoman .
hit you!
Proposition 101 will cost taxpayers money. Taxpayerg, not the at-fault EDWARD V. ROBERTS ~
Former Director, California State Department of
driver's insurance company, will pay the medical costs when a Medi-Cal' Rehabilitation'
recipient is injured in-an auto accident. Taxpayers pick up the bill; Presideng Worl~t~ Institute on Disability
92 Arguments printed on this page are the opinior~s of the authors and have not been checked for accuracy b~, any official agency G88
Initiative Statute
Argument Against Proposition 101
CONSUMERS UNION, THE NON-PROFIT PUBLISHER OF CON- someone ,bits your car, 0nly part of the costs and inju/y you suffer will
SUMEtlREPOtlTSMAGAZINE, urges you to vote NO ON PROPOSI- be paid under Propo-sition 101. This will amount to approximately 1/3 of
TION 101. We believe it isn,t good for consumers, today's typical auto accident claim. And you still may have to hire and
PROPOSITION 101 DOESN'T DELIVER THE LOWER RATES. pay an attorney to get your claim paid.
YOU DESERVE. PROPOSITION 101 LETS INSURANCE COMPANIES OFF THE
When an insurance company says it will lower your rates you have to HOOK FOR MOST OF THE CLAIMS THEY NOW PAY.
ask "How?" Your total cost could be higher ff Proposition 101 passes. If you are in an accident and the other driver is at fault, you may have
BEAD THE FINE PRINT. PROPOSITION 101 DOESN~F REALLY to use up your health insurance, your sick leave~ and your disability
GUARANTEE A RATE REDUCTION OF 50%. · insurance before you can collect one penny from the insurance
- ]'he promised reduction in premiums applies Only to the bodily company for your medical costs or lost wages. If you are eligible, you
bijury and uninsured motorist portions of your liability coverage. This may have to collect from Medi-Cal and Workers Compensation before
might amount to a .17% overall reduction in your ,premiums depending the other driver's'insurance company pays you a centl This means that
onhow much coverage you carry. However, there s nothing in the plan the costs of health insurance will increase diastieally. While auto
to prevent insurance companies from raising the premiums for other insurance companies pay less, our taxes and health care costs will go up.
portions of your policy. Insurance companies can increase your premi- This initiative affects more than just fender benders.
urns for property damage, collision, and/or comprehensive coverage as PROPOSITION 101 DOESN~F REFORM THE INSURANCE SYS-
much as they want without restrictions. TEM AND IT DOESN'F GIVE YOU TRUE RATE REDUCTIONS. IT
· PROPOSITION 101 DOESN'F STOP AUTOMOBILE INSURANCE DOES PROTECT AUTO INSURANCE. COMPANY PROFITS AT
RATE INCREASES. YOUR EXPENSE.
'The insurance companies drafted this -initiative to allow incre'ased SAY NO TO PROPOSITION 101.
bodily injury premiums every year after the first year. The other HARRY M. SNYDER
portions of your premiums can go up even sooner. Director, West Coast Regional Office,
If this measure passes, the amount you receive after being injured in Consumers Union· of U.S., Inc.,
a typical automobile accident could be reduced by 2]3 or more. When Publishers, Consumer Reports Magazine
Rebuttals to Argument Against Proposition 101
HERE THEY GO AGAIN... Proposition 101 means that every county, city, and school dl~trict in
Attorney Harry. Snyder, hiding behind the guise of a consum_er California will have millions more dollars for mekningful programs--or
organization, does not understand Proposition 101. rebates to taxpayers--and less money going into insurance' reserves.
· Proposition 101 mandates by law a 50% reddetion in bodily i~jury I. strongly urge everyone concerned about local government and
liability and uninsured' motorists insurance. ' schools to· vote for Proposition 101.
Most Californians receive an average rate'reduction of one-third.' DON ROTH
.Drivers with older cars may get almost one-half. Drivers with newer, Orange County Supervisor
luxury ears, about one-fourth. '
· Proposition 101 stops fraud.
The Insurance Crime Prevention Institute estimates that 30% to 40% Sbniors should support Propbsition 101 because we will receive the
of all accident claims in southernCalifornia may involve' some'elements greatest benefit from it.
of fraud.
· Proposition 101 only limits pain and suffering awards'in minor Because we'generally have older cars We will receive rate reductions
accidents., of almost 50%.
Medical bills, 10st wages, auto r~pair, etc. are paid in full in any Vote YES on 101.
accident. Individuals with serious and permanent injuries are entitled to 'MAY SHOTWELL
the same pain and. suffering damages they receive today. Seniors Advocacy Services
· Proposition 101 provides an arbitration procedure to determine the
seriousness of the injury. , -
'A neutral physician determines ff any injury is serious and perma-
nent.
Proposition 101 lowers auto insurance rates and protects consumers
rights!
Vote YES on 101.
RICHARD POLANCO
Member of'the Assembly, 55th District
Chair, Consumers for Lower Auto Insurance Rates
G88 Arguments printed on this page are the opinions of the authors and have not been checked for accuracy by any official agency 93
..l. kJg_- Initiative Statute --
Official Title and Summary Prepared by the Attorney General
REPORTING EXPOSURE TO AIDS VIRUS. INITIATIVE. Requires doctors, blood banks,~md others, to report'
patients and blood donors, whom they reasonably believe to have been infected by or tested positive forAIDS virus,
to local health officers, Restricts confidential testing. Re.quires reporting by persons infected or testedpositive. Directs
local health officers to notify reported person's spouse, sexual partners, and others possibly, exposed. Repeals
prohibition on use of AIDS virus tests for employment or insi~rability. Creates felony for persons with knowledge of
infection or positive test to donate blobd. Modifies fines'and penalties for Unauthorized disclosure of AIDS Virus.test
results. Summary of Legis~lative Analyst's estimate of net state and local government fiscal impact: Fiscal 'impact is
unknown, possibly tens or hundreds of millions of dollars depending on costs of measures "reasonably necessary" to
prevent spread of disease, number and types of cases investigated, testing criminal offenders, and public health care .
for those denied insurance or employment.
Analysis by the Legislative AnalYst ·
Background spreading the HIV are subject to'existing communicable
Acquired immtm~ deficiency syndrome (AIDS) is a disease laws, However, no health officer has ever t~.ken
disease that impairs the 'body's normal ability to resist any official action to require persons infected with HIV to
serious diseases and infections. The disease is caused by a be isolated or quarantined, because there is no medical
virus~the human immunodefici~ncy virus (HIV)-z--that evidence which demonstrates t. hat HIV is spread by
is spread through intimate sexual contact or exposure to casual contact with an infected person. Many health
the blood of an infected person. At the time this analysis officers, however, 'have initiated some limited invesL-iga-
was prepared (June 1988), there was no readily'available tion of cases.
method to detect Whether a person actually has HIV. An Current Testing and Confidentiality'Requirements Re-
lated to AIDS and HIV Infection. In addition'to the
HIV antibody' test does exist to' detect whether a person laws relating specifically to commtmicable diseases, there
has ever been ~ infected with HIV and, as a result, has are also laws relating to AIDS and HIV infection. Tl~ese
developed antib~odies to it.'A person infected with HIV laws prohibit involuntary HIV ,antibody testing and: re-
may or may not develop AIDS after a period of years, quire that .voluntary test results be kept confider.,tiaL
There is no known cure for AIDS, which is ultimately These laws also prohibit the ~ase of-the HIV antibody test
fatal, for purposes 'of determining insurability or employabi~ty.
AIDS became a recognized disease in 1981. Since then With limited exceptions, a person may not be tested for
about 14,000 persons in California have been diagnosed as antibodies to HIV without his or her written consent.
having the disease; and about 8,000 of them have-di~d. With few exceptions, no one, except physicians who have
The State Department of Health Services estimates that. been authorized in writing by the person tested, :may
possibly 500,000 persons in California are infected with disclose the results-of an HIV antibody test. Anyone
HIV. The department estimates that by 1991 a total of making an unauthorized disclosure may be subject to civil
approximately 50,000 AIDS eases will have been identi- penalties or, ff the disclosure, causes har. m to the person
fled in the 10 years since AIDS became a recognized tested, the person making the disclosure may be charged
disease, with a misdemeanor and punished by imprisonment or a.
Health-Officers' Authority' to .Prevent the Spread .of. fine, or both. In addition, no one Can be compelled to
Communicable Diseases. State law gives health officers identify an indi. vidual who has been tested for HIV
broad authority to take actions they believe are necessary antibodies in any criminal or other governmental pro;
to protect the public health and to prevent the spread of' ceeding, nor 'can public health records of HIV antibodY
communicable diseases such as tuberculosis and various test results' be Used in those-proceedings.
venereal diseases, among others. The kind of action taken ' Current Reporting Requirements f~r Persons with AIDS
by health officers varies, depending on how easily the and HIV Infection. Current' law Fequires health care
disease is spread from one person to another. For exam- providers to report the names of persons with AIDS to
pie, health officers may isolate or quarantine individuals local health officers. There are no requirements' for
infected with a communicable disease, or exclude them r~por, ting the names of persons who have tested pgs:itive
from certain jobs, ff the health officer believes it is for HIV infection. However, counties must report to the
necessary in order to protect the health of others. Health state the number of cases in which blood tests perfor:med
officers may also investigate cases of communicable dis- at certain facilities reveal that a person has been infected
eases in order to contact individuals who may have been with HIV.
exposed to a communicable disease. If a health officer' Existing Laws Governing Investigation .of Persons 'with
carries out such an investigatiOn, the law requires the AIDS and HIV Infection..Although health officers have
infected person's identity to 'be kept confidential, the authority under existing law to investigate eases of
According to the State Department of Health Services, AIDS and HIV infection to identify the sources of infec-
persons who have AIDS and persons who are capable of ' Continued on page 137'
94 G88
Text of Proposed Law
This initiative measure is submitted to the people in accordance with '.'.-:'~-r.u::c n_.c.~.clc:-.cy :'.,~rc,~..c~ AIDS to a third party, in a manner which
the provisions of Article II, Section 8 of the Constitution. identifies or provides identifying characteristics of the person to whom
This initiative measure amends, adds and repeals sections of the the test results apply, except ~:rsuant t~ a ~;~.'ttcr. .... ~---'
Health and Safety Code, and adds sections to the Penal Code; therefore,~ dcsc~cd i~ ~.:~'~.2;tslzn (g), e~ cxccpt as provided in this chapter,
existing sections proposed .to be deleted are printed in :,.~2zcc.'.:t ~c. -Section 1603.1, or Section 1603.3, which results .in economic,-bodily, or
and new provisions proposed to be added are printed in italic type to psychological harm to the subject of the test, is guilty of a misdemeanor,
indicate that they are new. · - · _. punish, able by imprisonment in'the county jail for a period not to exceed
PROPOSED LAW one year or a fine of not t~~-~ t~ '~-~.v~.~'~ ~.~'~-"~-~ ~..~,~ .... less
than one thousand dollars ($1,000) or more than five thousanddollars
SECTION 1. This initiative 'and Chapter 1.11 (commencing' with ($5,000), or both.
Section 199.20) of Part 1 of Division I of the Health and Safety Code · (d) Any person who commits-any act described in subdivision (a) or
shall be'known and may be cited as the ~alifornia Physicia'ns for (b) shall be liabl6 to the subject for all actual damages, including
Logical AIDS Response Public Health Act of 1988. damages for. economic, bodily, or psychological harm which is a
SEC. 2. The people of the State of California find and declare alLof proximate cause of the act.
the following: . (e) Each disclosuie made in violation of this chapter is a separate and
(a) The Surgeon General. of the United States,-at the request of the actionable offense.
President, has reported to the American public that the acquired iff)- Thc rc:".!".~ ~f ~ b!c.~.~ tc:t t~ ~c'~zct ~b~:dc: t~'the
immune deficiency syndrome (AIDS) epidemic is a major public health .......... c. gc::~. e~ acqvJrc, d ........ a^e'~ ........ ~ ....... ~.:~
issue, and its impact on our society is presently, and 'will continue to ~dcn.~c.: ~ ~rc.;qdc; i~c. nY~5~g c?..zc, ztc~;:.qc: ~f t4m ~zrzc. n
become, increasingly devastating. - t-he tc:t re:--.2'.':, a~p!y, :~?.2 n~ b~ "..:c~ in any L'aztc..-:co f~
(b) The National Academy of Sciences'lnstitute of Medicine has also . ~ctC.-:r.L-:a~c.n ~f... ....... ........ ~-:~ ........ : e~ ......t.:~ .... ~ f~ .... ~--~ ......
reported to the Amer~an public that if the spread of the virus is not. ' -(g~f (f) "Written authorization," as used in this section, applies, only
checked the present epidemic.will become a world wide catastrophe, to the disclosure of test results by a person responsible for the care and
(c) AIDS is a fatal, infectious, and Communicable disease, dangerous treatment of the person-subject to the test. Written authorization is
to the public health. -' required for each separate disclosure of the test results, and shall include
(d) The provisions of this initiative are necessary for the preservation to whom the disclosure would 'be made.
of public health. ~-~ (g) Nothing in this section limits or expands the fight 'of an
SEC. 3. Section 199.19 is added to Chapter 1.11 (commencing with injured subject to recover damages trader any other applicable law.
Section 199.20) of Part i of Division I of the Health and Safety Code, to Nothifig in this section-shall impose civil liability or criminal sanction for
read: . disclosure of the results of tests performed on cadavers to public health
199.19. As used 'in this chapter, "AIDS" means acquired immune authorities or tissue banks.
deficiency syndrome. ~f (h) Nothing in this section imposers liability or criminal sanction
For ~u, rposes of this chapter, the term "tested positive" refers only to for disclosure of a blood test to detect an.q~.~os t~ t~he evidence of
results of a generally acceptable confirmatory test or tests and 'not to infgction by any probable causative agent of AIDS in accordance with
any screening test unless the test is also considered to be a generally any reporting requirement f~ a adag::c.:c~ cazc ~f AIDS by
acceptable confirmatory test. ~.~-~ .... '-'--'........ by the State Department of Health Services or the Centers
SEC. 4. Section 199.20 of the Health and Safety Code is amended to. for Disease Control under the United States Public Health Service2
read: ~ (i) The .~atc. dc~ar..~z..cnt State Department of Health Services
199.20. To protect the privacy of individuals who are the subject of ' may require blood banks and plasma ceraers to submit monthly reports
blood testing for a.':~c.~c: t~ tahe evidence of infection by any probable summarizing statistical data concerning the results of tests to detect the
causative agent of ~.~ ........................ ~ *~ .........x .....~ AIDS presence of viral hepatitis and c~,q~c?.Ac.: t~ tahe other blood tests
the following shall apply: indicative of infection -by any probable causative agent of AIDS. This
Except as provided in_ this chapter, Section 1603.1, or Section 1603.3, statistical stmunary shall not include the identity of individual donors or
as ......... by ~1~ ~ ~f t-he ...... Rcg'.:lar £c::~c.n, no person shall be identifying characteristics which would identify individual donors.
compelled in any state, county, city, or other local civil, criminal, ~ 0') "Disclosed," as used in this section, means to disclose, release,
administrative, legislative, or other proceedings to identif)/or provide transfer, disseminate, or otherwise communicate all or any part of any
identifying characteristics .which would identify any individual 'who is record orally, in writing, or by electronic means to any person or entity.
the subject of a blood test to detect -~.~.q~c.a.2c.: t~ tshe evidence of SEC. 6. Section 199.22 of the Health and safety Code is amended to
infection by any probable causative agent of AIDS. read:
SEC. 5. Section 199.21 of the Health and Safety Code is amended to 199.22. (a) N~ ExCept as provided in'this section, no person shall test
read: a person's blood for evidence of ~.'.ibc. d~c.: t~ t-he infection by any-
199.21, (a) Any person who, without written authorization, negli- probable causative agent of AIDS without the ':,~.'~:cn consent of the
gently discloses results of a blood test to detect ~.'.i~c.n.2c.: t-~ 0ac subject of. the test; and ~e ~.rz.~.7. g~'.'~.g ~ ~ Sha~ [a';C. a ;vr~ttcn
evidence of infection by iany probable causative agent of acqulrc~ :tatc.~c. nt :~g::c~ by t~ae :u~jcct ccnSr~:.~g t~at he ~ she :~tcAncd
: ...... n~e~: ........ n .... AIDS to any third party, in a manner ....... frcn. ~
which identifies or provides identifying characteristics of the person to .n~.. :..: rcquL-c...-~c..-:t ~c.c: This consent shall be no different than is
whom the test results apply, except ~;;:'g~:Z..':t t-O a ;;~:ttcn au:[c.~:zatc, n, required for any other diagnostic blood test.
as dc:cr~cd i~ :u~d~:'~s~.n (g), e~ cxcc~t as provided in this chapter, (b) .When the subject of the test is not competent to give consent,
Section 1603.1, or Section 1603.3, shall be assessed a civil penalty in an consent may be obtained from the subjecfs parent, guardian, conser-
amount not to.exceed one thousand dollars ($1',000) plus court costs, as vator, or other person lawfully authorized to make health care decisions
determined by the court, which penalty and costs shall be paid to the for the subject. For purposes of this subdivision, a minor shall be
subjecl~ of the tes. t. deemed not competent to give consent, unless he or she is legally
(b) Any person who, without written authorization, .willfully dis- emancipated.
closes the results of a blood test to detect a.-:.q~c.d~c: t~ t-he evidence of (c) The requirements of subdivision (a) do' not apply to a any of the
infection by any probable causative agent Of acq~rcd ~_'7.-.~c ~cFJ following:
clcncy :yndrc.~c. AIDS to any third party, in a manner which identifies (1) A test performed at an alternativ~ site, as established pursuant to
or provides identifying characteristics of the person to whom the test Article 8 (commencing with Section 1630) of Chapter 4 of Division 2.
:u~d~:~".~.-(g%,~ c:cc~L as provided in this chapter, Section 1603.1, or _(2) Any blood and blood products specified in paragraph (2) of
Section 1603.3, shall be assessed a civil penalty in an amount not'less than subdivision ' ' '~- ............. "-~ ...... ~ ~-^-
· (a) of Section 1603.1 ........ .~ ............... ~ .r~..;,-
one thousand dollars ($1,000) and not more than five thoi~sand dollars (3) When testing is performed as part 9f the medical examination
($5,000) plus court costs, as determined by the court, which penalty and performed pursuant to Section 7152.5.
costg shall be paid to the subject of the test. (4) Tests conducted pursuant to Section 1202.1 of the Penal Code.
(c) Any person who, without- written authorization, willfully or ~ (d) Nothing in this section shall preclude a medical examiner or
negligently discloses the results of a blood test to detect.a::~C.~c: ~ t4~ other physician and surgeon from ordering or performing a blood test to
evidence of infection by any probable causati~ze agent of acquired Continued on page 138
G88 95
Initiative Statute
. Argument in Favor of Proposition 102 ' ·
Do you believe ~hat infection by the AIDS· virus should be Has "contact tracing" driven people "'underground," away
treated like any other communicable disease and reported to from treatment? Of course· not. Experience in Colorado with
the health department? similar laws has shown that many more ·people have undergone
PROPOSITION 102 is specifically designed to stop the spread voluntai'y testing than here in California.
Persons who believe that they may have been exposed tO any
of AIDS. It does this by requiring confidential reporting to disease have been able to turn to the public health department
public health authorities, in complete reliance upon the time-honored system of confi-
~ Although AIDS is treatable, there is no cure-yet. But we can dentiality.
stop. it from spreading. . PROPOSITION 102 will enhance confidentiality by exp,'~nd-
Currently, doctors, are required to confidentially report to. ing the legal definition of the AIDS test.
Public health authorities 'case~ of venereal disease, such as PROPOSITION 102 will not give your employer the right to
syphilis. But, if-a ~loctor weie to'report all who are infected with test you for AIDS without your consent.
the AIDS virus, he would be subject to a $10,000 fine and'/or up Health 'and life insurance premiums will likely increase as a
to a year imprisonment, result of the AIDS epidemic. PROPOSITION 102 ~ help ke~p
In short, UNDER CURRENT LA W, IFA DOCTOR'TREATS the cost of insurance down.
With AIDS, the only way to save a life is to p/event infecl:ion.
AIDS INFECTION LIKE HE WOULD ANY OTHER DISEASE, That's what PROPOSITION 102 is all about.
HE WOULD COMMITA CRIME. PROPOSITION 102 is both reasonable and effective..
Under PROPOSITION.102, persons found to be infected with It will help stop the spread of a killer disease, while respec~g
the AIDS'virus would be interviewed by the health department the confidentiality of those affected.' It will save lives ~ bile
so thatothers with whom they have had sexual contact or shared pro~ding early detection for countless thousands of victims.
drug needles can be confidentially counseled. That s why thousands of California physicians support PROPO-
PROPOSITION 102 does not call for the quarantine of people SITION '102.
with AIDS. VOTE "YES" ON PROPOSITION 102.
While AIDS is not curable, it is preventable, which is why it is It's GOOD' MEDICINE.
so important to have the health department contact those who
have been unknowingly exposed as well as those who have been WARREN L. BOSTICK, M.D.
Former Presldeng California Medical Association ·
unknowingly exposing others. ' Former Dean of the College of Medicin~
Current AIDS-related pu, blic health laws have been politi6ally · University of California, Irvine
motivated and simply don t work. ' Former Presideng American Society of Clinical Pathologists
One fact says it all: THE OVERWHELMING MAJORITY OF LAWRENCE J. McNAMEE,
THOSE INFECTED BY THE AIDS VIRUS ARE UNAWARE Presideng Californ',m Ph~lsiciansfor a ..
OF THEIR CONDITION-OR THE POTENTIAL THREAT· Logical AIDS Response.
THEY MAY POSE TO OTHERS. Member, Los Angeles .Count~t Medical Association
For m.an.y decades, our public health ~fficers have been Committee on AIDS
confidentially testing, tracing and counseling those with com- PAUL GANN
municable diseases. THE SYSTEM. WORKS. ~ Presideng People's Advocat~ In~
Rebuttal to Argument in Favor of Proposition 102"
Proposition 102 isn't "good me_dicine." It's a public health Pr6position 102 wouldn'~ keep insurance costs down. It would
nightmare and fiscal disaster, shift millions of dollars of h, ealth care costs to the taxpayers.
Don't be fooled by the proponents' "medical" arguments.-. Proposition 102 wouldn t' prevent employers from forcing
The California Medical Association, California Nurses Associa-' their employees to be tested--it repeals the law which prevents
tion and Health. Officers' Association strongly oppose Proposi- involuntary testing.
Propositionl02 would drive potentially infected individuals
tion 102 as being counterproductive to the medical fight-against away from. voluntary testing which is linked to counseling to
AIDS.
The argument for Proposi~,o,n 102 is' based On the simple- educate them.about how not to spread AIDS.
minded idea that AIDS is 'like any other 'communicable Proposition 102 would cost California taxpayers hundreds of
disease." But all diseases aren't alike, and public health officials millions of dollars and would only make the epidemic worse.
have special strategies for dealing with each of them. Proposi- Vital research, treatment and education programs on AIDS
tion 102 would destroy important policies designed by health would be closed down, endangering the lives of all Californians.
experts to stop the spread of AIDS. . - Vote NO.on Proposition 102!
The argument for Proposition 102 is packed with mistruths. LEO-McCARTHY
Proposition 102 wouldn't "enhance confidentiality"--it actu- Lieutenant Governor
ally repeals California's AIDS confidentiality law. Anonymous LAURENS P. WHITE, M.D.
AIDS testing has been highly successful in reducing the rate of President, California. Medical Association
new infections in high-risk communities. Proposition 102 would ROBERT J. MELTON, M.D., M.P.H.
reverse this impdrtant progress. . · President, Health Officers'A~ssociation of California
96 Arguments printed On this page are the opinions of the authors 'and have not been checked for accuracy by any official agency G88
Reporting Exposure to AIDS Virus. '1'
Initiative Statute 102
Argument Against Proposition 102
AIDS is a serious public health crisis. It should not be a would require the public reporting of all persons who have
political football, positive AIDS antibody rests, tests which 'aren't even always
Twice before, Californians have overwhelmingly rejected a accurate.
:misguided initiative on AIDS that was proposed by a politician Public health officials agree that voluntary, anonymous AIDS
with no medical ~xpertise. We must do so again, testing is one of the single greatest factors contributing to the
Proposition 102 must be defeated for the health and safety of reduction of new infections in high-risk communities. Proposi-
all Californians. tion 102 would take away from medical professionals this vital
tool to control the epidemic.
This initiative would cripple the efforts of physicians, re- Like the AIDS Quarantine Initiative, Proposition 102 could
searchers and public health officials to halt the spread of AIDS.force thousands of Californians out of their jobs in our schoois
It would only make the epidemic worse, and food service industries. It could throw many students out. of
Proposition 102 is as extreme and irrational as the AIDS school. None of them are any threat to the public health because
Quarantine Initiative (Propositions 64 and 69), which voters medical science has proven that AIDS is not casually contagious.
defeated by margins of two to one. In fact, the proponent of Like the AIDS Quarantine Initiative, Proposition 102 would
Proposition 102 was the only major public official to support thecreate disruption and division in ,our workplaces, all for no
Quarantine Initiative. legitimate public health purpose.
Like the AIDS Quarantine Initiative, Proposition 102 could Like the AIDS Quarantine Initiative, Proposition 102 would
cost California taxpayers hundreds of millions of dollars to uthonze widespread witch hunts and ~nvaslons of the pn-
enforce--money that would be far better spent on legitimate vacy of CalifOrnians. The lives of even those who are perfectly
· needs, including the prevention and treatment of AIDS. Worse healthy could be iuined by misguided people making irrespon-
yet, this initiative could cost many Californians their lives by sible charges. ' ·
Proposition 102 is a punitive, political approach to AIDS that
creating a climate of fear that undermines research to find a is totally at odds with modern medicine and science.
vaccine and cure for AIDS.
Like the AIDS Quarantine Initiative, Proposition 102 would Join us once again in supporting a sane, effective AIDS policy.
strongly discourage people from getting tested for AIDS be- Send the message again that California voters want medical
cause they could lose their jobs, homes or health care. Thus solutions to AIDS, not politics.
more people will unknowingly transmit the virus to others and Vote NO on Proposition 102.
more infected blood will be donated to blood banks. Fewer LAURENS P. WHITE, M.D.
volunteers will participate in vital research studies and fewer Presideng California Medical Association
infected people will receive the early treatment which could MARILYN RODGERS
save their lives. President, California Nurses Association
Proposition 102 is NOT about the reporting of AIDS cases. TOM BRADLEY
The law already requires that this be done. Rather, this initiative Mayor, City of Los Angeles
Rebuttal to Argument Against Proposition 102
Quarantine is not necessary to stop the spread of AIDS. That's will lead to "witch hunts." We say it's time to stop peddling such
why PROPOSITION 102 says "nothing contained in this section fear and panic.
shall be construed to require the use of quarantine or isolation." California's. present AIDS,,policy was proposed by the current
The record is clear, mayor of San Francisco, a 'politician without medical exper-
PROPOSITION 102 is not an AIDS quarantine initiative. To tise."
suggest otherwise only adds to the fear and confusion experi- It is a miserable failure.
PROPOSITION 102 was developed by doctorspracticing in
enced by the victims of this terrible disease. Haven't they communities throughout California. It represents doctors doing
suffered enough?
what they do best--saving lives.
The purpose of reporting and contact tracing is to let those VOTE "YES" ON PROPOSITION 102.
who are infected know that they pose a risk to others.
Current law calls for reporting of AIDS patients because that LARIMORE CUMMINS, M.D.
Chairman, Santa Cruz County Medical Society
is good public health policy. But there are hundreds of thou- AIDS Task Force
sands.of others who carry the AIDS virus, and are contagious, Former Presideng Santa Cruz County Medical Society
but have, not developed the advanced disease, yet. WILLIAM E. DANNEMEYER
Doesnt it make sense for doctors to report these cases, too? United States Congressman, California
Confidential contact tracing is a fair and effective way to LAWRENCE J. McNAMEE, M.D.
balance the rights of victims with the rights of the public. That's President, California Physicians for a
why the nation's largest medical association has recommended Logical AIDS Response
that all states do it. '
~[ember, Los Angeles County Medical Association
Opponents to PROPOSITION 102 say that contact tracing Committee on AIDS
G88 Arguments printed on this page are the opinions of the anthors and have not been checked fi)r accuracy by any official agency 97
Official Title and Summary Prepared by the Attorney General
INSURANCE RATES, REGULATION, COMMISSIONER. INITIATIVE STATUTE. Requires minimum 20-percent
rate reduction from November 8, 1987, levels, for automobile and other property/casualty insurance. Freeze,s rates
until November 8, 1989, unless insurance company is substantially threatened with insolvency. Thereafter requires
every insurer offer any eligible person a good-driver policy with 20-percent differential. Requires public hearing and
approval by elected Insurance Commissioner for automobile, other property/casualty insurance rate chang;es.
Requires automobile premiums be determined primarily by driving record. Prohibits discrimination, price-fixing,
unfair practices by insurance companies. Requires commissioner provide comparative pricing information. Authorizes
insurance activities by banks. Summary of Legislative Analyst's estimate of net state and local government impact:
Would increase Department of Insurance administrative costs by $10 to $15 million in first year, varying thereafter
with workload,'to be paid by additional fees on the insurance industry. State'and some local governments would, have
unknown savings from lower insurance rates. Gross premium tax reduction of approximately $125 million for first
three years offset by required premium tax rate adjustment. Thereafter, possible state revenue loss if rate reductions
and discounts continue but gross premium tax is not adjusted.
Analysis by the Legislative Analyst
Background · Requires the Insurance Commissioner to review and
Various types of insurance are Sold in California, includ- approve rate increases-for various types of insur-
ing automobile, liability, fire, health and life. In 1987, ance--before they can take effect.
companies collected about $50 billion in premiums from · Requires that the Insurance Commissioner be
the sale of insurance. In turn, the state received about $1 elected.
billion from a tax on these premiums. This measure changes the laws that regulate insurance
Motor vehicle insurance is one of the major types of rates for certain types of insurance. It applies to motor
insurance purchased in the state. It accounted for about vehicle, fire and liability insurance, but not to life,
$12 billion (24 percent) of all premiums collected during mortgage and disability insurance.
1987. 'Additionally, fire and liability insurance premiums Rate Reductions
totaled about $10 billion, or 21 percent, of all premiums.
Rate Setting by Insurance ComPanies. Currently, in- 1. Rate Reduction. This measure requires that rates
surance companies set rates for various types of insur- for motor vehicle, fire and liability insurance issued or
ance, using a number of factors.. For motor vehicle renewed on or after November 8, 1988, be reduced by 20
insurance, these factors generally include the age, sex, percent from their levels on November 8, 1987.
marital status, driving record, type of vehicle and home 2. Rate Freeze. The measure requires that the rates
address of the insured. The insurance companies also take be kept at the reduced levels until November 8, 1989.
into consideration other factors such as their claims During this period, the rates can be increased only if' the
experience, income and expenses. Insurance companies Insurance Commissioner determines that the affected
are not required to tell the public what relative weight insurance company is threatened with insolvency.
they give to these factors when setting rates. In addition, Review and Approval of InSurance Rate Filings
insurance companies are not subject to the state's anti-
trust laws. Beginning November 8, 1989, the measure requires the
Role of the Department of Insurance in Reviewing Insurance Commissioner to review and approve rate
Rates. Currently, the Department of Insurance does not changes before they go into effect. Insurance comp~tnies
review and approve insurance rate changes before they are required to file information with the commissioner to
take effect. Instead, the Department of Insurance can justify the new rates. In general, the commissioner is
request insurance companies to justify such rates after required to hold a public hearing on the proposed rate
they take effect, as part of the rate examination process or change whenever it exceeds certain percentages. Addi-
in response to complaints from consumers. Historically, tionally, the commissioner is authorized to hold a he~tring
the scope and frequency of rate examinations has been when requested by a consumer.
limited. Good Driver Discount Plan and Other Automobile
~.ropo,sal. Provisions
In summary, this measure:' 1. "Good Driver" Discount. This measure reqnires
,~-~·~' Requires insurance companies to reduce rates for insurance companies to offer motor vehicle insurance to
~" ' vari~hs types of insurance, including'motor vehicle, good drivers at reduced rates. These rates would take
fire and liability, effect November 8, 1989, (one year after the general rate
· Requires insurance companies to offer a "Good reduction) and would'be 20 percent below the rate which
Driver Discount Plan" and makes other changes would otherwise have been paid for the same coverage.
regarding automobile insurance. Continued on page.140
G88'
98
TeXt of Proposed Law
This initiative measure is submitted to the people in accordance with Good Driver Discount policy shall comply with subdivision (a) and
the provisions of Article II, Section S of the Constitution. .shall be at least 20% below the rate the insured would otherwise have
This initiative measure adds and repeals sections of the Insurance been charged for the same coverage. Rates for Good Driver Discount
Code, and adds a section to the Revenue and Taxation Code; therefore, policies shall be approved pursuant to this article.
existing sections proposed to be deleted are printed in :t:~!:c~'.'-t t':'~a (c) The absence of prior automobile insurance coverage, in and of
and new provisions proposed to be added are printed in italic type to itself, shall not be a criterion for determining eligibility for a Good
indicate that they are new. Driver Discount policy, or generally for automobile rates, premiums, or
PROPOSED LAW insurability.
SECTION 1. Findings and Declaration. (d) This section shall become operative on November 8, 1989. The
The P~ople of California find and declare as follows: commissioner shall adopt regulations implementing this section and
insurers may submit applications pursuant to this article which comply
Enormous increases in the cost of insurance have made it both with such regulations prior to that date, provided that no such
unaffordable and unavailable to millions of Californians.
The existing laws inadequately protect consumers and allow insur- application shall be approved prior to that date.
ance companies to charge excessive, unjustified and arbitrary rates. Prohibition on Unfair Insurance Practices
Therefore, the People of California declare that insurance reform is 1861.03. (a) The business of insurance shall be subject to the laws of
necessary. First, property-casualty insurance rates shall be immediately California applicable to any other business, including, but not limited
rolled back to what they were on November 8~ 1987, and reduced no less to, the Unruh Civil Rights Act (Civil Code Sections 51 through 53), and
than an additional 20%. Second, automobile insurance rates shall be the antitrust and unfair business practices laws (Parts 2 and 3,
determined primarily by a driver's safety record and mileage driven, commencing with section 16600 of Division 7, of the Business and
Third, insurance rates shall be maintained at fair levels by requiring Professions Code).
insurers to justify all future increases. Finally, the state Insurance (b) Nothing in this section shal~l be construed to prohibit (1) any
Commissioner shall be elected. Insurance companies shall pay a fee to agreement to collect, compile and disseminate historical data on paid
cover the costs of administering these new laws so that this reform will claims or reserves for reported claims, provided such data is contempo-
cost taxpayers nothing, raneously transmitted to the commissioner, or (2) participation in any
SECTION 2: Purpose. . joint arrangement established by statute or the commissioner to assure
The purpose of this chapter is to protect consumers from arbitrary availability of insurance.
insurance rates and practices, to encourage a competitive insurance (c) Notwithstanding any other provision of law, a notice of cancel-
marketplace, to provide for an accountable Insurance Commissioner, lation or non-renewal of a' policy for automobile insurance shall be
and to ensure that insurance is fair, available, and affordable for all effective only if it is based on one or more of the following reasons:
Californians. (1) non-payment of premium; (2) fraud or material misrepresentation
SECTION 3: Reduction and Control of Insurance Rates. affecting the policy or insured; (3) a substantial increase in the hazard
Article 10, commencing with Section 1861.01 is added to Chapter 9 of insured against.
Part 2 of Division 1 of the Insurance Code to read:
Insurance Rate Rollback Full Disclosure of Insurance Information
1861.01. (a) For any coverage for a policy for automobile and any 1861.04. (a) Upon request, and for a reasonable fee to cover costs,
the commissioner shall provide consumers with a comparison of the rate
other form of insurance subject to this chapter issued or renewed on or in effect for each personal line of insurance for every insurer.
after November 8~ 1988, every insurer shall reduce its charges to levels
which are at least 20% less than the charges for the same coverage which Approval of Insurance Rates
were in effect on November 8, 1987. 1861.05. (a) No rate shall be approved or remain in effect which is
(b) Between November 8~ 1988, and November 8, 1989, rates and excessive, inadequate, unfairly discriminatory or otherwise in violation
premiums reduced pursuant to subdivision (a) may be only increased if of this chapter. In considering whether a rate is excessive, inadequate or
the commissioner finds, after a hearing, that an insurer is substantially unfairly discriminatory, no consideration shall be given to the degree of
threatened with insolvency, competition and the commissioner shall consider whether the rate
(c) Commencing November 8~ 1989, insurance rates subject to this mathematically reflects the insurance company's investment income.
chapter must be approved by the commissioner prior to their use. (b) Every insurer which desires to change any rate shall file a
(d) For those who apply for an automobile insurance policy for the complete rate application with the commissioner. A complete rate
first time on or after November 8, 1988, the rate shall be 20% less than application shall include all data referred to in Sections 1857.7, 1857.9,
the rate which was in effect on November 8, 1987, for similarly situated 1857.15, and 1864 and such other information as the commissioner may
risks, require. The applicant shall have the burden of proving that the
(e)' Any separate affiliate of an insurer, established on or after requested rate change is justified and meets the requirements of this
November 8, 1987, shall be subject to the provisions of this section and article.
shall reduce its charges to levels which are at least 20% less than the (c) The commissioner shall notify the public of any application by
insurer's charges in effect on that date. an insurer for a rate change. The application shall be deemed approved
Automobile Rates & Good DriVer Discount Plan sixty days after public notice unless (1) a consumer or his or her
representative requests a hearing within forty-five days of public notice
1861.02. (a) Rates and premiums for an automobile insurance and the commissioner grants the hearing, or determines not to grant the
policy, as described in subdivision (a) of Section 660, shall be deter- hearing and issues written findings in support of that decision, or (£)
mined by applicat~'on of the following factors in decreasing order of the ~ommissioner on his or her own motion determines to hold a
importance: hearing, or (3) the proposed rate adjustment exceeds 7% of the then
(1) The insured's driving safety record, applicable rate for personal lines or 15% for commercial lines, in which
(£) The number of miles he or she drives annually, case the commission~ er must hold a hearing upon a timely request.
(3) The number of years of driving experience the insured has had. 1861.06. Public notice required by this article shall be made through
(4) Such other factors as the commissioner may adopt by regulation distribution to the news media and to any member of the public who
that have a substantial relationship to the risk of loss. The regulations requests placement on a mailing list f[~r that purpose.
shall set forth the respective weight to be given each factor in 1861.07. All information provided to the commissioner pur~u-a~t t[~~
determining automobile rates and premiums. Notwithstanding any this article shall be available for public inspection, and the provisidns
other provision of law, the use of any criterion without such approval of Section 6254(d) of the Government Code and Section 1857.'9 of the
shall constitute unfair discrimination. Insurance Code shall not apply thereto.
(b) (1) Every person who (A) has been licensed to drive a motor 1861.08. Hearings shall be conducted pursuant to Sections 11500
vehicle for the previous three years and (B) has had, during that period, through 11528 of the Government Code, except that.. (a) hearings shall
not more than one conviction for a moving violation which 'has not be conducted by administrative law judges for purposes of Sections
eventually been dismissed shall be qualified to purchase a Good Driver 11512 and 11517, chosen under Section 11502 or appointed by the
Discount policy from the insurer of his or her choice~ An insurer shall commissione~. (b) hearings are commenced by a filing of a Notice in
not refuse to offer and sell a Good Driver Discount policy to any person lieu of Sections 11503 and 11504; (c) the commissioner shall adopt,
who meets the standards of this subdivision. (2) The rate charged for a Continued on page 140
G88
99
Insurance Rates, Regulation, Commissioner.
Initiative Statute _
Argument in Favor of Proposition 103 ,.
There are important differences between the five So,me insurance compames disagree w~th no fault, so
insurance initiatives on the November ballot which you they re financing Proposition 101, which claims to make
should be aware of before voting, the biggest cut in auto insurance. But the big cut they
Proposition 103--Voter Revolt to Cut Insurance Rates boast about affects only one portion of your auto insur-
--is the only insurance initiative written and paid for ance--they could raise pren~iums for the rest of your
coverage as much as they want. In return, Proposition 101
exclusively by consumers. It alone reduces all of your allows insurance companies to avoid full payment for
automobile, home and business insurance premiums to accidents. It, too, cancels many Of the auto insurance
November 1987 prices. Then, it alone cuts them another reforms in Proposition 103.
20%. Insurance companies are also financing Proposition ;106,
Proposition 103 will also end the insurers' exemption which restricts your right to quality legal counsel. Fhe
from the antimonopoly laws, allow people to elect the insurance companies claim Proposition 106 will CUt their
Insurance Commissioner, require a special 20% discount costs. In fact, it will lin~it your ability to make the
for good drivers, and stop unfair price increases in the insurance companies pay up.
future. It specifies that a permanent, independent con- Proposition 100, which is paid for by trial lawyers and
sumer watchdog system will champion the interests of bankers, simply does not go far enough to protect con-
sumers' interests. Unlike Proposition 103, it does not
insurance consumers.
Proposition 103 is written in plain language. There are automatically and immediately cut insurance rates. Nor
no loopholes or fine print. Unlike the other propositions,' does it enable consumers to permanently unite to fight
nonlawyers can read it. . against insurance abuse, as Voter Revolt's Proposition 103
Because the polls showed that the insurance industry does.
could not defeat Voter Revolt's 103 directly, the insurance Proposition 103 is the only initiative written and paid
companies came up with a plan to defeat it indirectly, for exclusively by consumers. It will save you the most
The.y,, are pushing Proposition 104 the so-called "no- money.
fault proposition--and are spending tens of millions of To guarantee that every reform in Voter Re, volt',s,
dollars to advertise that it is better for consumers than Proposition 103 becomes law, it, must get more 'Yes
votes than any other proposition. Every vote in favor of
Proposition 103.
Privately, insurance executives have admitted that another insuran?,e proposition cancels your vot~ for,Prop-
their Proposition 104 would actually raise auto insurance osition 103. That s why we advise you to vote Yes only
premiums for many drivers. Worse, Proposition 104 re- on Proposition 103.
writes the entire California Insurance Code to benefit RALPH NADER
insurance companies. The 24,000 words of obscure legal- Consumer Advocate
ese in Proposat~on 104 turn the law mto a your fault HARVEY ROSENFIELD
system. Their fine print cancels out every consumer Chair, Voter Revolt to Cut lnsuronceRates/
reform in. Voter Revolt s Proposition 103. Proposition 103
Rebuttal to Argument in Favor of Proposition 103
Proponents of PROP 103 claim that their initiative eliminates rating based on the driving safety record
includes no "fine 'print," but IT'S FULL OF UNIN- of your neighborhood and forces suburban and rural
TENDED CONSEQUENCES THAT WILL WIPE OUT drivers to subsidize motorists in,high-risk areas.
ANY BENEFITS IT PROMISES YOU. VOTE NO ON · DRUNK DRIVERS who haven t lost their licenses
can qualify for "good driver" discounts.
PROP 103. A MASSIVE BUREAUCRACY IS NOT THE sOLu-
The most glaring example of this "fine print" allows for' TION. Only fundamental reform of our auto insura_nce'
massive government intervention into the insurance in- system will hold down insurance premiums. We nec,'d to
dustry. A GOVERNMENT-RUN INSURANCE SYSTEM reduce the cost of litigation, fraud and subsidizing unin-
IS NOT THE ANSWER. sured motorists.
In New Jersey, where the government intervened in PROP 103 DOES NOT REFORM OUR SYSTEM. IT
the insurance business under circumstances similar to DOES NOT GUARANTEE YOU LONG-TERM RATE
those mandated in PROP 103, every driver is paying a REDUCTIONS.
surcharge to help foot a $2.5-billion deficit racked up by Vote NO on PROP 103.
the state-run insurance system. ALISTER McALISTER
PROP 103 advocates also tell you their initiative con- Former Chair, AssemblII Finance and In. suronce Committee
rains no loopholes. Look again. It's loaded with them. ED DAVIS
· RATES WILL INCREASE by an average 22% for State Senator, 19th District
two-thirds of the state's drivers, according to the KIRK WEST .
State Department of Insurance, because. PROP 103 Presideng California Chamber of Commerce
100 Arguments'printed on this page are the opinions of the authors and have not been checked for accuracy by any official agency G88
Insurance Rates, Regulation, Commissioner.
Initiative Statute 103
Argument Against Proposition 103
KEEP BIG GOVERNMENT OUT OF THE AUTO ruby an average 22%!
INSURANCE BUSINESS. · Allow convicted drunk drivers who have not lost
You might think PROP 103's auto insurance rate redue- their' licenses to win an additional rate discount for
tions seem too gOod to be true. You're right. "good driving."
Vote NO on PROP 103; it does not enact any cost- · Make the Insurance Commissioner an elected official
cutting reforms. Instead, it attacks the symptoms of our with enormous new powers. This "insurance czar"
failing auto insurance system. It does not address, let would be a politician l'irst, and a regulator second. As
alone begin to grapple with, the real problemmthe cost of a politician, this official would be preoccupied with
uninsured motorists, fraud and, most importantly, run- raising campai ,gp, money from special interests all too
away auto accident litigation, willing to "buy influence.
PROP 103 might seem well-intentioned but, unfortu- · Create a huge government bureaucracy that does
nately, it inevitably would lead to a huge, state-run nothing to make auto insurance more affordable.
insurance system costing millions of dollars. Instead, PROP 103 would add time, expense and 10ts
Hidden provisions of this measure give the state un- of lawyers to enact a price-control policy that ~os
precedented authority to enter the insurance business. If failed miserably in New Jersey and other states..
uthink lines are long and the bureaucracy impenetra- carry out this price-control policy, the measure in-
e at government offices today, just wait until you have creases the Department of Insurance's budget by
to deal with the state to purchase insurance. 33% and its staff by at least 100 new bureaucrats.
This sloppily drafted measure will: VOTE NO on PROP 103. Lowering auto premiums fo, r
· Raise insurance premiums, in the long term, for the California drivers is a laudable goal, but this measure s
majority of California drivers. PROP 103 forces flawed methods, are not the answer. Please VOTE NO on
insurers to ignore the driving safety record of where PROP 103.
you live and, instead, forces you to subsidize drivers KIRK WEST
in areas that have the highest insurance losses. For Presideng California Chamber of Commerce
example, a 55-year-old suburban driver will end up WILLIAM CAMPBELL
paying more for insurance so that a young urban State Senator, 31st District
driver can pay less. A State Department of Insurance Chairman, Joint Legislative Budget Committee
study recently predicted that this aspect of PROP 103 D~,VID DAVREUX
will raise rates for two-thirds of the state's drivers Author, Consumers' Guide tO Auto Insurance
Rebuttal to Argument Against Proposition 103
The insurance companies want to divert your attention new set of rules to create a competitive marketplace
away from the fact that Prop 103 will save everyone 20% and prohibit excessive rates.
on their auto insurance as well as their home and business · 103 will actually save money for taxpayers, according
insurance. That's why the statement above employs to the official California State Legislative Analyst.
confusing and often ridiculous arguments against it. · And no wonder the insurance companies don't want
an elected Insurance Commissioner--in the states
Here are the facts: where people elect insurance commissioners, rates
· 103 is the only initiative that will immediately cut average 30% lower than in California.
eVeryone's premiums by 20%. Voter Revolt's Proposition 103 is the only insurance
· 103 forces insurance companies to base your rates on reform initiative written and paid for exclusively by
your driving record first, rather than on where you consumers. That's why it is the only initiative endorsed
live. That means good drivers throughout the state by Ralph Nader.
will pay less than they do now, while bad drivers will 103 will lower insurance rates for everyone. That's why
pay more. the insurance industry is against it. Don't buy their
· ' 103 eliminates the insurance industry's unfair exemp- misleading advertising. Vote YES on Proposition 103.
tion from the antitrust laws. This will reduce rates HARVEY ROSENFIELD
permanently. Chair, Voter Revolt to Cut Insurance Rates/
· 103 involves no new government bureaucracy--just a Proposition 103
G88 Arguments printed on this page are the opinions of the authors and have not been checked fOr accuracy by any official agency 101
&
Official Title and Summary Prepared by the Attorney General
AUTOMOBILE AND OTHEB INSURANCE. INITIATIVE STATUTE. Establishes no-fault insurance for automobile
accident injuries, covering medical expenses, lost wages, funeral expenses. Accident victim may recover from
responsible party only for injuries beyond no-fault limits. Prohibits recovery for noneconomic injuries except cases of
serious and permanent injuries and specified crimes. Reduces rates for certain coverages 20 percent for tWo years.
Cancels Propositions 100, 101, 103. Restricts future insurance regulation legislation. Requires arbitration of disputes
over insurers' claims practices, limits damage awards against insurers. Prohibits agents and brokers from discounl:ing.
Increases Insurance Commissioner's power to prosecute fraudulent claims. Limits plaintiffs' attorney contingency fees
in motor vehicle accident cases. Summary of Legislative Analyst's estimate of net state and local government fiscal
impact: Would increase state administrative costs by about $2.5 million in 1988-89, varying thereafter with workload,
to be paid by additional fees on the insurance industry~. State and some local governments would have unknown
savings from lower insurance rates and liability ]imitations. Possible but unknown effect on recovery of workers'
compensation. Possible reduction in court costs and court revenues could result from limitations on claims for
noneconomic damages. Would reduce state revenue from the gr. oss premiums tax by about $25 million a year for two
years if no other changes are made in insurance rates.
Analysis by the Legislative Analyst
Background Rates. Currently, the Department of Insurance does not
Various types of insurance are sold in California, includ- review and approve insurance rates before they take
ing automobile, liability, fire, health and life. In 1987, ~ffect. Instead, the Department of Insurance can request
insurance companies collected about $50 billion in pre- insurance companies to justify such rates after they take
miums from the sale of insurance. In turn, they paid about effect, as part of the rate examination process or in
$1 billion to the state in a tax on these premiums, response to complaints from consumers. Historically:, the
Motor vehicle insurance is one of the major types of scope and frequency of rate examinations have been
insurance purchased in the state. It accounted for about limited.
$12 billion (24 percent) of all premiums collected during Current Method of Settling Claims. Currently, the
1987. Such insurance may include protection for: party who is "at fault" in an accident is responsible for
· Liability and property damage (which covers claims paying compensation~for both bodily injury and prol~.erty
for bodily injury and property damage to others damage.
when the insured person was at fault); If a claim for damages is filed and one or more of the
· Medical (which covers the insured person an,,d other, s, parties involved in an accident is insured, insurance
in the automobile, regardless of fault, for excess companies attempt to determine who is at fault. These
medical expenses, meaning those expenses not coy- claims are usually settled by negotiations or by court
ered by other insurance); action. After it is determined which party is at fault,, the
· Collision (which covers collision damage to the in- insurance company of that party pays the damages, not to
sured's car regardless of the fault of' the insdred); exceed the limits of the insurance policy.
· Comprehensive (which covers damage other than Attorney Fees. Attorney fees in motor vehicle acci-
collision, such as fire, theft, glass breakage and van- dent cases are usually based on a percentage of the
dalism, to the insured's car); and amount the client recovers and are referred to as "con-
* Uninsured and underinsured motorist (which covers tingency fees." The fees are fixed by a contract between
claims for bodily injury and/or property damage the attorney and client. There are no dollar limits on
caused by a motorist who is at fault and who has no
insurance or inadequate insurance), contingency fees in these cases.
Rate Setting by Insurance Companies. Currently, in- Proposal
surance companies set rates for various types of insur-
ance, using a rmmber of factors. For motor vehicle In summary, this measure:
insurance, these factors generally include the age, sex, · Establishes a "no-fault" motor vehicle insurance sys-
marital status, driving record, type of vehicle and home tern that (1) pays benefits up to specified limits to an
address of the insured. The insurance companies also take accident victim who suffers bodily injury and (2)
into consideration other .factors such as their claims permits individuals to sue for losses which exceed
e~xperience, income and expenses. Insurance companies those limits.
are not required to tell the public what relative weight · Limits noneconomic losses (such as "pain and suffer-
they give to these factors when setting rates. In addition, ing") and attorney contingency fees.
insurance companies are not subject to the state's anti- · Requires a two-year reduction in certain motor ye-
trust laws. hicle insurance rates.
Role of the Department of Insurance in Reviewing Continued on pag,~ 144
102 G88
Text of Proposed Law
This initiative measure is submitted to the people in accordance with undertaking by a duly authorized insurer, self-insyrer, or obligated
the provisions of Article II, Section 8 of the Constitution. government to pay or provide basic loss benefits in accordance with this
This initiative measure adds, amends, and reenacts sections of the Chapter with respect to the ownership, maintenance, or use of one or
Insurance Code, and amends and adds sections of the Vehicle Code; more specified motor vehicles or classes of motor vehicles, to which such
therefore, existing provisions proposed to be deleted are printed in insurance shall be deemed applicable.
:,~.:~c,u', ~;,-~ and new provisions proposed to be added are printed in (6) "Insured" means, with resp.ect to basic loss benefits:
italic type to indicate that they are new. (a) an individual (hereinafter referred to as a "named insured"}
PROPOSED LAW identified by name as an insured in a contract of insurance pursuant to
this Chapter for any vehicle for which that policy provides insurance;
SECTION 1. Title. and
This initiative shall be known as the Insurance Cost Control Act of (b) a spouse or other relative of a named insured, or an individual
1988. below the age of 18 in the custody of a named insured or in the custody
SECTION 2. Findings and Declaration. of a relative of a named insured, provided such spouse, other relative, or
The people find and declare as follows: individual is:
1. Insurance costs, the number of claims and lawsuits, and the size of (i) neither a named insured in any other contract of insurance in
jury awards have increased greatly in California in recent years. A large accordance with this Chapter nor obligated to maintain insurance in
percentage of court awards goes to pay legal fees and court costs. These
costs are ultimately passed on to the public in the form of higher accordance with this Chapter for any vehicle for which the contract of
insurance premiums, insurance under which such person claims to be insured does not
2. A system of no-fault automobile insurance will reduce wasteful constitute such insurance; and
litigation, speed payment of claims, and help stabilize insurance costs. (ii) in residence in the same hous~hoM with a named insured.
A no-fault system which mandates a two year statewide average (7) "Insurer" includes an insurer authorized to transact business in
reduction in the rates for basic automobile insurance for personal this state or, with respect to any policy providing insurance for a vehicle
injuries (including no-fault insurance, liability, insurance, medical registered in another state, the insurer issuing that policy, and any
payments and uninsured motorist insurance) will result in automobile self-insurer or obligated government providing or obligated to provide
insurance premium savings, basic loss benefits in accordance with this Chapter.
3. A no-fault automobile insurance system should (a) provide that (8} "Medical rehabilitation services" means services reasonably nec-
specified compensation for bodily injuries be paid directly by the essary and reasonably designed to reduce the disability and dependence
insured's insurance company regardless of fault, (b) allow compensa- of a victim and to restore such person, to the extent reasonably possible
tion for property damage and additional compensation for serious and at a cost which is reasonable in relation to the degree of restoration to
permanent injuries to COntinue to be based on the present fault system, be achieved, to his/her pre-accident level of physical functioning.
(c) place limits on attorneys'contingency fees, and (d) provide that no (9) "Medical expense" means reasonable and necessary charges
insurance company can cancel, refuse to renew, or increase the rate incurred for, or (when products, services, or accommodations are'
charged any person for any insurance policy solely on account of any provided without ~harge by any person who is neither the employer of
prior payment of a no-fault claim, the victim nor an employee or agent of such employer} the reasonable
4. Penalties should be increased for uninsured motorists, value of reasonably needed and used products, services, and accommo-
5. Insurance rates should be established by competition in the open dations for:
market. (a) professional medical treatment and care for personal injury;
6. Fraudulent insurance claims have resulted in greater insurance (b) emergency medical services for personal injury;
costs requiring stronger anti-f~aud laws. ~ (c) medical rehabilitation services for personal injury;, and
7. The insurance Commissioner should impose penalties and fines on (d) any non-medical care and treatment rendered for personal
insurance companies which unlawfully discriminate in setting rates, injury in accordance with a religious method of healing recognized by
and shouM hear evidence from consumers in proceedings before the the laws of this State.
Commissioner. The term does not include that portion of a charge for a room in a
8. Arbitration procedures should be established to allow disputes hospita~ clinic, convalescent or nursing home, or any other institution
regarding claims under liability insurance policies to be resolved engaged inprovidingnursing care, medical care, and related services, in
without costly litigation, excess of a reasonable and customary charge for semi-private accommo-
SECTION 3. Purpose. elations, unless medically required. Professional medical treatment and
The people enact this initiative to control the cost of insurance in care, emergency medical services, and medical rehabilitation services
California b7 establishing a no-fault system to govern motor vehicle are not to be considered "reasonably needed"unless (i) widely accepted
accident claims, by increasing penalties for uninsured motorists, by as appropriate and effective for similar injuries or conditions by
requiring that insurance rates be established by market competition, by medical practitioners in this State Or the United States, (ii) based upon
providing an option for speedy resolution by arbitration of disputes scientific criteria generally accepted by medical practitioners in this
with insurers over liability claims and by regulating insurance fraud State or the United States, and (iii) not of an experimental or
and anti-competitive insurance company practices, investigational nature.
SECTION 4. California Guaranteed Protection Plan. (10) "Motor vehicle" means a vehicle having more than three load
There is hereby added to Division 2, Part 3 of the Insurance Code the bearing wheels, ora kind required to be registered under the laws of this
following Chapter 6, commencing at Section 12001, which shall be State relating to motor vehicles, designed primarily for operation upon
known as the California Guaranteed Protection Plan: the public streets, roads, and highways, and driven by power other than
12001. Definitions. muscular power, and includes a trailer drawn by or attached to such a
(1) "Accident victim" or "victim" means a person suffering personal vehicle.
injury as defined in this Section. (11) "Non-economic loss" means pain, suffering, emotional distress,
(2) "Basic loss benefits~' means (i) required loss benefits and (ii) inconvenience, physical impairment, loss of society, and any other
optional loss benefits, non-pecuniary damage recoverable under the tort law applicable to a
(3) "Disability" means medically established inability of a victim to personal injury.
perform the usual and customary duties of the victim's occupation. (12) "Optional loss benefits" includes (i) basic loss benefits with
(4) "Government" means the government of the United States, monetary and/or tempordl limits in excess of required loss benefits and
Canada, any state, the District of Columbia, any Canadian province, (ii) basic loss benefits provided as a result of a named insured's exercis~
any political subdivision of any of the foregoing entities, any instru- of an option provided pursuant to Section 12011.
mentality of two or more of the foregoing entities, or any agency, (13) "Owner"means the person in whose name the motor vehicle~has
subdivision, or department of any such governmeng including antl been registered. If no registration is in effect at the time of an accident
corporation or other association organized by a government for the involving the motor vehicle, "owner" means the person who holds the
execution of a government program and subject to control by a legal title thereto or, in the event the motor vehicle is the subject of a
government, or any corporation or agency established under an inter- security agreement or lease with option to purchase with the debtor or
state compact or international treaty, lessee having the right to possession, "owner"means the debtor or lessee.
(5) "Insurance" means any policy of insurance, contract, or other Continued on page 145
G88 103
Argument in Favor of Proposition 104
NO-FAULT, PROP 104, is the only insurance measure · pREsERVE the right to sue for out-of-pocke~: ex-
on the ballot that saves consumers money by truly penses that exceed no-fault benefit limits ~and for
ref~Brming California'~ failing auto insurance system "pain and suffering" damages in cases of "serious and
OF 104 is'a compr~hensive cost-control, measure that permanent" injuries.
cuts auto insurance premiums by reducing the costs PROP 104 requires all drivers to purchase a basic
driving up insurance rates--high legal costs, fraud and benefits package of $10,000 for medical expenses and
the burden of protecting ourselves against uninsured $15,000 for work loss. In 1986, 90% of all auto acc, ident
.motorists. claims wouM have been fullit covered by these basic
This measure enacts a NO-FAULT system, where auto no-fqult benefits. Drivers who want more coverage can
accident victims are guaranteed medical and work-loss purchase,i.t. Motorists already covered by a health plan, or
benefits from their own insurance company--regardless who don t need wage-replacement coverage, can save
of fault. By restricting costly lawsuits, except in cases of even more by purchasing less coverage at lower cost.
"serious and permanent" injuries, no-fault saves consum- PROP 104 creates a new deterrent to driving unin.,;ured
ers and taxpayers money now and in the future, because uninsured motorists cannot receive no-fault ben-
NO-FAULT is fundamental reform that will: efits and cannot sue for compe~nsation unless they are
'· REDUCE PREMIUMS by requiring all California seriously injured.
auto insurers to cut rates for basic personal injury The U.S. Department of Transportation and numerous
coverage by an average of 20%. This will result in an consumer organizations have praised the type of no-fault
immediate overall average premium reduction of 7% system proposed for California for providing more money
to 17%: to accident victims, more quickly and more efficiently
· PROTECT CONSUMERS .by prohil~iting insurers than traditional auto insurance.
from canceling or nonrenewing policies, or increas- Don't be fooled bit other initiatives that promise large
ing rates solely because of a no-fault claim, prem,,ium cuts--theit either do nothing to cut costs or theit
· GUARANTEE rapid'payment of claims. PROP 104 don t guarantee that cost reductions will be permanent.
reqUires insurers to pay all valid no-fault claims VOTE YES on PROP 104. It is the only responsible,
'within 30 days of the claim or face a stiff interest proven auto insurance reform. We urge you to vote for
penalty, reform by voting YES on PROP 104.
· SAVE taxpayers and' consumers money by reducing
court cases. Consider these facts from the Rand DIANNE FEINSTEIN
Corporation: 43% of civil court cases in California Former Mayor of San Francisco
involve auto accidents and the average jury trial for ALFRED F. FEDERICO
Presideng California State AutOmobile Association
an injury case costs taxpayers $8,300. Other estimates
show that 52 cents of every insurance dollar con- PAT NOLAN
tested in court goes to pay legal expenses, not to Member of theAssembly, 41st District
compensate victims. Assembly Minority Leader
Rebuttal to Argument in Favor of Proposition 104
Important facts are missing from the statement above, is a hidden section in 104. Its fine print cancels every
First, Proposition 104 was written, and is being paid for, reform in Voter Revolt's Proposition 103, the initiative
by the insurance companies. It will not reduce rates; it backed by Ralph Nader. Because the insurers were afraid
will raise them. It will not protect consumers; it will they would be unable to defeat 103, they deci&,~d to
permit further abuse of consumers by the insurance spend $23 million to pass 104, and hide within it regula-
industry, tions that would cancel everything in 103.
. According to the Los Angeles Times (June 24, 1988), at Where will the $23 million come from? According to
a private meeting of insurance agents on March 14, 1988, the Los Angeles Times (July 8, 1988), $2.3 million will
that was secretly taped, Donald Stewart, director of the come from State Farm, $2.1 million from Farmers, $1.4
American Agents Alliance and a supporter of 104, admit- million from Allstate, and the rest from other insurance
ted that 104 "guarantees no cost Savings." Ste. wart also companies.
'admitted that insurance companies "can change their Every vote for 104 is. a vote against real insu:rance
rates the day before the election" to offset any rate reform.
reductions promised if 104 is approved by the voters. Vote NO on 104.
Finally, Stewart admitted that, under 104, rates could HARVEY ROSENFIELD
increase by 35% for some drivers. Chair, Voter Revolt to Cut Insurance Rates~
Second, the statement above fails to mention that there Proposition 103
1.04 Arguments printed on this page are the opinions of the authors and have not been checked for accuracy by any official agency 688
Automobile and Other Insurance. Initiative StatUte
Argument Against Proposition 104
The. insurance industry is spending millions of adver- Worse, ProPosition 104 allows the automobile insurance
rising dollars to say "Trust us. Our Proposition 10~ the companies to continue to raise rates through Election
'no fault' initiativemwill lower your automobile insur- Day, before they give drivers the advertised "discount."
ance rates." The insurance companies don't expect you Many companies have already raised prices between 10%
to read Proposition 104's confusing 24,000 words of legal and 20% this yearmso the reduction offered by ProPosi-
jargon, which turn insurance law into a "your fault" tion 104 is already meaningless.
system. Third, under Proposition 104 it will be even harder for
However, we've studied. ProPosition 104. It contains drivers to make insurance companies pay fully for a
many traps and pitfalls for consumers, legitimate claim. And, under their "no fault" plan, you
For example, Proposition 104 allows insurance compa- will have to collect from your own insurance company in
nies to continue their anticompetitive behavior and ex- most cases if someone else strikes you. Under Proposition
empts them from California's antitrust and consumer 104, careful drivers are treated the same as unsafe drivers.
protection laws. It allows insurance companies to con- Finally, Proposition 104 will not lower your taxes. In
tinue to raise their rates as much as they want, without fact, Proposition 104 forces taxpayer-funded programs
opening their books to justify them. It prevents consum- like Medi-Cal to pay compensation to victims first, before
ers form effectively challenging insurance companies the insurance companies have to pay. This simply means
when they unfairly raise rates, cancel policies or refuse to insurance companies will pay less, while 'taxpayers shoul-
pay a claim. It maintains the present laws which prohibit der the burden of compen,sation.
insurance agents from offering discounts. It permits Auto insurance "no.fault' systems written by insurance
insurers to continue to base rates unfairly on whereyou companies do not lower rates or protect consumers. A
live, rather than upon your driving record. And it does 1985 U.S. government study shows that car insurance
nothing to lower rates for homeowner, business and other' rates are up ,to 40% higher in states with "no fault"
kinds of insurance. The insurance companies wrote Prop- systems. That s why Nevada and Pennsylvania have re-
osition 104 to defeat genuine insurance reform proposals pealed their "no fault" laws in recent years.
on this ballot and obstruct future reform efforts. Don't be misled by the insurance industry's advertising
Second, the insurance industry's Proposition 104 won't campaign. Every vote for Proposition 104 is a vote for
save m.a,,ny consumers a penny. Its promised "7-17% higher rates andagainst needed reforms. We advise you
discount only applies to a portion of your automobile to vote "NO" on the insurance industry's Proposition 104.
policy. The companies will be free to charge you what- RALPH NADER .
ever they wish for the rest of the coverage you mtist buy. Consumer Advocate
Insurance industry representatives themselves have ad- HARVEY ROSENFIELD
mitted privately that many drivers will pay more under Chair, Voter Revolt to Cut Insurance Rates/
Proposition 104. Proposition 103
Rebuttal to Argument Against Proposition 104
PROP 104, NO-FAULT, IS THE ONLY INSURANCE raising your rates solely because of a no-fault claim.
MEASURE THAT REDUCES PREMIUMS BY PERMA- · REDUCE premiums by requiring all auto insurers to
NENTLY CUTTING COSTS OUT OF THE INSURANCE cut rates for basic personal injury coverage by an
SYSTEM. VOTE YES ON 104. average of 20%. This will result in an immediate
Proponents of other insurance initiatives promise tern- overall average premium reduction of 7% to 17%.:
porary premium reductions. What they don't tell you is Don't be misled by arguments that lump all no-fault
that hidden provisions of their initiatives mandate mas- plans together. Some no-fault laws have not worked
sive government intervention. They also don't tell you because they were WATERED DOWN BY TRIAL LAW-
that bureaucracies in other states have failed miserably to YERS. PROP 104 is modeled after the most successful
hold down premiums, no-fault laws nationwide.
Consider New Jersey, where government intervention ONLY PROP 104 REDUCES RATES IMMEDIATELY
led to an enormous state-run insurance system with a AND HOLDS THEM DOWN IN THE FUTURE
$2.5-billion deficit. THROUGH FUNDAMENTAL REFORM.
Don't believe no-fault opponents when they promise VOTE YES on PROP 104.
premium reductions without fundamental reform.
Only Prop 104 enacts comprehensive reform, through RICHARD U. ROBISON
no-fault and other cost-control mechanisms, to regulate .Presideng Southern Califo'rnia Auto Club
the costs driving up insurance rates. BETI~]/SMITH
PROP 104 will: Former Chair, California Democratic Party
· GUARANTEE prompt payment of no-fault claims JIM NIELSEN
State Senator, 4th District
from your own insurance company. Vice Chair, Senate Insurance Claims and
· PROHIBIT insurers from canceling your policy or Corporations Committee
G88 Arguments printed on this page are the opinions of the authors and have not been checked for accuracy by any official agency i05
Disclosures to Consumers, Voters, Investors.
Official Title and Summary Prepared by the Attorney General
DISCLOSURES TO CONSUMERS, VOTERS, INVESTORS. INITIATIVE STATUTE. Measure requires,'as specified,
the following disclosures: (1) advertisers' warnings regarding disposal of toxic household products with exceptions; (2)
notices regarding coverage limits and insurance offeror's identity on insurance policies to supplement Medicare; (3)
disclosures in nursing home contracts and advertisements regarding access to State Ombudsman and facility violation
information; (4) disclosures by initiative and referendum campaign committees as to contributors; and (5) disclos'ares
by corporations selling st°Cks in state whether or not they are doing business in South Africa or with any person or
group located there. Provides fines for violations. Summary of Legislative Analyst's estimate of net .state and local
government fiscal impact: The net annual state costs could be up to $550,000 when the measure is fully implemented
for toll-free telephone lines, development of regulations, and recordkeeping. Costs would be offset by unknown
amount of fines from violators.
..... Analysis by the Legislative Analyst
'?roposal disclosures regarding (1) the extent of covel~age
'.-~':.~'.~'.. · ... provided and (2) the relationship between premi-
· .:' This measure would require certain information to be urns received and claims paid.
_di,selosed with respect to (1)' household toxic products, d. Requires medigap insurance policies to inform con-
(2) seniors' health insurance, (3) nursing homes, (4) sumers that they may call the toll-free number of the
certain statewide ballot measures (initiatives and refer- Department of Insurance, indicated on the policy,
enda), and (5) corporations that sell stock in Galifornia. for more information about medigap insurance.
. 1. Household Toxic Products. This measure would 3. Nursing Homes. Currently, the state has two pro-
require busi'flesses that advertise a 'household toxid prod- grams designed to protect the rights of patients in nursing
uet to warn the public that the product should not be homes. First, under the Long:Term Care Ombudsman
placed in the trash or poured down the drain. Small or program, volunteers investigate and resolve complaints
occasional' advertisers, and household products that eon- and act as advocates On behalf of nursing home residents.
'tain pesticides, would not be subject to the warning Second, the State Department of Health Services is
requirements, required to inspect nursing homes to cheek whether t:hey
"Household toxic product' and the nature and number comply with laws and regulations. If a nursing home
of the warnings would be defined by the State Depart- violates a law or regulation and a patient dies or could
ment of Health Services by regulation. The measure have suffered serious harm because of the violation, the
probably would affect household products, such as paints department may issue a citation and impose a civil
and motor oil, but would exclude bleaches and disinfee- penalty. Under existing law, the department is required
tants, which are generally treated as pesticides under to develop a consumer information service system to
state or federal law. provide updated and accurate information to the general
The measure would require the State Department of public regarding nursing homes, including a'history of
Health Services to establish a toll-free telephone line for citations and complaints for particular facilities.
providing information about safe disposal of household This measure would require nursing homes to state on
toxic products. The toll-free number would be included in their admission contracts and advertisements that more
the warning, information about the facility is available at the State
2. Seniors' Health Insurance. Existing federal and Ombudsman's office. The measure also would require
state law regulates insurance policies that supplement or nursing homes that have the most serious records of
cover gaps in health insurance provided under the fed- violations, as compiled by the State Department of
eral Medicare program. These policies are commonly Health Services, to state on their admission contracts.and
referred to as "medigap" insurance policies. This measure advertisements that a record of the citations the nursing
would require insurance companies to disclose certain home has received is posted at the nursing home and can
information regarding the sale and content of medigap be obtained from the department.
insurance policies. Specifically, it: 4. Statewide Ballot Measures. This measure would
a. Requires public advertisements for medigap insur- require any proponent or opponent of specified statewide
anee containing the name of an organization which ballot measures (initiatives and referenda) to disclose in
resembles that of a government agency, a nonprofit any advertisement certain major sources of financial
charitable entity, or a seniors' organization to dis- contributions. The measure would establish various cate-
close that the intent of the organization is to sell gories of ballot campaign contributors for purposes of
insurance as a business, determining whether the eontributor~ must be identJlfied
b. Requires medigap insurance Policies to disclose that as major funding sources.
the coverage may duplicate benefits available under 5. Corporations That Sell Stock in California. 'This
another medigap insurance policy, measure would require any corporation selling stocks or
e. Requires medigap insurance policies to make certain securities in California to disdlose whether it is doing
106 G88
business in South Africa or with any person or group Fiseal Effect
located in South Africa. Specifically, it would require
corporations to file a disclosure notice with the Secretary The adoption of this measure would result in costs to
of State, prior to selling stock or securities in California. It various state agencies to operate toll-free telephone lines,
would require that this information be made available by develop regulations, and keep records. The net annual
the Secretary of State. costs could be up to $550,000 when the measure is fully
This measure would allow certain court actions to be implemented. These costs would be partially offset by
brought to enforce its provisions. Fines resulting from unknown revenues from fines charged to people or
these actions would be deposited in the State General companies who violate the disclosure requirements.
Fund.
Text of Proposed Law
This initiative measure is submitted to the people in accordance with ability insurance policies and nonprofit hospital service plan contracts
the provisions of Article II, Section 8 of the Constitution. which are designed primarily to supplement Medicare and which are
This initiative measure adds sections to the Government Code and issued on a group or individual basis.
the Insurance Code; therefore, new provisions proposed to be added are ' 10195.2. Pubhc adverttsementsfor insurance policies to supplement
printed in italic type to indicate that they are new. Medicare that contain the name of an organization that resembles a
government agency, nonprofit or charitable institution, or seniors
PROPOSED LAW organization shall contain the following notice, if applicable:"
PUBLIC'S RIGHT TO KNOW ACT (name of organization) is or is associated with a business which sells
' insurance."
SECTION 1. The people of California find that the lack of truth in 10195.3. All insurance policies to supplement Medicare shall contain
advertising strongly reduces the public's right to accurate information, the following notice on the cover page of the outline of coveragb:
resulting in harm to their health and finances. The public's right to '~Caution: This policy may include coverage that totally or pdrtly
know this information will help consumers to make good decisions on duplicates your other Medicare supplemental insurance coverag~:j'~,~,
the vital matters addressed in this initiative: 10195.4. All insurance policies to supplement Medicare shall discl6se
· Household toxic products on the cover page of the outline of coverage whether the coverage
· Fraudulent health insurance sales to senior citizens
offered is "extensive'; "moderate'; or "limited." The Insurance Cpm-
· Nursing home abuses, which deprive seniors of the right to safe~y missioner shall issue regulations setting minimum standards for which
an~d dignity that they have earned
· The true sources of campaign funds for initiatives types of policies are "extensive'; "moderate", or "limited."
10195.5. All insurance policies to supplement Medicare.shall disclose
· Disclosure of business dealings with apartheid South Africa on the cover page of the outline of coverage the loss ratio of the policy
The people therefore declare their rights as consumers to make during the preceding year.
informed, intelligent decisions in these important areas, free from fraud 10195.6. All insurance policies to supplement Medicare shall disclose
or deceit, on the cover page of the outline of coverage that consumers may call the
The people hereby, enact the provisions of this initiative in further- Department of Insurance's toll-free number for information about
ance of these rights, buying insurance policies to supplement Medicare, and shall state the
SECTION 2. Article 10 (commencing with Section 66799) is added number. ~
to Chapter 3 of Title 7.3 of the Government Code, to read: 10195. 7. The Insurance. Commissioner shall issue regulations to
Article 10. Household Toxic Products Disclosure implement this Section.
66799. (a) Any business which advertises a household toxic product 10195.8. The remedies for violation of this Section are as provided in
intended for use by the general public shall provide clear and reason- Government Code Section 12269. .
able warning that the product should not be placed in the trash unless SECTION 4. Chapter 3.95 (commencing with Section 1599.85) is
completely empty, or poured down the drain, added to Division 2 of the Health and Safety Code, to read:
(b) "Advertises" means mass-media advertisements such as elco- CHAPTER 3.95. SENIORS NURSING HOME DISCLOSURE
tronic media, print, outdoor, and direct mail, but not including posters 1599.85. Lon_g-term health care facilities must prominentltt and
or displays in a retail store, clearly display the following notice on all contracts of admission, and
(c) "Clear and reasonable warning" may be provided by general all advertisements used to solicit consumers to enter into contracts of
methods such as labels on household toxic products, posting of notices, admission: "For more information about our facility, you may call the
placing notices in public news media, and similar methods. The State Ombudsman's Office at (insert toll-free number)."
warning may refer to the specific product, or to household toxic 1599.86. "Contract of admission," as used in this chapter, includes
products in general. The warning shall notify consumers that they may all documents which a resident or his or her representative must sign at
call the Department of Health Service's toll-free number for informa- the time of, or as a condition of, admission to a long-term care health
tion about proper disposal of household toxic products, and shall state facility as defined in Health and Safety Code Section 1326.
the number. 1599.87. The Department of Health Services (the Department) shall
66790.1. This section shall not apply to household use pesticides compile a list of approximately twenty five % (25%) of the long-term
subject to storage and labell~'ng requirements pursuant to the Food and health care facilities with the most serious records of violations of laws
Agricultural Code or the Federal Insecticide, Fungicide, and Rodenti- or regulations by virtue of proven or admitted Class AA and Class A
cide Act. citations. Those facilities on this list shall include this statement on all
66799.2. Small or incidental advertisers of household toxic products contracts of admission, and all advertisements used to solicit consumers
are exempt from this Article provided that any advertiser with an to enter into contracts of admission: "This facility's record of citations
annual California advertising budget for household toxic products of is posted at the facility, and a copy may be obtained from the
fifty thousand dollars ($50,000.00) or more shall not be exempted. Department of Health Services."
66799.3. The Department of Health Services shall issue regulations to 1599.88. The Department shall issue regulations to implement this
implement this Article, including but not limited to defining Chapter, including permitting one disclosure to satisfy the requirements
"household toxic products" (Section 66799), defining the nature and of Section 1599.85for all advertisements on the same page.
quantity of warnings required (Section 66799(c)) and defining small 1599.89. The remedies for violations of this Chapter are as provided
advertisers (Section 66799.2). in Government Code Section 12269.
66799.4. TheremediesforviolationsofthisArticleareasprovidedin SECTION 5. Article5 (commencing with Section 84501) isaddedto
Government Code Section 12269. Chapter 4 of Title 9 of the Government Code, to read:
SECTION 3. Sections 10195.1-10195.8 are added to the Insurance
Code, to read: Article 5. Truth in Initiative Advertising
Seniors Health Insurance Disclosure 84501. "Initiative" means a qualified statewide~ initiative measure or
10195.1. "Insurance policies to supplement Medicare" refers to dis- a qualified statewide referendum measure. Continued on page 157
C,88 107
Disclosures to Consumers, Voters, Investors.
105 Initiative Statute
Argument in Favor of Proposition 105
PROPOSITION 105, THE CONSUMER RIGHT-TO-KNOW But the facts remain unchanged: Proposition 105's only
INITIATIVE, WILL PROTECT CONSUMERS FROM ADVER- purpose is to require that advertisers tell the truth to eonsum-
TISING DECEPTIONS, HALF-TRUTHS, AND EVASIONS, ers.
AND WILL HELP US ALL TO MAKE INFORMED, INTEL- So ask yourself: Why would any honest business object~ to
LIGENT DECISIONS. being asked to tell the truth? What do opponents have to hide?
The lack of truth in advertising harms the health and finances DONOr BE FOOLED BY THE DECEPTIONS OF THE
of consumers. But special interest groups have blocked legisla- SPECIAL INTERESTS!
tion that would require truthful advertising. Your vote for Proposition 105 will:
Now it's up to us. · Protect our water supplies and landfills from pollution
We can protect ourselves--consumers, seniors, the environ- caused by unsafe disposal of toxic household products.
ment--by voting for Proposition 105 to enforce our right to: · Protect seniors from unsafe nursing homes, where 59
· Warnir/gs against pouring toxic household products down patients have died because of bad care in the last three
the drain, to avoid polluting our water supply, years alone.
· Understandable insurance policy information to stop sales · Stop the supplemental "medigap" insurance seams which
have stolen $300,000,000 a year from seniorg. One example:
to seniors of fraudulent "medigap" insurance, an elderly Santa Rosa couple was sold 20 policies costing
· Disclosure about nursing home practices and safety viola- $13,000 per year.
tions so that seniors and their families can make choices The stakes are much too high to continue playing with a deck
which will assure the safety and dignity that seniors have that's stacked against consumers.
earned. PLEASE JOIN WITH CONSUMER, SENIOR, AND ENVI-
· Advertising about initiatives which will disclose who really RONMENTAL GROUPS IN SUPPORTING THE CONSUMER
is paying for the advertisements. RIGHT-TO-KNOW INITIATIVE. Proposition 105 is a very
· Stock purchasers being able to find out whether companies reasonable solution to some very real problems.
are doing business in South Africa. Its aim is simple: to prote,? the public.
Proposition 105 doesn't interfere with the way companies do The special interests won t do it/
business. It doesn't make them do anything--except tell The'politicians haven't done itt
the truth in their advertising. It doesn't stop them from doing Now we can do it ourselves/
anything~xcept lying to the public. VOTE YES ON THE CONSUMER RIGHT-TO-KNOW [NI-
IT SIMPLY REQUIRES THAT CONSUMERS BE TOLD TIATIVE.
THE TRUTH, so they can make their decisions based on facts, VOTE YES ON PROPOSITION 105!
not on fraud and deceit. JIM ROGERS
The Consumer Right-to-Know Initiative will protect consum- President, CURE (Consumers United for Reform)
ers, seniors, and our environment from shady practices, without
LOIS McKNIGHT
creating an expensive bureaucracy. Director, Nursing Home Ombudsman Program
Proposition 105 targets "bad apple" businesses, and protects o£ Contra Costa Countll
honest businesses from the unfair competition of those who Member, Board of Directors, East Ball
would lie to sell their products. Elder Abuse Prevention Consortium
The special interests will do anything to stop Proposition BILL SHIREMAN
lOS--anything to stop them from being forced to tell consumers Executive Director, Californians Against Waste
the truth. They will tr~ to confuse voters with meaningless Chairman, ECCO (Environmental and
objections. Commerce Coalition)
Rebuttal to Argument in Favor of Proposition 105
This rebuttal addresses the household products disposal por- Today's consumer products are safe, efficient, convenient and
tion of Proposition 105. It is virtually impossible for any one provide valuable benefits for our homes, schools, and other
person or group to speak for or against the many diverse issues public facilities. Proposition 105 fails to tell us what products will
whidh are covered in Proposition 105 and which have failed in require new warnings, and leaves it up to the statebureauc;racy
the past. Proposition 105 is an oversimplistic and misleading to decide--an expensive process that will have questionable
results.
approach to protecting our environment. Household products Proposition 105 supporters have incorrectly confused house-
are not a source of pollution to water supplies, as recent hold health and safety With truth-in-advertising issues. On the
research in Los Angeles County and several other areas.around household toxics issue, Prop 105 should be rejected by voters as
the country have shown. This initiative will not provide protec- false advertising: What it says it will accomplish is not what
tion for your environmentwit will only cost the taxpayers and voters will get!
consumers much money. Protecting our groundwater should be VOTE NO ON PROP 105.
left to the current legislative study, which has been eomprehen- jIM CAUDILL
sively and effectively addressing the question. Household Products Disposal Council
108 Arguments printed on this page are the opinions of the authors and have not been checked for accuracy by any official agency
Disclosures to Consumers, VoterS,initiative StatuteInvest°rs' 105
Argument Against Proposition 105
The household toxic products disposal provision of the Con- The household product provision is therefore unnec-
sumer Disclosure Initiative addresses an issue that is already essary.'
being handled by your state government. · Most consumers buy only products they need and use them
The California Waste Management Board is acting on the completely.
household hazardous waste issue under the authority of current · Scientific evidence shows that disposal of household prod-
California law. Under the board, an advisory committee of ucts has virtually no adverse impact on the,environment.
representatives of state and local government, citizens, environ- · Increased costs associated with providing needless warnings
will bepassed on to consumers just as if the Legislature had
mental groups and industry was formed to determine Califor- enacteda tax on the products.
nia's role in-residential waste management, the structuring of · Money spent in implementing this provision will be a waste
special collection programs and educational materials for of tax dollars.
schools. Accordingly, you should VOTE NO on the
Consumer Disclo-
This effort is a bipartisan and balanced approach which will sure Initiative.
evaluate the issue and make appropriate recommendations to JAMES GAUDILL
the State of California. Household Products Disposal Council
Rebuttal to Argument Against Proposition 105
PROPOSITION 105 PROTECTS CONSUMERS FROM DE- toxics, it also protects the elderly.
CEPTIVE ADVERTISEMENTS WHICH HARM THE Seniors' grou,,ps support, Proposition 105 because it tells nurs-
HEALTH AND FINANCES OF CONSUMERS. ing homes and medigap insurance companies who rip off an~t
For instance, the Consumer Right-to-Know Initiative requires abuse the elderly: ~' ' '
warnings against pouring toxic household products down the WE MUST PROTECT THE HEALTH OF SENIORS--
drain, to avoid polluting our water supplies. NOT THE WEALTH OF COMPANIES THAT VICTIMIZE SE-
The special interests claim this is too much safety. NIORS AND THEIR FAMILIES.
The consumer, senior, environmental coalition supporting Proposition 105 doesn't require anyone to do anything--ex-
Proposition 105 says we can't ,be too safe from toxics, cept tell the truth.
Contrary to, the opponents claims, this truth-in-adve,r, tising Why would anyone oppose that--except those with something
initiative won t pass on costs to consumers. It doesnt cost to hide?
advertisers any more to tell the truth than to lie! PLEASE lOIN WITH CONSUMER, SENIOR, AND ENVI-
Further, Proposition 105 won't raise taxes or create expensive RONMENTAL GROUPS IN SUPPORTING THE CONSUMER
bureaucracy. Any administrativ~e costs should be paid from fines RIGHT-TO-KNOW INITIATIVE!
collected from violators. VOTE 1!ES ON PROPOSITION 105!
So askyours,elfi Why all the meaningless objections from the GEORGE SANDY
toxics industry s front group? Presideng Congress of California Seniors
Because the special interests are scared of having to come KEN McELDOWNEY
clean with consumers/ Executive Director, Consumer Action
DON~F BE DECEIVED: VOTE YES ON THE CONSUMER MARGARET BYRNE
RIGHT-TO-KNOW INITIATIVE! Administrator, Bay Area Advocates for
Proposition 105 not only protects our water supply from Nursing Home Reform
C_,88 Arguments printed on this page are the opinions of the authors and have not been checked for.accuracy by any official agency 109
06 Attorney Fees Limit for Tort Claims.
Initiative Statute
Official Title and Summary Prepared by the Attorney General
ATTORNEY FEES LIMIT FOR TORT CLAIMS. INITIATIVE STATUTE. Measure places limit on amount .of a
contingency fee an attorney may collect for representing a plaintiff in connection with a tort claim. The fee may be
no more than 25 percent of first $50,000 recovered, no more than 15 .percent of next $50,000 recovered, and no more
than 10 percent of amount'recovered above $100,000. The court may review the fee and reduce it below the stated
limits if it is not reasonable and fair. Defines amount recovered to calculate fee limitations. Summary of Legislative
Analyst's estimate of net state and local government fiscal impact: Fiscal impact on state and local governments is
'unknown and would depend on how attorneys and their clients respond to these contingency limits. The response
could affect the number of cases filed and settled, and the size of awards.
Analysis by the Legislative Analyst
Background
An injured party may sue to recover damages for
injury, death, or property loss. The amount of damages to
be paid may be determined by negotiation, court trial, or
arbitration. These types of cases are referred to as "tort'"
cases.
Typically tort cases are handled on a "contingency fee"
basis, which means that the attorney is paid only if the
case is won or settled in favor of the client. Statutory
limitations on these fees apply only to medical malprac-
tice cases.
Current law limits attorney contingency fees in medi-
cal malpractice cases to the following: (1) 40 percent of
the first $50,000 recovered for damages; (2) 33.3 percent
of the next $50,000 recovered; (3) 25 percent of the next
$500,000 recovered; and (4) 15 percent of any amount
recovered which exceeds $600,000.
Proposal
This measure places limits on the amount of contin-
gency fees attorneys could charge clients for their ser-
vices in tort cases, including medical malpractice cases. It
would limit attorney contingency fees to the following:
(1) 25 percent of the first $50,000 recovered; (2) 15
percent of the next $50,000 recovered; and (3) 10 percent
of the amount recovered above $100,000.
The measure authorizes the court to conduct a hearing
to determine whether a proposed fee is reasonable and
fair. The court may reduce the fee below the limits
proposed in this measure, but it may not increase the fee
above these limits.
Fiscal Effect
The fiscal impact of this measure on state and local
governments is unknown, and would depend largely on
how attorneys and their clients respond to these contin-
gency fee limits. The response could affect the number of
cases filed, the number settled before trial, and the size of
the awards.
110 G88
Text of Proposed Law
This initiative measure is submitted to the people in ($50,000) recovered.
accordance with the provisions of Article II, Section 8 of (3) Ten percent of the amount of recovery above one
the Constitution. hundred thousand dollars ($100,000).
This initiative measure adds a section to the Business The limitations shall apply regardless of whether the
and Professions Code; therefore, new provisions proposed recovery is by settlement, arbitration, or judgment.
to be added are printed in italic type to indicate that they (b) The court, in any action filed seeking damages
based on a tort claim, including a claim covered by
are new.
Section 6146, may on its motion, or on the motion of a
PROPOSED LAW party, review the contingency fee arrangement upon
TITLE. notice and' hearing to determine whether the fee is
This shall be known as the Lawyers Fair Fee Act. reasonable and fair and may order a fee. less than the
amount set out in subdivision (a). The fee brdered by the
· FINDINGS AND DECLARATION. court shall not exceed the amount set out in subdivision
Attorneys who represent injured persons in most tort (a).
claims charge a fee based on a percentage of the amount (c) If periodic payments are awarded to the plaintiff
recovered, whether by settlement or judgment. Contin- pursuant to Section 667. 7 of the Code of Civil Procedure,
gency fees of up to 40% are common, the court shall place a total value on these payments
The people of California find that excessively high based upon the projected life expectancy of the plaintiff
contingency fees deprive injured persons of too large a and include this total amount in d°mputing the award
share of the amounts they recover on tort claims. Ade- from which attorney's fees are calculated under this
quate legal representation .will be available to injured section.
persons if attorneys'fees are limited as provided herein. (d) For purposes of this section, "recovered"means the
net sum recovered after deducting any disbursements or
LIMIT ATTORNEY FEES. costs incurred in connection with prosecution or settle-
Section 6146.1 of the Business and Professions Code is ·ment of the claim. Costs of medical care incurred by the
added to read: plaintiff and the attorney's office-overhead costs or
6146.1. (a) An attorney shall not contract fo~ or charges are not deductible disbursements or costs for such
collect a contingency fee in connection with a tort claim, purpose.
including a claim covered by Section 6146, in excess of the (e) The provisions of this section shall not be amended
following limits: ~ by the Legislature except by statute passed in each house
(1) Twenty-five percent of the first fifty thousand by roll call vote entered in the journal, two-thirds of the
dollars ($50,000) recovered, membership concurring, or by a statute that becomes
(2) Fifteen percent of the next fifty thousand dollars effective only when approved, by the electorate.
G88 111
106
Attorney Fees Limit for 'Tort Claims.
Initiative Statute _
Argument in Favor of Proposition 106
VOTE FOR PROP 106 TO LIMIT ATTORNEY CON- have enough money left. over to pay their ~medical
TINGENCY FEES AND SECURE MORE MONEY FOR 'expenses or rehabilitation costs. We cannot continue to
VICTIMS. allow lawyers to make outrageous profits at the expense
PROP 106 reforms our legal system by limiting the of accident victims.
amount lawyers can take from their clients' award, Compare these facts: In 1987, the Lawyer's Almanac
channeling more money to victims and less to attorneys, reports the starting salarty for a law school graduate at top
Our current legal s~tstem allows lawyers to routinely Los Angeles firms was $52,000. Don't believe law2/ers
collect up to 40% of an injured victim's total award. In when they say that they can't work for less money. There
many cases, attorneys collect much more. are over 106,000 lawyers in California. If we limit attorney
PROP 106 limits attorney contingency fees in all ~tort contingency fees, every good case will still be presented
cases to: to the court by competent lawyers; the only difference is
· no more than 25 % of any award up to $50,000. that lawyers will be prohibited from charging their clients
· no more than 15% of that portion of an' award excessive fees.
between $50,000 and $100,000. The federal government and several other states ]~ave
· no more than 10% of an award above $100,000. recognized the need to cap attorney contingency fees.
Currently, the State Bar of California, an organization Nearly 40 years ago the federal government enacted
that lobbies for attorney interests, is responsible for contingency fee limitations in cases where it is a defen-
managing lawyer conduct and fees. ' ' dant. Florida, New York and California limit contingency
Under current rules, the State Bar routinely recognizes
40~,o, as an appropriate fee and no fee is too high unless it feeScut passedin medicallegislationmalpractiCesimilarCaSeS,to PRopand last106.year Connecti-
is 'unconscionable." According to the State Bar, an PROP 106 will reform our wasteful tort system., by
"unconscionable" fee is: directing more money to those who need it most: acci~lent
"so exorbitant and wholly disproportionate to the victims and other wronged claimants.
services performed as to shock the conscience of PLEASE VOTE TO LIMIT ATrORNEY CONTIN-
lawyers of ordinary prudence practicing in the same GENCY FEES.
community." VOTE YES on PROP 106.
We wonder just what shocks the conscience of a lawyer
of ordinary prudence, since contingency fees of 50% and TOM McCLINTOCK ·
more are upheld. Member of the Assembly, 36th District
PROP 106 WILL RETURN COURT AWARDS TO Vice Chairman, Assembly Judiciar!t Committee
VICTIMS. ALAN F. SHUGART
More money should go to compensate accident victims. Chairman of the Board and CEO, Seagate Technolog~
Less should go toward padding lawyers' wallets. Today, JOHN FLEMING
after paying attorney fees, accident victims often don't University of California Law Professor
Rebuttal to Argument in Favor of Proposition 106
Don't let insurance companies trick you. They wrote In the June 2 San Diego Union, insurance industry
and financed Proposition 106 to make it harder for you to executive George Tye said Proposition 106 won't reduce
make them pay up. They plan to wreck an effective insurance rates.
system that allows seriously injured Americans to pay Notice that 106 doesn't restrict fees that insurance
their lawyers ONLY IF THEY WIN--AND NOTHING IF companies pay their lawyers t'o defend wrongdoers. So
THEY LOSE! while they can hire the best lawyers to fight you, you
The negotiable contingent fee permits Californians of couldn't afford to do the same. That's the trick of 106.
modest means to bring wrongdoers to justice without The contingent fee allowed thousands of America~as to
having to pay fat hourly lawyers' fees. That's why scholars prevail against drunk drivers, and asbestos, hazardous
call the contingent fee the key to the courtroom door for household products and Pinto fuel tank manufacturers.
average Americans.
Even a major insuran,c,e executive said, in the July 19 SuChtheir safetyViCt°rieSobligationsmake companieStoward allPaYAmericans.'m°re attention to
'Los Angeles Times, 106 ... will bar public access to the Vote NO.
.courts."
Proposition 106 deviously stifles your ability to hire the RALPH NADER
smartest, most determined lawyers for you and your Consumer Advocate
children against drunk drivers and manufacturers of HEATHER BECHTEL MAURER
defective cars, cancerous chemicals and dangerous pre- Executive Director, Asbestos Victims of America.
scription drugs. It will result in more wrongdoers getting GENE PATTERSON
off and more insurance companies not paying up. Executive Director, National Victim Center
112 Arguments printed on this page are the opinions of the authors and have not been checkeO for accuracy by any official agency 688
Attorney Fees Limit for Tort Claims.
Initiative Statute 106
Argument Against Proposition 106
Don't be misled/Proposition 106 is the most insidious their profits. In 1987 alone, they made a record $13.7
insurance industry-sponsored initiative on this ballot, billionl They should lower your rates without restricting
The insurance industry wants caps on legal fees. your rights.
But whose fees? NOT the fees paid to lawyers Who If Proposition 106 passes, Californians would lose valu-
work for insurance companies, NOT manufacturers' law- able rights in exchange for empty pr.omises. Don't be
yers, NOT large corporation lawyers, NOT criminals' taken in by the insurance companies' secret strategy to
lawyers, divert your attention from the real issues--their outra-
The ONLY lawyer whose fees would be limited would geous premiums and obscene profits--by making the
be YOURS---the lawyer YOU HIRE to help you recover victim's attorney their scapegoat.
damages from a drunk driver, an insurance company that Proposition 106 is another "fine-print" insurance scam
won't pay you what it owes you 6r a shoddy manufac- restricting the rights of policyholders to hold insurance
turer.
YOUR lawyer, NOT THEIRS! companies accountable---even if those actions involve
Written by insurance company lawyers to confuse legitimate claims against drunk or negligent drivers.
California voters and obschre the real issues--insurance Will this initiative save you money? NO! The insurance
reform and accountability--Proposition 106 would ~rip- companies admit it. But th~s initiative could cost you
· money/If yoi~ lack proper ~ecourse in demanding that
pie the ability of crime and accident victims to retain your insurance company reimburse ))ou fairly for your
qualified 'legal counsel.
Proposition 1.06 would hurt, among others, drunk driv- losses, you may never receive the compensation to which
lng victims who would be hindered from seeking justice- you are entitled. You may be letting a drunk driver off
from the offenders. ' ~ the' hook/
Proposition 106 is unfair/It cleverly restricts YOUR Proposition 106 is discriminatory and unfair. It stacks
ability to fight for your rights, but does nothing to limit the deck in favor of insurance companies AT YOUR
the amount insurance companies cari pay THEIR attor- EXPENSE by allowing them to hire whatever legal talent
neys to'fight you. they want at whatever fee they want to pay while
Propositi,on 106 puts a straitjacket on 'the average innocent victims would lose such rights.
Californian s ability to challenge insurance companies If you think the fight against insurance companies is
that refuse to Pay benefits on legitimate claims. It also unfair today, just consider what will happen if Proposition
allows unscrupttlous insurance companies' lawyers to 106passes.
bully victims and their families (who use the contingency The free-choice system is essential for parents, victims
fee system) through intimidation and delaying tactics, and consumers. Don't put youi loved ones and yourself in
Why are insurance companies behind Proposition 1067 needle~s jeopardy/ Vote NO on PROPOSITION 106.
Because the insurers wh6 are bankrolling this initiative JUDITH ROWLAND
know that if they stack the deck against policyholders by Execu'tive Director, California Center on Victimology
restricting legal challenges, they can increase their TOM BRADLEY
profits. After all, the fewer claims they pay, the higher Mayor of Los Angeles
Rebuttal to Argument Against Proposition 106
DON'T BE FOOLED BY THE TRIAL LAWYERS' .County has multiplied two and a half times since 1970 and
PLEA TO PROTECT THEIR EXORBITANT CONTIN- has increased by 35% since 1980!
GENCY FEES. VOTE YES ON PROP 106. California, New York and Florida already have fee
Injured victims will have no difficulty finding.proper limitations in medical malpractice cases, and injured
legal representation. PROP 106 protects victims from victims have not gone without representation.
TRIAL LAWYERS ARE BENT ON DEFEATING
excessive contingency fees. PROp 106 TO PROTECT THEIR EXCESSIVE FEES--
Trial lawyers routinely take up to 40% or more of an NOT TO SAFEGUARD VICTIMS'~ RIGHTS. DON'T BE
injured victim's award. PROP 106 will give more money TRICKED.
to victims by reducing excessive contingency fees. Vote Please VOTE YES on PROP 106 to ensure that injured
YES on PROP 106. vi6tims--not their attorneys---receive compensation.
'Trial lawyers protest that they can't work for less than Vote YES on PROP 106.
they make now, but the facts show otherwise. JERRY EAVES
Don't believe trial lawyers when they claim they Member oftheAssembly, 66th District
cannot work for less money. JAxMES NIELSEN
California has more than 106,000 attorneys--one out of State Senator, 4th District
seven nationwide. And their ranks continue to swell. The REGIS McKENNA
number of lawyers licensed tO practice in Los Angeles Chairman of the Board and CEO, Regis McKenna, Inc.
G88 Arguments printed on this page are the opinions of the authors and have not been checked for accuracy by any official agency 113
Proposition 79: Text'of Proposed Law
Continued from page 9 exchange of any bonds issued to refund either those bonds or any
previously issued refunding bonds.
17698.60. In computing the net interest cost under Section16754 of 17698.95. Out of the first money realized from the sale of bonds
the Government Code, interest shall be computed from the date 6f the under this chapter, there shall bg repaid any moneys advanced or
bonds or the last preceding interest payment date, .whichever is latest, to loaned to the State School Building Lease-Purchase Fund under anb' act
the respective maturity dates of the bonds then offered for sale at the
of the Legislature, together with interest provided for in that act.
coupon rate or rates ~pecified in the bid, the computation to be made on 17698.98. (a ) Of the proceeds from the sale of bonds pursuant to
a 360-day-year basis.
17698.70. The committee may authorize the Treasurer to sell all or this chdpter:
(1) Not more than one hundred million dollars ($100,000,000). may
any part of the bonds herein authorized at such time or times as may be be used for the reconstruction or modernization of facilities within the
fixed by the Treasurer.
17698.80. All proceeds from the sale of the bonds herein authorized meaning of Chapter £2 (commencing with Section 17700).
deposited in the fund, as provided in Section 16757of the Government for(£) Not more than twenty million dollars ($£0,000,000) may be a~sed
the purchase and installation of air-conditioning equipment and
Code, except those derived from premium and accrued interest, shall be insulation materials pursuant to Section 42250.1.
available for the purpose herein provided, but shall not be available for (3) Not more than one hundred million dollars ($100,000,000) may
transfer to the General Fund pursuant to Section 17698.25 to pay be used for the identification, assessment, and abatement of hazardous
principal and interest on bonds.
17698.90. Wiih respect to the proceeds of bonds authorized by this asbestos in school facilities.
chapter, all provisions of Chapter 22 (commencing with Section 17700) (b) Notwithstanding subdivision (a), in the event the board deter-
shall apply, mines at any time that the maximum amount made available purs~'ant
17698.93. Any bonds issued and sold pursuant to this chapter may to any of the paragraphs in that subdivision exceeds the amc,unt
be refunded by the issuance and sale or exchange of refunding bonds in necessary to fund the qualified recipients of the apportionment au tho-
accordance with Article 6 (commencing with Section 16780) of Chapter rized under that paragraph, the board may expend any portion of
4 of Part 3 of Division 4 of Title 2 of the Government Code. The excess for the construction of new school facilities pursuant to Chapter
approval by the electors of this state of the issuance and sale of bonds 22 (commencing with Sectiqn 17700) or for any one or more of the
under this chapter includes approval of the issuance and sale or purposes described in subdivision (a).
Proposition 80: Text of Proposed Law previously issued refunding bonds.
Continued from page 13 7412. All proceeds fr_om the sale of bonds, except those derived from
has by resolution authorized to be sold for the purpose of carrying out premiums and accrued interest, 3hall be available for the purpose
this chapter. The board shall execute any documents required blt the provided in Section 7406 but shall not be available for tranqfer to the
Pooled Money Investment Board to obtain and repay the loan. Any General Fund to pay the principal of and interest on bonds. The money
amounts loaned shall be deposited in the fund to be allocated by the in the fund may be expended only as herein provided.
board in accordance with this chapter. . 7413. Money in the fund may only be expended pursuant to
7411. Any bonds issued and sold pursuant to this chapter may be appropriations by the Legislature.
refunded by the issuance .of refunding bonds in accordance with Article 7414. The Legislature hereby finds and declares that, inasmuch as
6 (commencing with Section 16780) of Chapter 4 of Part 3 of Division the proceeds from the sale of bonds authorized by this chapter are. not
2 of Title £ of the Government Code. Approval by the electors of the "proceeds of taxes" as that term is used in. Article XIII B of' the
state for the issuance_of bonds shall include the approval of the issuance California Constitution, the disbursement of these proceeds is not
of any bonds issued to refund any bonds originally issued or any subject to the limitations imposed by that article.
Proposition 81: Text of Proposed Law
the Legislature by an act raises the limit specified in this section.
Continued from page 17 (b) Upon receipt of an application for a grant or loan pursuant tb
(3) An agreement by the public agenclt, (A) to proceed expeditiousllt this chapter, the department shall propose to the applicant improve-
with, and complete, the project, (B} to commence operation of the ments to the applicant's water development, distribution,, and utiliza-
project upon completion thereof, and to properly operate and maintain tion system which will conserve water in a cost-effective manner. Ihese
the project in accordance with the applicable provisions of law, (C) to improvements may include, bUt need not be limited to, leak detection
apply for, and make reasonable efforts to secure, federal assistance for and repair programs, valve repair and replacement, meter calibration
the project, (D) to secure approval of the department and of the State and replacement, physical improvements to achieve corrosion control,
Department of Health Services before applying for federal assistance in distribution and installation of water conservation devices and fixtures,
order to maximize and best utilize the amounts _of that assistance and other capital improvements which can be demonstrated to conserve
available, and (E) to provide for payment ofthe public agency's share water in a cost-effective manner. The department and applicant may
of the cost of the project, ~ any.
14013. Applications for loans and grants under this chapter shall be agree to include these capital improvements in the grant or loan. Failure
blt the applicant~ to include water conservation capital improvements in
made to the department in the form and with the supporting material the grant or loan application shall not be sufficient cause for the
as prescribed by the department.
14014. The department shall prepare an annual report on all grant department to refuse to make the grant or loan.
14016. An application for a grant pursuant to this chapter shal~! not
commitments made, or grant contracts entered into, pursuant to this be approved blt the department, unless the State Department of Health
chapter. The report shal[be filed with the Legislature, 4f it is in session Services determines that the public agency is otherwise unable to meet
or, if it is not in session, with the Joint Rules Committee. ~he report shall minimum safe drinking water standards established pursuant to C,~ap-
be filed on or before January 31 of each year for grant commitments ter 7 (commencing with Section 4010) of Part 1 of Division 5 of the
made, or grant contracts entered into, by the department during the Health and Sqfe_ty Code.
previous calendar year. No grant shall be made by the department except upon approval.by
14015. (a) Loans and grants malt be made only for projects for the State Department of Health Services of project plans submitted by
domestic water systems. The State Department of Health Services may the applicant and upon written approval by the State Depart~nent of
make reasonable allowance for future water supply needs and malt Health Services that the proposed project is consistent with Chap~?er 7
provide for additional capacitlt when excessive costs would be incurred (commencing with Section 4010) of Part 1 of Division 5 of the Health
~by later enlargement. The loans and grants may be made for all, or any and Safetlt Code.
part, of the cost of constructing, improving, or rehabilitating any 1401Z First priority for grants shall be granted to public agencies
system when, in the judgment of the State Department of Health having immediate health related problems, as certified blt the State
Services, improvement or rehabilitation is necessary to provide pure,
Department of Health Services. Additional high prioritu shah be
wholesome, and potable water in adequate quantity at sufficient granted to projects to correct immediate problems, as opposdd to grants
pressure for health, cleanliness, and other domestic purposes. The State for construction of projects to meet future growth needs.
Department of Health Services shall determine and notify applicants of 14018. First priority fo_r loans shall be given to suppliers with the
eligibility of components requested to be included in the proposed most critical public health problems. Priority for loans shall also be
project. The department shall use this determination as a basis for given to suppliers which have a lesser capability to reasonably finance
disbursing funds. No single public agency shall receive grants pursuant system improvements.
to this chbpter totaling more than four hundred thousand dollars 14019. Preliminartl design work, including a cost estimate for the
($400,000). Loans may be made to provide for the purchase of a water project, shall be completed before a loan or grant is awarded. Operation
stistem or the purchase of watershed land§. No loan to an individual and maintenance costs shall-be the responsibilitlt of the supplier and .
supplier shall exceed the sum of five million dollars ($5,000,000), unless may not be considered as part of the project cost. Costs for planning and
114 G88
preliminary engineering studies may be reimbursed following the (Chapter 10.7 (commencing with Section 13895)) in effect on the
receipt of a loan or grant, subject to approval by the department and the effective date of this chapter may, at the option of the State Department
State Department Of Health Services.
14020. No applibation for a grant may be made pursuant to this of Healththe State DepartmentServices' be utilized`of HealthupOnservicesVOter adoptsappr°vala new°f thiSprioritychapterlist.until
chapter unless the public agency has also applied for a loan pursuant 14028. Not more than twenty-fi'ye million dollars ($25,000,000) of
to this chapter. A public agency shall be eligible for a grant only to the state loans for projects shall be authorized by the department in a single
extent that the department finds that the agency is found unable to calendar quarter. No contract shall be approved by the department,
repay the full costs of a loan. . unless the department finds that the supplier has the ~capacity to repay
If the department has determined that the applicant is. unable to the loan amounts speci_'fied in the contract. ·
At the request of the department, the Public Utilities Commission
repay the full costs of a loan, the applicant may also f(le for a grant.
Upon receipt of a grant application, the department shall determine shall furnish comments concerning the ability of suppliers subject to its
that portion of the full costs that the applicant is capable _of repaying, jurisdiction to finance the project from other sources and the ability to
Grant funds shall only be provided for that portion that the applicant
repay the loan. .
is not capable of repaying. 14029. (a) As approved annually by the Legislature in the Budget
14021. Grant funds shall be expended by the public agency'within Act, the department, notwithstanding Section 14022, may expend money
three years _of the making of the grant. No grant funds may be expended repaid to the state pursuant to any contract executed under Section
by the public agency unless the public agency is able to demonstrate to 14011 as necessary for the administration of contracts entered into by
the department, within one year of the making of the grant, supported the department un-der this chapter, but those expenditures may not in
by an acceptable bid, that the amount to be expended fbr the project
will be within 20 percent of the public agency's cost estimate for the
any year exceed 1.5 percent of the amount repaid to the state in that
year. Charges incurred by the Attorney General in protecting the state's
project, interest in the use and repayment of grant and loan funds under this
14022. For the purpose of, administering this chapter, the total . chapter may be paid by the department from these funds, but those
expenditures of the department and the State Department of Health charges may not exceed one-half of 1 percent of the amount repaid to
Services may not exceed 5 percent of the total amount of the bonds the state in that year. Any of the above sums approved by the
authorized to be issued under this chapter. The department shall Legislature, but unexpended by the department at the end of any year,
shall automatically revert to the General Fund.
(b) Except as provided in subdivision (a), all money ?epaid to the
establish a reasonable schedule of administrative fees for loans, which
fees shall be paid by the supplier pursuant to Section 14011, to
reimburse the state for the costs of state administration of this chapter, state pursuant to any contract executed under Section 14011 shall be
· Charges incurredby the Attorney General in protecting the state's deposited in the General Fund and, when so deposited, shall be applied
interests in the use and repayment of grant and loan funds under this as a reimbursement to the General Fund on account of principaland
chapter shall be paid from the proceeds of bond sales under this interest on bonds issued pursuant to this chapter which has been paid
chapter. These charges shall not be paid from funds allocated for from the General Fund.
administrative purposes, but shall be treated as a program expense not (c) The department may enter into contracts with suppliers of water
to exceed 1.5 percent of the total amount of the bonds authorized to be fo_r grants or short-term loans for the purpose of investigating and
sold under this chapter., ~ identifying alternatives for system improvements. Any loans or grants
14023. Repayment of all or part of the principal, which is the loan pursuant to this section shall be made from the fund. No supplier may
receive for a single investigation more than twenty-five thousand
plus the administrative fee, may be deferred during a development dollars ($25,000) in the form of a loan or grant pursuant to this section.
period not exceeding I0 years within the maximum 50-year repayment The State Department of Health Services shall review all proposed
period, when, in the department's judgment, the development period is
justified under the circumstances. Interest on the principal shall not be investigations and shall determine if they are necessary and appropri-
deferred. Repayment of principal which is deferred during a develop- ate.
ment periodmay, at the option of the supplier, be paid in annual (d) Any c~ntract entered into pursuant to this section shall include
installments during the remainder of the loan repayment period, terms and conditions consistent with this chapter, and any loan
contract shall provide for a repayment period not to exceed 24 months.
14024. The department shall esiablish the interest rate for loans (e) Not more than d~x million dollars ($6,000,000) may be expended
made pursuant to this chapter at 50 percent of the true interest cost to for the purposes of this section, of which not more than two million
the state of general obligation bonds issued most recently prior to the dollars ($2,000,000) may be used for grants to public agencies. A loan or
loan being executed. All loans made pursuant to this chaptershallcarry grant made for the purposes o_f this section shall not decrease the
the established interest rate for the calendar year in which the funds are maximum amount of any other loan or'grant which may be made under
committed to the loan, as of the date of the letter of commitment from this chapter, Chapter 10.2 (commencing with Section 13810), Chapter
the department, and shall remain at that interest rate for the duration 10.5 (commencing with Section 13850), Chapter 10.6 (commencing with
of the loan. Section 13880), or Chapter 10. 7 (commencing with Section 13895).
14025. (a) The department, after put~lic notice and hearing and
with the concurrence of the State Department of Health Services, shall Article 3. Fiscal Provisions
adopt rules and regulations necessary to carry out the purposes of this 14030. Bonds in the total amount of seventy-five million dollars
chapter. The regulations shall include, but not be limited to, criteria ($75,000,000), exclusive of refunding bonds issued pursuant to Section
and procedures for e~tablishing the eligibility of a supplier. 14039, or so much thereof as is necessary, may be issued and sold to
(b) The department shall adopt rules and regulations that, in its provide a fund to be used for carrying out the purposes expressed in this
judgment, will most effectively carry out this chapter in the public chapter and to be used to reimburse the General Obligation Bond
interest, to the end that the ~eople of California are most efficiently and Expense Revolving Fund pursuant to Section 16724.5 o_f the Government
most economically provided supplies of pure, wholesome, and potable Code. All bonds herein authorized, which shall have t~een duly sold and
domestic water. The rules and regulations may provide for the denial of delivered as herein provided, shall constitute valid and legally binding
funds when the purposes of this chapter may most economically an-d general obligations of the State of California, and the full faith and
efficiently be attained by means other than the construction of the credit of the State of California are hereby pledged for the punctual
proposed projbct, payment of both principal and interest thereof
14031. The bonds authorized by this chapter shall be prepared,
(c) Notwithstanding subdivision (a) or any other provision qf law,
existing rules and regulations adopted by the department pursuant to executed, issued, sold, paid, and redeemed as provided in the State
the 'California Safe Drinking Water Bond Law of 1984 (Chapter 10.2 General Obligation Bond Law (Chapter 4 (commencing with Section
(commencing with Section 13810)) which are in effect on the effective 16720) _of Part 3 of Division 4 of Title 2 of the Government Code), and
date of this chapter, may, at the option of the department, be utilized all o_f the provisions of that law apply to the bonds and to this chapter
upon voter approval of this chapter for purposes of implementing this and are hereby incorporated in this chapter as though set forth in full
chapter. The department, with the concurrence of the State Department in this chapter.
of Health Services, may subsequently revise those rules and regulations
14032. (a) Solely for the purpose of authorizing the issuance and
pursuant to Chapter 3.5 (commencing with Section 11340) of Part 1 of sale, pursuant to the State General Obligation Bond Law, of the bonds
Division 3 of Title 2 of the Government Code as necessary to implement authorized by this chapter, the California Safe Drinking Water Finance
provisions of this chapter which differ from Chapter 10.2 (commencing Committee is hereby created. For purposes of this chapter, the Califor-
with Section 13810) or Chapter 10. 7 (commencing with Section 13895) nia Safe Drinking Water Finance Committee is "the committee" as that
term is used in the State General Obligation Bond Law. The committee
or for any other reason to carry out the purposes of this chapter.
14026. The State Department of Health Services shall notify suppli- consists of the Governor, the Treasurer, the Director of Finance, the
ers that may be eligible for loans pursuant to this chapter of (a) the Director.`of Water Resources, and the State Director of Health Services,
purposes of this chapter and (b) the rules and regulations adopted by or their ddsignated representatives. A majority of the committeo may act
the department, for the committee.
1402Z (a) The State Department of Health Services, after public . (b) For purposes of the State General Obligation Bond Law, the
notice and hearing and with the advice of the department, shall, from Department of Water Resources is designated the "board."
time to time, establish a priority list of projects to be considerdd for 14033. The committee shall determine whether or not it is necessary
or desirable to issue bonds authorized pursuant to this chapter in order
financing.
(b) Notwithstanding subdivision (a) or any other provision of law, to carry out the actions speci~'ed in Section 14011, and, if so, the amount
the priority list established by the State Department of Health Services of bonds to be issued and sold. Successive issues of bonds may be
pursuant to the California Safe Drinking Water Bond Law of 1986
G88 115
authorized and sold to carry out those actions progressively, and it is Investment Accountfrom money received from the sale of bonds for i~he
not necessary that all of the bonds authorized to be issued be sold at any purpose of carrying out this chapter·
time. 14037. All money deposited in the fund which is derived from
14034. There shall be collected each year and in the same manner premium and accrued interest on bonds sold shall be reserved in t'he
and at the same time as other state revenue is collected, in addition to fund and shall be available for transfer to the General Fund as a credit
the ordinary revenues of the state, a sum in an amount required to pay to expenditures for bond interest.
' the principal of, and interest on, the bonds maturing each year, and it 14038. The Legislature hereby finds and declares that, inasmuch as
is hereby made the duty of all officers charged by law with any duty in the proceeds from the sale of bonds authorized by this chapter are t~ot
regard to the collection of the revenue, to do and perform each and "proceeds of taxes" as that term is used in Article XIII B of the
every act which shall be necessary to collect the additional sum. California Constitution disbursement of these proceeds is not subject to
the ?imitations imposed by that article.
14035. Notwithstanding Section 13340 of the Government Code,
there is hereby appropriated from the General Fund in the State 14039. Any bonds issued and sold pursuant to this chapter may be
Treasury, for the purposes of this chapter, an amount that will equal the refunded by the issuance of refunding bonds in accordance with A rticle
total of the following: 6 (commencing with Section 16780) of Chapter 4 of Part 3 of Division
(a) The sum annually necessary to pay the principal of and interest 2 of Title 2 of the Government Code. Approval by the electors of l~he
on, bonds issued and sold pursuant to this chapter, as the principal and state for the issuance of these bonds shall include the approval of any
interest become due and payable, bonds issued to yefundany bonds originally issued or previously iss~ed
refunding bonds.
(b) The sum which is necessary to carry out the provisions of Section
14036, appropriated without regard to fiscal years. 14040. The board may request the Pooled Money Investment Board
14036. For the purposes of carryin~ out this chapter, the Director _of to make a loan from the Pooled Money Investment Account, in
Finance may, by written o~der, authorize the withdrawal from the accordance with Section 16312 of the Government Code, for the
General Fund of an amount or amounts not to exceed the amount of the purposes of carrying out the provisions of this chapter. The amount _of
unsold bonds which' the committee has, by resolution, authorized to be the request shall not exceed the amount of the unsold bonds which ~,he
sold for the purpose of carrying out this chapter. Any amounts committee has by resolution authorized to be sold for the purpose of
withdrawn shall be deposited in the fund to be allocated by the board carrying out this chapter. The board shall execute such documents as are
in accordance with this chapter. Any money made available under this required by the Pooled Money Investment Board to obtain and repay
section shall be returned by the board to the General Fund, plus the the loan. Any amounts loaned shall be deposited in the fund to be
interest that the amounts would have earned in the Pooled Money allocated by the board in accordance with this chapter.
Proposition 82: Text of Proposed Law
Continued from page 21 Budget Act but unencumbered at the end of any year shall automt~ti-
project, program, or facility, cally revert to the General Fund. ,
(3) An agreement by the local agency to proceed expeditiously with, 12879.5. (a) The sum of twenty million dollars ($20,000,000) of i~he
and complete, the eligible project, money in the fund shall be deposited in the Local Water Projects
(4) A provision that there shall be no moratorium or deferment on Assistance Account and shall be available for loans to local agencies to
payments of principal or interest, aid in the construction of eligible projects.
(5) Local agencies seekin~ a loan shall demonstrate, to the satisfac- (b) No eligible project may receive more than five million dollars
tion of the department, that an adequate opportunity for public ($5,000,000) in loans from the department.
participation regarding the loan has been provided. (c) In the administration of this section, the department and i'he
(6) A ny election held with respect to the loan shall include the entire California Water Commission shall give preference to projects involv-
local agency except where the agencTt proposes to accept the loan on in~ the development of new basic water supplies which may include ~:he
behalf of a specified portion, or portions, of the agency, in which case entargement of existing dams and reservoirs, and for projects that will
the e[ection shall be held in that portion or por~ions of the agency only. remedy existing water supply problems. The department and i'he
(7) Annual principal and interest payments shall commence not California Water Commission shall set priority for loans pursuant to
later than one year after completion of any project and all loans shall this section on the basis of the COst effectiveness df the proposed project,
be fully amortized not later than 50 years after project completion, with the most cost-effective projects receiving highest priority.
(8) The recipient of a loan shall establish a dedicated source of (d) If the water supply function of a dam and reservoir facility is
revenue for repayment of the loan. · operationally limited or eliminated for dam safety purposes, pursur~nt
(9) Any loans made pursuant to this chapter may be for a period o_f to Part 1 (commencing with Section 6000) of Division 3, the department
up to 20 years. The interest rate for the loans made for projects to tSe and the Cal(fornia Water Commission may give consideration to
funded pursuant to Section 12879.5 shall be set at a rate equal to the projects which would rehabilitate the dam and reservoir for water
interest rate paid by the state on the most recent sale of state general supply purposes. The rehabilitation of facilities may include compa.ra-
obligation bonds, with that rate to be computed according to tT~e true ble replacement facilities.
interest cost method. The interest rate for loans made for projects to be (e) A copy of each application for a loan pursuant to this section
funded pursuant to Section 12879.6 shall be set at a rate equal to 50 shall be transmitted by the department to the Department offish and
percent of the interest rate paid by the state on the most recent sale of Game, the Department of Parks and Recreation, and the State Water
state general obligation bonds, with that rate to be computed according Resources Control Board. A report on each application shall be prepared
to the true interest cost method. When the interest rate so determined is by the department and submitted to the Legislature, together with ~e
not a multiple of one-tenth of 1 percent, the interest rate shall be set at comments of those agencies to which the application was transmitt.~d.
the next higher multiple of one-tenth of 1 percent. The interest rate set In the report, the department shall make findings as to the nature a~d
fo_r each contract shall be applied throughout the repayment period of extent of the statewide interest in the project, the urgency of the new,d,
the contract. There shall be a level annual repayment of principal an~d and the engineering feasibili~, economic justification, and financial
interest on the loans. The amount of the principal shall include the feasibility of the project.
administrative fee described in subdivision (b). (f) Not later than January 31, 1990, and each year thereafter, 1~he
(d) All loans made pursuant to this chapter shall be subject to the department shall submit to the Legislature an annual report on .all
approval of the Legislature by statute, loans made pursuant to this chapter. The report shall cover loans made
(e) Applications for loans or financial participation by the state by the department during the previous calendar year.
under this chapter shall be made to the department in the form and (g) The department shall not make loans pursuant to this section for
with the supporting material as may be prescribed by the ddpartment, otherwise eligible projects whose benefits are more than 50 percent
derived from hydroelectric generation, as determined by the depart-
(f) All money repaid to the state pursuant to any contract executed
under this chapter, or under Section 13999.11, shall be deposited in the ment.
General Fund as reimbursement fo_r payment of principal and interest (h) The department may make loans to local agencies, at the interest
on bonds authorized to be issubd under this chapter or Chapter 15 rates authorized pursuant to this chapter and pursuant to any terms
and conditions as may be determined necessary by the department, for
(commencing with Section 13999) that have been paid from the General the purposes of financing feasibility studies of projects potentia!!y
Fund.
(g) As approved annually by the Legislature in the Budget Act, the eligible for fun-ding pursuant to this section. No single potential proj~,ct
department, notwithstanding subdivision (b), may expend money shall be eligible to receive more than five hundred thousand dollars
repaid to the state pursuant to any contract executed pursuant to this ($500,000), and not more than 10 percent of the total amount of bonds
authorized to be expended for purposes of this section may be expended
chapter as necessary for the administration of contracts entered into by
the department pursuant to this chapter. However, the expenditures for those purposes.
may not in any year exceed 1.5 percent of the amount repaid to the state 12879.6. (a) The sum of fo_ rty million dollars ($40,000,000) of the
in that year. Charges incurred blt the Attorney General in protecting lhe money in the fund shall be deposited in the Water Conservation a:~d ·
state's interests in the use andrepayment of funds pursuant to this Groundwater Recharge Account and shall be available for appropria-
chapter may be paid by the departmentfrom these funds. However, the tion by the L~.gislature for loans to local agencies to aid in the
charges may not exceed 0.5 percent of the amount repaid to the state in acquisition anct construction of voluntary, cost-effective capital outlay
that year. Any of the foregoing sums approved by the Legislature in the water conservation programs and groundwater recharge facilities.
116 C~88
(b) No eligible project may receive more than five million dollars 12879.14. All money deposited in the fund which is derived from
(85,000,000) in loans fro_m the department. . _ premium and accrued interest on bonds sold shall be reserved in the
(cJ The department shall set priority for loans under this section for fund and shall be available for transfer to the General Fund as a credit
voluntary, cost-effective capital outlay water conservation programs on to expenditures for bond interest.
12879.15. Any bonds issued and sold pursuant to this chapter may
the basis of the cost effectiveness of theproposed project, with the most be refunded by the issuance of refunding bonds in accordance with
cost-effective projects receiving the highest priority.
(dj-The department shall set priority for loans under this section for Article 6 (comme. ncing with Section 16780) of Chapter 4 of Part 3 of
groundwater recharge facilities for projects in overdraft~d groundwater Division 2 of Title 2 of the Government Code. Approval by the electors
basins and those projects in critical need, for projects whose feasibility of the state for the issuance of these bonds shall include the approval of
studies show the greatest economic justification and the greatest any bonds issued to refund any bonds originally issued or previously
engineering and hydrogeologic feasibility, as determined by the depart- issued refunding bonds.
12879.16. The board may request the Pooled Money Investment
ment, and for projects located in areas which have existing water Board to make a loan from the Pooled Money Investment Account, in
management programs.
(e) The department may make loans to local agencies, at the interest accordance with Section 16312 of the Government Code, for the
rates authorized pursuant to this chapter and under any terms and purposes of carrying out this chapter. The amount of the request shall
conditions as may be determined necessary by the department, for the ' not exceed the amount of the unsold bonds which the committee has.by
purposes of financing feasibility studies of projects potentially eligible resolution authorized to be sold for the purpose of carrying out tt~is
for funding pursuant to this section. No single potential project shall be chapter. The board shall execute such documents as are required by the
eligible to receive more than one hundred thousand dollars ($100,000), Pooled Money Investment Board to obtain and repay tl~e loan. Any
and not more than 3 percent of the total amount o£ bonds authorized to amounts loaned shall be deposited in the fund to be allocated by the
be expended for the purposes of this section may be expended for these board in accordance with this chapter.
12879.1Z The Legislature hereby finds and declares that, inasmuch
purposes, as the proceeds from the sale of bonds authorized by this chapter are not
Article 3. Fiscal Provisions "~roceeds of taxes" as that term is used in Article XIII B of the
California Constitution, the disbursement of these proceeds is not
subject to the limitations imposed by that article.
12879. Z Bonds in the total amount of sixty million dollars
($60,000,000), exclusive of refunding bonds issued pursuant to Section
12879.15, or so much thereof as is necessary, may be issued and sold to SEC. 2. Section 13459 of the Water Code is amended to read:
provide a fund to be used for carrying out the purposes expressed in this 13459. (a) The sum of seventy-five million dollars ($75,000,000) of
chapter and to be used to reimburse the General Obligation Bond the money in the fund shall be deposited in the Agricultural Drainage
Water Account is appropriated for expenditure in the 1986-87 fiscal year
Expense Revolving Fund pursuant to Section 16724.5 of the Government
Code. All bonds herein authorized, which have been duly sold and for loans to agencies to aid in the construction of drainage water
delivered as herein provided, shall constitute valid and legally binding management units for the treatment, storage, or disposal of agricultural
general obligations of the State of California, and the full faith and drainage water and the purposes set forth in this section. The board may
loan an agency up to 100 percent of the total eligible costs of design and
credit of the State of California is hereby pledged for the punctual construction of an eligible project. Loans made in the 1986-87 fiscal year
payment of both principal and interest thereof
may not be authorized sooner than 30 days after notification in writing
12879.8. The bonds authorized by this chapter shall be prepared, of the necessity therefor to the chairperson of the committee in each
executed, issued, sold, paid, and redeemed as provided in the State house which considers appropriations, to the policy committee of the
General Obligation Bond Law (Chapter 4 (commencing with Section Assembly as designated by the Speaker of the Assembly and the policy
16720) of Part 3 of Division 4 of Title 2 of the Government Code), and committee of the Senate designated by the Senate Rules Committee,
all of the provisions of that law apply to the bonds and to this chapter
and are hereby incorporated in this chapter as though set forth in full and the Chairperson of the Joint Legislative Budget Committee.
in this chapter. (b) Any contract for an eligible project entered into pursuant to this
12879.9. (a) Solely for the purpose of authorizing the issuance and section may include such provisions as determined by the board and
sale, pursuant to the State General Obligation Bond Law, of the bonds shall include, in substance, all of the following provisions:
authorized by this chapter, the Water Conservation Finance Committee (1) An estimate of the reasonable cost of the eligible project.
is hereby created. For purposes of this chapter, the Water Conservation (2) An agreement by the agency to proceed expeditiously with, and
Finance Committee is "the committee" as that term is used in the State complete, the eligible project; commence operation of the containment
General Obligation Bond Law. The committee consists of the Governor, structures or treatment works upon completion and to properly operate
the Controller, the Treasurer, the Director of Finance, the Director of and maintain the works in accordance with applicable provisions of law;
Water Resources, and the Chairperson of the California Water Corn- provide for payment of the agency's share of the cost of the project,
mission, or their designated representatives. A majority of the commit- including principal and interest on any state loan made pursuant to this
tee may act for the committee.
(b) For purposes of the State General Obligation Bond Law, the sectiOn;secure federaland' ifassistanceappropriate,for theapplYstate-assistedf°r and makeproject.reasonable efforts to
Department of Water Resources is designated the "board." (c) All loans pursuant to this section are subject to all of the following
12879.10. The committee shall determine whether or not it is provisions:
necessary or desirable to issue bonds authorized pursuant to this (1) Agencies seeking a loan shall demonstrate, to the satisfaction of
chapter in order to carry out the actions specified in Sections 12879.5 the board, that an adequate opportunity for public participation
and12879.6, and, if so, the amount of bond~ to be issued and sold. regarding the loan has been provided.
Successive issues of bonds may be authorized and sold to carry out those (2) Any election held with respect to the loan shall include the entire
actions progressively, and it is not necessar~ that all of the bonds agency except where the agency proposes to accept the loan on behalf
authorized to be issued be sold at any one time. of a specified portion, or portions, of the agency, in which case the
12879.11. There shall be collected each year and in the same manner referendum shall be held in that portion or portions of the agency only.
and at the same time as other state revenue is collected, in addition to (3) Loan contracts may not provide a moratorium on payment of
the ordinary revenues of the state, a sum in an amount required to pay principal or interest.
the principal of, and interest on, the bonds maturing each year, and all (4) Loans shall be for 'a period of up to 20 years ~ m~ ~ rate
officers required by law to perfqrm any duty in regard to the collection ~ .... ;~ b~ t4~ .... ~ f~ 15e~me~ ~f t4~ ................. ~, .... b~
oJ state revenues shall collect that additional sum ..... :
12879.12. Notwithstanding Section 13340 of the Government Code, ~ e~.c,~ter. The interest rate for the loans shall be set at a rate equal
there is hereby appropriated from the General Fund in the State to 50 percent of the interest rate paid by the state on the most recent sale
Treasury, for the purposes of this chapter, an amount that will equal the of state general obligation bonds, with that rate to be computed
total of the following: according to the true interest cost method. When the interest rate so
(a) The sum annually necessary to pay the principal of, and interest determined is not a multiple of one-tenth of 1 percent, the interest rate
on, bonds issued and sold pursuant to this chapter, as the principal and shall be set at the next higher multiple of one-tenth of 1 percent. The
interest become due and payable, interest rate set for each contract shallbe applied throughout the
contract's repayment period. There shall be a level annual repayment of
principal and interest on loans.
(b) The sum which is necessary to carry out the provisions of Section
12879.13, appropriated without regard to fiscal years.
12879.13. For the purposes of carrying out this chapter, the Director (5) The board in considering eligible projects shall give preference to
of Finance may, by executive o~der, authorize the withdrawal from the technologies which treat drainage water where the board finds that the
General Fund of an amount or amounts not to exceed the amount ~f the technology is readily available and economically feasible for the agency.
unsold bonds which the committee has, by resolution, authorized to be (6) No single project may receive more than twenty million dollars
($20,000,000) in loan proceeds from the board.
(d) The board may make loans to local agencies, at the interest rates
sold for the purpose of carrying out this chapter. Any amounts
withdrawn shall be deposited in the fund to be allocated by the board
in accordance with this chapter. Any money made available under this authorized under this section and under any terms and conditions as
section to the board from money received from the sale _of bonds for the may be determined necessary by the board, for purposes of financing
purpose of carrying out this chapter shall be returned to the General feasibility studies of projects potentially eligible for funding under this
Fund plus the interest that the amount would have earned in the Pooled section. No single potential project shall be eligible to receive more than
Money Investment Account. one hundred thousand dollars ($100,000), and ndt more than 3 percent
G88 117
of the total amount of bonds authorized to be expended for purposes of the money in the fund shall be deposited in the Water Reclamation
this section may be expended for this purpose. A loan for a feasibility Account and is appropriated for loans to municipalities for ehgible
study shall not decrease the maximum amount of any other loan which water reclamation projects which will provide water for beneficial uses.
may be made under this section. The board may loan a municipality up to 100 percent of the total
SEC. 3. Section 13999.3 of the Water Code is amended to read: eligible costs of design and construction of a reclamation project.
13999.3. (a) There is in the State Treasury the 1984 State Clean (b) Any contract'for an eligible water reclamation project entered
Water Bond Fund, which fund is hereby created. There shall be into pursuant to this section may include such provisions as determined
established in the fund a Clean Water Construction Grant Account for by the board and shall include both of the followingprovisions:
the purpose of implementing Section 13999.8, a Small Communities (1) An estimate of the reasonable cost of the eligible water reclama-
Assistance Account for the purpose of implementing Section 13999.9, a tion project.
Water Reclamation Account for the purpose of implementing Section (2) An agreement by the municipality to proceed expeditiously with,
13999.10 and a Water Conservation Account for the purpose of imple- and complete, the eligible water reclamation project; commence oper-
menting Section 13999.11. ation of the project in accordance with appIicable provisions of law;
(b) From time to time, the board m~y modify existing accounts in the provide for payment of the municipality's share of the cost o:[ the
fund, or may establish other accounts in the fu_nd, and in all other bond project, including principal- and interest on any state loan made
funds administered by the board, which the board determines are pursuant to this section; and, if appropriate, apply for and make
appropriate or necessary for proper administration, reasonable efforts to secure federal assistance, other than that avai.lable
SEC. 4. Section 13999.5 of the Water Code is amended to read: pursuant to the federal Clean Water Act, for the state-assisted project.
13999.5. (a) The committee is hereby authorized and empowered (c) Loan contracts may not provide for a moratorium 6n payme~ts of
to create a debt or debts, liability or liabilities, of the State of California, principal or interest.
in the aggregate amount of three hundred twenty-five million dollars (d) (1) Any loans made from the Water Reclamation Account shall
($325,000,000), in the manner provided in this chapter. The debt or be for a penodof up to 25 years ,,:~_ a~: .... rc~ rc,~c ~ annuc,~.y
debts, liability or liabilities, shallbe created for the purpose of providing ~c,r~ a~ ~/~ ~crccn~ of t-he a~a. ge ~ rr, tc pa~d by the st-a~e
the fund to be used for the object and work specified in this section and ...... , ^~,,.._~.~_ t,~_,a~ . ~,^_,a .... · ~. ~ , ·
in Sections 13999.6, 13999.8, 13999.9, 13999.10, 13999.11, and 13999.14. t-he ;,'car i~ ;;'~i~h t4~e ~ agrccmcnt i~ cxccutcd. ~ti prlnclpa'~
(b) The board is authorized to enter into contracts with municipal- : .......r_~_, ..... ~,~,, ........ n x,~ ....~,
ities having authority to construct, operate, and maintain treatment f~e nc',;' lemans. The interest rate for the loans shall be set at a rate equal
works and reclamation projects, for grants and loans to the'municipal- to SO percent of the interest rate paid by thestateon the most recent sale
ities to aid in the construction of eligible projects and eligible water of state general obligation bonds, with that rate to be computed
reclamation projects and may adopt rules and regulations necessary to according to the true interest cost method. When the interest rr~,te so
carry out the provisions of this chapter, determined is not a multiple of one-tenth of 1 percent, the interest rate
(c) As approved by the Legislature annually in the Budget Act, the shall be set at the next higher multiple of one-tenth of 1 percent.
board may, by contract or otherwise, undertake plans, surveys, research, (2) All principal and interest from loans shall be returned to the
development, and studies necessary, convenient, or desirable to carry Water Reclamation Account for new loans.
out. the purposes of this division, and may prepare recommendations (e) Funds available under this section may be used for loans pursuant
with regard thereto, including the preparation of comprehensive to subdivisions (f), (g), and (h) of Section 13999.8 if the Clean Water
statewide or areawide studies and reports on the collection, treatment, Construction Grant Account is depleted. All principal and interest on
and disposal of waste under a comprehensive cooperative plan. any such loans shall be repaid to the Water Reclamation Account.
(d) As approved by the Legislature annually in the Budget Act, the (f) No single project may receive more than ten million dollars
board may expend bond funds necessary for administration of this .($10,000,000) from the board.
chapter. SEC. 6. Section 13999.17 is added to the Water Code, to read:
(e) Not morethan 5 percent of the m~y~i~t-he fund total 13999.17. (a) Notwithstanding an~ other provision of this chapter
and to the extent permitted by federa[ and state law, the money in the
usedam°unt°ftheb°ndsauth°rizedt°beissuedun'derthischaptermaybefor purposes of subdivisions (c) and (d). fund may be used to rebate to the federal government all arbitrage
(f) As approved by the Legislature annually in the Budget Act, the profits required by the Federal 7~ax Reform Act of 1986 or any
department may direct grants and loans to any public agency or, by amendment thereof or supplement thereto. To the extent that the money
contract or otherwise, undertake plans, surveys, research, development, in the fund may not be used for that purpose due to restraints of federal
and studies 'necessary, convenient, or desirable to carry out voluntary, or state law, any rebates required shall be paid from the General .Fund
cost-effective capital outlay water conservation programs, or fr_om other sources as required by the Legislature.
(g) The boaramay expend funds necessary to reimburse the General (b) Notwithstanding any other provision of law, rule, or regulation,
Obligation Bond Expense Revolving Fund pursuant to Section 16724.5 the board may enter into contracts, or procure those services and
of the Government Code. equipment, which may be necessary to ensure prompt and complete
SEC. 5. Section 13999.10 of the Water Code is amended to read: compliance'with any provisions relating to the fund imposed by cither
13999.10. (a) The sum of twenty-five million dollars ($25,000,000) of the Federal Tax Reform Act of 1986 or the federal act.
Proposition 83: Text of Proposed Law ' (d) Any contract entered into pursuant to this section may include
Continued from page 25 such provisions as may be determined by the board, provided that any
Clean Water Act. contract shall include the following provisions..
(1) An estimate of the reasonable cost of the eligible project.
Article 2. Clean Water and Water Reclamation Bond Program (2) An agreement by the small community to proceed expeditiousl~t
14055. (a) The prockeds of bonds issued and sold pursuant to this with, and complete, the proposed eligible project, commence operatio~
chapter shall be deposited in the State Treasury to the credit 9f the 1988 of the treatment works upon completion, and to properly operate and
Clean Water and Water Reclamation Fund which is hereby created, maintain the works in accordance with applicable provisibns of law.
There shall be established in the fund a ~mall Communities Grant (e) Small communities eligible for a state grant may also appA? for
Account for the purpose of implementing Section 14056 and a Wate~ a loan from the State Water Pollution Control Revolving Fund for¥osts
Reclamation Account for the purpose of implementing Section 14058. hot covered by the grant.
(b) From time to time, the board may modify existing accounts in 14057. The sum often million dollars ($10,000,000) of the money in
the fund, br may establish other accounts in the fund, and in all other the fund shall be available for transfer by the board to the Clean Water
bond funds administered by the board, which the board determines are Bond Guarantee Fund and-shall be available to the board to guar6mtee
appropriate or necessary for proper administration, local agency bond issues pursuant to Article 2.5 (commencing with
14056. (a) The sum of twenty-five million dollars ($25,000,000) of Section 13425) of Chapter 6. After January 1, 1990, the board may
the money in the fund shall be deposited in the Small Communities transfer any funds in the Clean Water Bond Guarantee Fund which
Grant Account and, notwithstanding Section 13340 of the Government have not been committed to guaranteeing local agency bond issues to
the 1988 Clean Water and Water Reclamation Fund.
Code, is hereby continuously appropriated fqr state grants to small
communities for construction of treatment works eligible for assistance 14058. (a) The sum of thirty million dollars ($30,000,000) of the
under Title lTI ofthefederalact, money in the fund shall be deposited in the Water Reclamation
(b) The board may enter into grant contracts in accordance with this Account and, notwithstanding Section 13340 of the Government (~oode,
is hereby continuously appropriated to the board for the purpos~s of
section with qualifying small communities havin6 authority to con-
struct, operate, and maintain treatment works to aict in the construction this section.
of eligible projects. (b) The board may enter into contracts with local public age~cies
(c) The board may make grants to small communities in an amount having authority to construct, operate, and maintain water reclamation
on a sliding scale, based on a community's ability to pay not to exceed projects, for loans to aid in the design and construction of eligible water
97~ percent of the total estimated cost of pollution stu~ties, planning, reclamation projects. The board may loan up to lOOpercent of the total
design, and construction determined in accordance with applicable eligible cost of design and construction of an eligible reclamation
state laws and regulations. Total state assistance under this section shall project.
not exceed two million dollars ($£,000,000) for any single eligible (c) Any contract for an eligible water reclamation project en1:ered
project, into pursuant to this section may include such provisions as determined
118 G88
by the board and shall include both of the fo_ llowing provisions: on, bonds issued and sold pursuant to this chapter, as the principal and
(1) An estimate of the reasonable cost of the eligible water reclama- interest become due and payable.
tion project. (b) The sum which is necessary to carry out the provisions of Section
(2) An agreement by the local public agency to proceed expedi- 14071, appropriated without regard to fiscal years.
tiously with, and complete, the eligible water reclamation project,. 14071. For the purposes of carrying out this chapter, the Director of
commence operation of the project in accordance with applicable Finance may authorize the withdrawal from the General Fund of an
provisions of law, and provide for the payment of the local public amount or amounts not to exceed the amount of the unsold bonds which
agency's share of the cost of the project, including principal and have been authorized by the committee to be sold for the purpose of
interest on any state loan made pursuant to this section, carrying out this chapter. Any amounts withdrawn shall be deposited
(d) Loan contracts may not provide_for a moratorium on payments in the fund. Any money made available under this section shall be
of principal or interest, returned to the General Fund plus the interest that the amounts would
(e) Any loans made from the fund may be for a period of up to 20 have earned in the Pooled Money Investment Account from money
years. The interest rate for the loans shall be set at a rate equal to 50 received from the sale of bonds for the purpose of carrying out this
percent of the interest rate paid by the state on the most recent sale of chapter.
state general obligation bonds, with that rate to be computed according 14071.5. The board may request the Pooled Money Investment Board
to the true interest cost method. When the interest rate so determined, is to make a loan from the Pooled Money Investment Account, in
accordance with Section 16312 of the Government Code for the
not a multiple of one-tenth of l percent, the interest rate shall be set at purposes of carrying out this chapter. The amount of the request shall
the next higher, multiple of one-tenth of I percent.
(f) All money repaid to the state pursuant to any contract executed not exceed-the amount of the unsold bonds which the committee has, by
resolution, authorized to be sold for the purpose of carrying this
under this chapter shall be deposited in the General Fund as reimburse-
chapter. The board shall execute those documents required by the
ment for the payment 9f principal and interest on bonds authorized to Pooled Money Investment Board to obtain and repay the loan. Any
be issued under this chapter.
14059. As approved by the Legislature annually in the Budget Act, amounts loaned shall be deposited in the fund to be allocated by the
the board may expend for the administration of this chapter not more board in accordance with this chapter.
14072. All money deposited in the fund which is derived from
than 5 percent of the amount of the bonds authorized to be issued under premium and accrued interest on bonds sold shall be reserved in the
this chapter. '
14060. As approved by the Legislature annually in the Budget Act, fund and shall be available for transfer to the General Fund as a credit
to expenditures for bond interest.
the board may, by contract or otherwise, undertake plans, surveys, 14073. The bonds may be refunded in accordance with Article 6
research, development, and studies necessary, convenient, or desirable
to carry out the purposes of this division, and may prepare recommen- (commencing with Sect~'on 16780) of the State General Obligation Bond
dations with regard thereto, including the preparation of comprehen- Law.
sire statewide or areawide studies and reports on water reclamation and
14074. (a) Notwithstanding any other provision of this chapter
and to the extent permitted by federal and state law, the money in the
the collection, treatment, and disposal of was'te under a comprehensive fund may be used to rebate to the federal government all arbitrage
cooperative plan. profits required by the Federal Tax Reform Act of 1986 or any
14061. The board may adopt rules, regulations, and guidelines amendment thereof or supplement thereto. To the extent that the money
necessary or appropriate to carry out this chapter, in the fund may not be used for that purpose due to restraints of federal
Article 3. Fiscal Provisions or state law, any rebates required shall be paid from the General Fund
14065. Bonds in the total amount of sixty-five million dollars or other sources as the Legislature may require.
($65,000,000), exclusive of refunding bon-ds, or so much thereof as is (b) Notwithstanding any other provision of law, or rule or regula-
necessary, may be issued and sold to provide a fund to be used for' tion, the board may enter into contracts, or procure those services and
carrying out the purposes expressed in this chapter and to be used to equipment, which may be necessary to ensure prompt and comlSlete
reimburse the General Obligation Bond Expense Revolving Fund compliance with any provisions relating to the fund imposed by either
pursuant to Section 16724.5 of the Government Code. The bonds shall, the Federal Tax Reform Act of 1986 or the federal act.
when sold, be and constitute a valid and binding obligation of the State 14075. The Legislature hereby finds and declares that, inasmuch as
oflC California, and the full faith and credit of the State of California is the proceeds from the sale of bonits authorized by this chapter are not
hereby pledged fdr the punctual payment of both principal _of, and "proceeds of taxes" as that term is used in Article XIII B of the
interest on, the bonds as the principal and interest become dui and California Constitution, the disbursement of these proceeds is not
payable, subject to the limitations imposed by that article.
14066. The bonds authorized by this chapter shall be prepared, SEC. 3. Section 13459 of the Water Code is amended to read:
executed, issued, sold, paid, and redeemed as provided in the State 13459. (a) The sum of seventy-five million dollars ($75,000,000) of
General Obligation Bond Law (Chapter 4 (commencing with Section the money in the fund shall be deposited in the Agricultural Drainage
16720) _of Part 3 of Division 4 of Title 2 of the Government Code), and Water Account is appropriated for expenditure in the 1986-87 fiscal year
all of the provisions of that law apply to the bonds and to this chapter for loans to agencies to aid in the construction of drainage water
and are hereby incorporated in this chapter as though set forth in full management units for the treatment, storage, or disposal of agricultural
in this chapter, drainage water and the purposes set forth in this section. The board may
14067. (a) Solely for the purpose of authorizing the issuance and loan an agency up to 100 percent of the total eligible costs of design and
sale, pursuant to the State General Obligation Bond Law, of the bonds construction of an eligible project. Loans made in the 1986-87 fiscal year
authorized by this chapter, the Clean Water and Water Reclamation may not be authorized sooner than 30 days after notification in writing
Fi~nance Committee is hereby created. For purposes o~f this chapter, the of the necessity therefor to the chairperson of the committee in each
Clean Water and Water Reclamation Finance committee is "the house which considers appropriations, to the policy committee of the
com~nittee" as that term is used in the State General Obligation Bond Assembly as designated by the Speaker of the Assembly and the policy
Law. The committee consists of the Governor, the Controller, the
committee of the Senate designated by the Senate Rules Committee,
Treasurer, the Director of Finance, and the Executive Director of the and the Chairperson of the Joint Legislative Budget Committee.
State Water Resources Control Board, or their designated representa- (b) Any contract for an eligible project entered into pursuant to this
tires. A majority of the committee may act for the committee, section may include such provisions as determined by the board and
(b) For purposes of the State General Obligation Bond Law, the shall include, in substance, all of the following provisions:
State Water Resources Control Board is designated the "board." (1) An estimate of the reasonable cost of the eligible project.
14068. Consistent with Section 602 of the federal act, the committee (2) An agreement by the agency to proceed expeditiously with, and
shall determine whether or not it is necessary or desirable to issue bonds complete, the eligible project; commence operation of the containment
authorized pursuant to this chapter in orcter to carry out the actions stru. ctures or treatment works upon. completion and to properly operate
specified in Sections 14056, 14057, 14058, 14059, and 14060, and, if so, the and maintain the works in accordance with applicable provisions of law;
amount of bonds to be issued and sold. Successive issues of bonds may provide for payment of the agency's share of the cost of the' project,
be authorized and sold to carry out those actions progressively, and it is including principal and interest on anystate loan made pursuant to this
not necessary that all of the bonds authorized to be issued be sold at any section; and, if appropriate, apply for and make reasonable efforts to
one time. secure federal assistance for the state-assisted project.
14069. There shall be collected each year and in the same manner (c) All loans pursuant to this section are subject to.all of the following
and at the same time as other state revenue is collected, in addition to provisions:
the ordinary revenues of the state, a sum in an amount required to pay (1) Agencies seeking a loan shall demonstrate, to the satisfaction of
the principal of, and interest on, the bonds each year, and it is the duty the board, that an adequate opportunity for public participation regard-
of all officers charged by law with any duty in regard to the collection ing the loan has been provided.
of the revenue to do and perform each and every act which is necessary (2) Any election held with respect to the loan shall include the entire
to collect that additional sum.
a~ency except where the agency proposes to accept the loan on behalf
14070. Notwithstanding Section 13340 of the Government Code, oF a specified portion, or portions, of the ~gency, in which case the
there is hereby appropriated from the General Fund in the State referendum shall be held in that portion or portions of the agency only.
Treasury, for the purposes of this chapter, an amount that will equal the (3) Loan contracts may not provide a moratorium on payment of
total of the following: · principal or interest.
(a) The sum annually necessary to pay the principal of, and interest (4) Loans shall be for a period of up to 20 years ...... ~m ........ rate
G88 119
....... ~--"~ .... a~r~0--- oft~ e¢ r by (g) The board may expend funds necessary to reimburse the General
t-he .. uc in.crc:, c~:. mct..c~ o~ ~c~n~: mc~:. ~ i::uc- pursuan, t~. Obligation Bond Expense Revolving Fund pursuant to Section 16724.5
tahi~ eha~cr. The interest rate for the loans shall be set at a rate equat of the Government Code.
to 50 percent of the interest rate paid by the state on the most recent sale SEC. 6. Section 13999.10 of the Water Code is amended to read:
of state general obligation bonds, with that rate to be computed 13999.10. (a) The sum of twenty-five million dollars ($25,000,000) of
according to the true interest cost method. When the interest rate so the money in the fund shall be deposited in the Water Reclamation
determined is not a multiple of one-tenth of l percent, the interest rate
Account and is appropriated for loans to municipalities for eligible
shall be set at the next higher multiple of one-tenth of 1 percent. The water reclamation projects which will provide water for beneficial uses.
interest rate set for each contract shall be applied throughout the The board may loan a municipality up to 100 percent of the to~:al
contract's repayment period. There shall be a level annual repayment of eligible costs of design and construction of a reclamation project.
principal and interest on loans. ' (b) Any contract for an eligible water reclamation project entered
(5) The board in considering eligible projects shall give preference to into pursuant to this section mayinelude such provisions as determined
by the hoard and shall include both of the followingprovisions:
technologies which treat drainage water where the board finds that the (1) An estimate of the reasonable cost of the eligible water reclama-
technology is readily available and economically feasible for the agency, tion project.
(6) No single project may receive more than twenty million dollars (2) An agreement by the municipality to proceed expeditiously width,
($20,000,000) in loan proceeds from the board, and complete, the eligible water reclamation project; commence oper-
(d) The board may make loans to local agencies, at the interest rates ation of the project in accordance with applicable provisions of law;
authorized under this section and under any terms and conditions as provide for payment of the municipality's share of the cost of the
may be determined necessary by the board, forpurposes of financing project, including principal and interest on any state loan made
feasibility studies of projects potentially eligible for funding under this pursuant to this section; and, if appropriate, apply for and make
section. No single potential project shall be eligible to receive more than reasonable efforts to secure federal assistance, other than that available
one hundred thousand dollars ($100,000), and not more than 3 percent pursuant to the federal Clean Water Act, for the state-assisted project.
of the total amount of bonds authorized to be expended for purposes of (c) Loan contracts may not provide for a moratorium on payments~of
this section may be expended for~this purpose. A loan for a feasibility
study shall not decrease the maximum amount of any other loan which
principal or interest.
(d) (1) Any loans made from the Water Reclamation Account shall
may be made under this section, be for a periodof up to 25 years ~ ~a~ into. rest ~ se~ ~ by'he
SEC. 4. Section 13999.3 of the Water Code is amended to read: ..... ~ 50 p ....... o~ the ~ ~ ~ paid by t-he .....
13999.3. (a) There is in the State Treasury the 1984 State Clean ~ c,~.:g~.c,n bo~ie m ~ ......... · ................ ·
Water Bond Fund, which fund is hereby created. There shall be t-he ~ ~. m ........ t-he ...... ~ ..........~s ......... A4~ t~ ...... t-~-
established in the fund a Clean Water Construction Grant Account for ........ r..~_ ~ ..... t.~n ........ .~ ,m .... r~_~ ....... ~,
......................... be ......... ~ot4~ ............................
the purpose of implementing Section 13999.8, a Small Communities ~ ~ !~,r,n:. The interest rate for the loans shall be set at a rate equal
Assistance Account for the purpose of implementing Section 13999.9, a to 5O percent of the interest rate paid by the'stateon the most recent sale
Water Reclamation Account for the purpose of implementing Section of state general obligation bonds, with that rate to be compm~ed
13999.10 and a Water Conservation Account for the purpose of imple- according to the true.interest cost method. When the interest rate so
menting Section 13999.11. determined is not a multiple of one-tenth of I percent, the interest rate
(b) From time to time, the board may modi[y existing accounts in the shall be set at the next higher multiple _of one-tenth of 1 percent.
fund, or may establish other accounts in the fu_nd, and in all other bond (£) All principal and interest from loans shall be returned to ~!he
funds administered by the board, which the board determines are Water Reclamation Account for new loans.
appropriate or necessary for proper administration. (e) Funds available under this section may be used for loans pursuant
SEC. 5. Section 13999.5 of the Water Code is amended to read:
to subdivisions (f), (g), and (h) of Section 13999.8 if the Clean Water
13999.5. d(a)teb The committee is hereby authorized and empowered Construction Grant Account is depleted. All principal and interest on
to create a or debts, liability or liabilities, of the State of California, any such loans shall be repaid to the Water Reclamation Account.
in the aggregate amount of three hundred twenty-five million dollars (f) No single project may receive more than ten million dollars
($325,000,000), in the manner provided in this chapter. The debt or ($10,000,000) from the board.
debts, liability or liabilities, shallbe created for the purpose of providing SEC. 7. Section 13999.17 is added to the Water Code, to read:
the fund to be used for the object and work specified in this section and
13999.17. (a) Notwithstanding any other provision of this chapter
in Sections 13999.6, 13999.8, 13999.9, 13999.10, 13999.11, and 13999.14. and to the extent permitted by federal and state law, the money in ;the
(b) The board is authorized to enter into contracts with' municipal- fund may be used to rebate to the federal government all arbitrage
ities having authority to construct, operate, and maintain treatment profits required by the Federal Tax Reform Act of 1986 or any
works and reclamation projects, for grants and loans to the municipal- amendment thereof or supplement thereto. To the extent that the money
ities to aid in the construction of eligible projects and eligible water in the fund may not be used for that purpose due to restraints of federal
reclamation projects and may adopt rules and regulations necessary to or state law, any rebates required shall be paid from the General Fund
carry out the provisions of this chapter, or from other sources as required by the Legislature.
(c) As approved by the Legislature annually in the Budget Act, the (b) Notwithstanding any other provision of law, or rule or regula-
board may, by contract or otherwise, undertake plans, surveys~, research, tion, the board may enter into contracts, or procure those services and
development, and studies necessary, convenient, or desiranle to carry equipment, which may be necessary to ensure prompt and complete
out the purposes of this division, and may prepare recommendations compliance with any provisions relating to the fund imposed by city,er
with regard thereto, including the preparation of comprehensive the Federal Tax Reform Act of 1986 or the federal act.
statewide or areawide studies and reports on the collection, treatment, SEC. 8. Section 13999.18 is added to the Water Code, to read:
and disposal of waste under a comprehensive cooperative plan. 13999.18. Notwithstanding any other provision of this chapter, and
(d)' As approved by the Legislature annually in the Budget Act, the as approved by the Legislature, the board malt share in the cost of the
board may expend bond funds necessary for administration of this construction of treatment works under subdivision (b)of Section 510o_f
chapter, the Federal Water Quality Act of 1987. That participation may be
(e) Not more than 5 percent of the mo~e~ d~ i~ t-he fund total approved only if the board determines that treatment works in Mex;ico,
amount of the bonds authorized to be issued under this chapter may be in conjunction with any defensive treatment works constructed under
used for purposes of subdivisions (c) and (d). the Federal Water Pollution Control Act, are not sufficient to protect the
(f) As approved by the Legislature annually in the Budget Act, the residents of the City of San. Diego and surrounding areas, including
department may direct grants and loans to any public agency or, by Imperial County, from water pollution originating in Mexico. No
contract or otherwise, undertake plans, surveys, research, development, project in which the board participates shall receive more than ten
and studies necessary, convenient, or desirable to carry out voluntary, million dollars ($10,000,000) in loan proceeds from the board.
cost-effective capital outlay water conservation programs.
Proposition 84: Text of Proposed Law
Continued from page ~9
Pooled Money Investment Account, from money received from the sale board in accordance with this chapter.
of bonds for thepurpose of carrying out this part. 53177. All money deposited in the fund which is derived from
53176.5. The board may request the Pooled Money Investment Board premium and accrued interest on bond* sold shall be reserved in the
to make a loan from the Pooled Money Investment Account, in fund and shall be availablefor transfer to the General Fund as a credit
accordance with Section 16312 of the Government Code, for purposes of to expenditures for bond interest.
carrying out the provisions of this chapter. The amount of the request 53178. The Legislature hereby finds and declares that, inasmuch as
shall not exceed the amount of unsold bonds which the committee has the proceeds from the sale of bonds authorized by this part are not
by resolution authorized to be sold for the purpose of carrying out this "proceeds of taxes" as that term is used in Article XIII B of the
chapter. The board shall execute any documents which are required by California Constitution, the disbursement of these proceeds is not
the Pooled Money Investment Board to obtain and repay the loan. Any subject to the limitations imposed by that article.
amounts loaned shall be deposited in the fund to be allocated to the
19,0
Proposition 85: Text of Proposed Law
Continued from page 33 ($75,000,000) (exclusive of ~efunding bonds), or so much thereof as is
necessary, may be issued and sold to provide a fund to be used for
remodeled, or rehabilitated with grants received pursuant to this carrying out the purposes expressed in this chapter and to be used to
chapter shall be dedicated to public library direct service use for a reimburse the General Obligation Bond Expense Revolving Fund
period of not less than 20 years following completion of the project, or pursuant to Section 16724.5 of the Government Code. The bonds shall,
the useful life of the buiMing, whichever is longer, when sold, be and constitute a valid and binding obligation of the State
(b) If the facility, or part thereof acquired, constructed, remodeled, o/California, and the full faith and credit of the State of California is
or rehabilitated with grants received pursuant to this chapter ceases to hereby pledged .for the punctual payment of both principal _of and
interest on, the l~onds as the principal and interest become due and
be used for public library direct service prior to the expiration of the payable.
period specified in subdivision (a), the board shall be entitled to
19971. The bonds authorized by this chapter shall be prepared,
recover from the grant recipient or the recipient's successor in the executed, issued, sold, paid, and redeemed as provided in the State
maintenance of the facility, an amount which bears the same ratio to General Obligation Bond Law (Chapter 4 (commencing with Section
the value of the facility/, or the appropriate part thereof at the time it 16720) _of Part 3 of Division 4 of Title £ of the Government Code), and
ceased to be used from public library direct service as the amount of the all o.f the provisions of that law apply to the bonds and to this chapter
and are hereby incorporated in this chapter as though set forth in full
grant bore to the cost of the facility or appropriate part thereof For
purposes of this subdivision, the'value of the facility, or the appropriate in this chapter.
part thereof shall be determined by the mutual agreement of the 19972. (a) Solely for the purpose o_f authorizing the issuance and
sale, pursuant to the State General Obligation Bond Law, of the bonds
parties, or through an action brought for that purpose in the superior authorized by this chapter, the California Library Construction and
court.
Renovation Finance Committee is hereby created. For purposes of this
(c) The board may release the grant recipient or the recipient's chapter, the California Library Construction and Renovation Finance
Committee is the "committee" as that term is used in the State General
successor in the maintenance of the facility from its obligation under
subdivision (a), and waive the requirements of_subdivision (b) if the
board determines that so doing would not diminish the quality of Obligation Bond Law. The committee consists of the Treasurer, the State
public library service in the community served by the facility. Librarian, the Director of Finance, or their designated representatives.
(d) Notwithstanding subdivision (f) of Section 16724 of the Gov- The Treasurer shall serve as chairperson of the committee. 'A majority of
the committee may act for the committee. ·
ernment Code, moneys recovered pursuant to subdivision (b) shall be (b) For purposes of the State General Obligation Bond Law, the
deposited in the fund, and shall be available for the purpose of Califqrnia. Library Construction and Renovation Board id designated
awarding grants Jor other projects.
the "boater."
Article 3. Fiscal Provisions
19973. The committee shall determine whether or not it is necessary
19970. Bonds in the total amount of seventy-five million dollars or desirable to issue bonds authorized pursuant to this chapter in order
G88 121
to carry out the actions specified in Article 2 (commencing with Section received from the sale of bonds for the purpose of carrying out ;~,his
19955), and, if so, the amount of bonds to be issued and sold. Successive chapter. ·
issues of bonds may be authorized and sold to carry out those actions 1997Z The board may request the Pooled Money Investment Board
to make a loan from the Pooled Money Investment Account, in
progressively, and it is not necessary that all of the bonds authorized to accordance with Section 16312 of the Govermnent Code, for the
be issued be sold at any one time.
19974. There shall be collected each year and in the same manner purposes of carrying out this chapter. The amount of the request shall
and at the same time as other state revenue is collected, in addition to not exceed the amount of the unsold bonds which the committee has by
the ordinary revenues of the state, a sum in an amount required to pay resolution authorized to be sold for the purpose of carrying out ~'his
the principal of,_ and interest on, the bonds each year, and it is the duty chapter. The board shall execute any documents required by the Pooled
of all officers charged by law with any duty in regard to the collection Money Investment Board to obtain and repay the loan. Any amo~:nts
of the revenue to do and perform each and every act which is necessary loaned shall be deposited in the fund to be allocated by the board in
to collect that additional sum. accordance with this chapter.
19975. Notwithstanding Section 13340 of the Government Code, 19978. Any bonds issued and sold pursuant to this chapter mas, be
there is hereby appropriated from the General Fund in the State refunded by the issuanceof refunding bonds inaccordance with Article
6 (cbmmencing with Section 16780) of Chapter 4 of Part 3 of Divi~'ion
Treasury, for the purposes of this chapter, an amount that will equal the 2 of Title 2 of the Government Code. Approval by the electors of the
total of the following:
(a ) The sum annually necessary to pay the principal of and interest state for the issuance of bonds shall include the approval of the issuance
on, bonds issued and sold pursuant to this chapter, as the principal and of any bonds issued to refund any bonds originally issued or any
interest become due and payable, previously issued refunding bonds.
19979. All money deposited in the fund which is derived f,om
premium and accrued interest on bonds sold shall be reserved in the
(b) The sum which is necessary to carry out the provisions of Section
19976, appropriated without regard to fiscal years.
19976. For the purposes of carrying out this chapter, the Director of fund and shall be available for transfer to the General Fund as a credit
Finance may authorize the withdrawal from the General Fund of an to expenditures for bond interest.
amount or amounts not to exceed the amount of the unsold bonds which 19980. The Legislature hereby finds i~nd declares that, inasmuc,~ as
have been authorized to be sold for the purpose of carrying out this the proceeds from the sale of bonits authorized by this'chapter are not
chapter. Any amounts withdrawn shall be deposited in the fund. Any "proceeds of taxes" as that term is used in Article XIII B of the
money made available under this section shall be returned to the California Constitution, the disbursement of these proceeds is not
' General Fund, with interest at the rate earned by the money in the subject to the limitations imposed by that article.
Pooled Money Ivvastment Account during the time the money was 19981. An amount not to exceed 1 percent of the fund may be t,sed
withdrawn from the General Fund pursuant to this section from money by the State Librarian for costs of administering this chapter.
Proposition 86: Text of Proposed Law section, plus any interest that the amounts would have earned in the Pooled
Money Investment Account, shall be returned to the General Fund from money
Continued from page 37 received from the sale of bonds for the purpose of carrying out this title.
not necessary that all of the bonds authorized to be issued be sold at any one time. 4496.44. All money deposited in the fund which is derived from premium and
4496.38. There shall be collected each year and in the same manner and at the accrued interest on bonds soM shall be reserved in the fund and shall be avaii'able
same time as other state revenue is collected, in addition to the ordinary revenues for transfer to the General Fund as a credit to expen-ditures for bond interest.
bf the state, a sum in an amount required to pay the principal of,, and interest on, 4496.46. The'bonds may be refunded in accordance with Article 6 (,rom-
the bonds each year, and it is the duty of all of~cers charged by ]aw with any duty mencing with Section16780) of Chapter 4 of Part 3 of Division 4 of Title 2 of the
in regard to the collection of the revenue to -do and peoCorm each and every act Government Code.
which is necessary to collect that additional sum. 4496.47. The board mag/request the Pooled Money Investment Board to make
4496.40. Notwithstanding Section 13340 of the Government Code, there .is a loon frqm the Pooled Money Investment Account, in accordance with Section
hereby appropriated from the General Fund in the State Treasury, for me . 16312'of the Government Code, for the purposes of carrying out the provisio~as of
purposes of this chapter, an amount that will equal the total of the following: this chapter. The amount Of the request shall not exceed the amount of the ur,~so[d
(a ) The sum annually necessary to pay the principal of ahar interest on, bonds bonds which the committee has by resolution authorized to be sold for the purpose
issued and soM pursuant to this chapter, as the principa[and interest become due of carrying out this chapter. The board shall execute such documents as required
and payable, by the Pooled Money Investment Board to obtain and repay the loan. Any
(b) The sum which is necessary to carry out the provisions of Section 4496.42, amounts loaned shall be deposited in the fund to be allocated by the board in
appropriated without regard to fiscal years, accordance with this chapter.
4496.42. For the purposes of carrying out this title, the Director of Finance may 4496.48. The Legislature hereby finds and declares that, inasmuch a.,~ the
authorize the withdrawal from the General Fund of an amount or amounts not to proceeds from the sale 9f bonds authorized by this title are not "proceeds of taxes"
exceed the amount of the unsold bonds which have been authorized by the as that term is used in Article XIIIB of the California Constitution, the
committee to be sold for the purpose of carrying out this chapter. Any amounts disbursement of these proceeds is not subject to the limitations imposed by that
withdrawn shall be deposited in the fund. A ny money made available under this article.
Proposition 87: Text of Proposed Law
This amendment proposed by Assembly Constitutional Amendment56 (Statutes s'.'.cS that territory has been annexed or otherwise included after ~-4~: the
of 1988, Resolution Chapter 54) expressly amends the Constitution by amending a ordinance's effective date, the assessment roll of the county last equalized on the
section thereof; therefore, existing provisions proposed to be deleted are printed effective date of said that ordinance shall be used in determining the assessed
in s~'2:cc,;:t ,~-~z and new provisions proposed to be added are printed in italic valuation of the taxable property in the project on said that effective date); and
type to indicate that they are new. (b) Tha', Except as provided in subdivision (c), that portion of said the levied
taxes each year in excess of :-acs that amount shall be allocated to and when
PROPOSED AMENDMENT TO ARTICLE XVI, SECTION 16 collected shall be paid into a special fund of the redevelopment agency to pay the
SEC. 16. All property in a redevelopment project established under the principal of and interest on loans, moneys advanced to, or indebtedness (wh,~'ther
Community Redevelopment Law Ae~ as now existing or hereafter amended, funded, refunded, assumed or otherwise) incurred by s',:ch the redevelopment
except publicly owned property not subject to taxation by reason of s::cS that agency to finance or refinance, in whole or in part, :'ac~ the redevelop:a~ent
ownership, shall be taxed in proportion to its value as provided in Section 1 of this project. Unless and until the total assessed valuation of the- taxable property in a
article, and ~ those taxes (the word "taxes" as used herein :~al! i~cl',:dc redevelopment project exceeds the total assessed value of the taxable property in
includes, but ~ is not be limited to, all levies on an ad valorem basis upon land s'.'.c5 the project as shown by the last equalized assessment roll referred to in
or real property) shall be levied and collected as other taxes are levied and pr. rag'rapS dc3ig.~;tzd ~ hcrcc, f subdivision (a), all of the 'taxes levied and
collectedby the respective taxing agencies, collected upon the taxable property in ~:c5 the redevelopment project shall be
.The Legislature may provide that any redevelopm.ent plan may contain a paid into the funds of the respective taxing agencies. When said the loans,
provision that the taxes, if any, so levied upon :~:cS t~e taxable proper!~' in a advances, and indebtedness, if any, and interest thereon, have been paid, th.~'n all
redevelopment project each year by or for the benefit of the State of Calitornia, moneys thereafter received from taxes upon the taxable property in st~.~ the
any city, county, city and county, district, or other public corporation (hereinaRer redevelopment project shall be paid into the funds of the respective taxing
sometimes called "taxing agencies") after the effective date of the ordinance agencies as taxes on all other Pr01?erty are paid. .
approving the redevelopment plan, shall be divided as follows: (c) That portion of the taxes identified in-subdivision (b) which are att:~but-
(a) That portion of the taxes which would be produced by the rate upon which able to a tax rate lev[ed by a taxing agency for the purpose of producing rew;nues
the tax is levied eaeh year by or for each of saidt those taxing agencies upon the in an amount sufficie?t to make annual repayments of the principal of and the
total sum of the assessed value of the taxable property in the redevelopment interest on, any bonded indebtedness for the acquisition or improvement of real
project as shown upon the assessment roll used in connection with the taxation of property shall be allocated to, and when collected shall be paid into, the fu nd of
;'~cS that prouerty by stteh the taxing agency, last equalized prior to the effectiv, e that taxing age~icy. This paragraph shall only apply to taxes levied to :,epay
date of :;:cStheordinance, shall be allocateato, and-when collected shall be pasd bonded indebtedness approved by the voters of the taxing agenc7 on or after
into, the funds of the respective taxing agencies as taxes by or for said those taxing January 1, 1989.
agencies on all other property are paid (for the purpose of allocating taxes levied The Legislature may also provide that in any redevelopment plan or i:a the
by or for any taxing agency or agencies which did not include the territory in a proceedings for the advance of moneys, or making of loans, or the incurring of any
redevelopment project on the effective date of sucS the ordinance but to which indebtedness (whether funded, refunded, assumed, or otherwise) by the rede-
122 ,G88
velopment agency to finance or refinance, in whole or in part, the redevelopment provisions hereof separately or in combination with powers granted by the same
project, the portion of taxes mc.n~cncd identified in ~ .:^-:gz~ted ~ or any other law relative to redevelopment agencies. This section shall not affect
~ £$U .... ' ...... ~ ' '
,crc. c,. bdtvtston (b), excluswe of that portion identified in subdivision (c), may any other law or laws relating to the same or a similar subject but is intended to
be irrevocably pledged for the payment of the principal of and interest on ~ authorize an alternative method of procedure governing the subject to which it
those loans, advances, or indebtedness, refers.
It is intended by this section to empower any redevelopment agency, city, The Legislature shall enact :uch those laws as may be necessary to enforce the
county, or city and county under any law authorized by this section to exercise the provisions of this section.
Proposition 88: Text of Proposed Law
This amendment proposed by Assembly Constitutional Amendment 63 (Statutes assessments, or perform municipal functions.
of 1988, Resolution Chapter 59) expressly amends the Constitution by amending a (b) The Legislature may, however, provide for the deposit of public moneys in
section thereof; therefore, new provisions proposed to be added are printed in any bank in this state or in any savings and loan association in this state or any
italic type to indicate that they are new. ' credit union in this state or in any federally insured industrial loan company in
PROPOSED AMENDMENT TO ARTICLE XI, SECTION 11 this state and for payment of interest, principal, and redemption premiums of
public bonds and other evidence of public indebtedness by banks within or
SEC. 11. (a) The Legislature may not delegate to a private person or body without this state. It may also provide for investment of public moneys in securities
power to make, control, appropriate, supervise, or interfere with county or and the registration of bonds and other evidences of indebtedness by private
municipal corporation improvements, money, or property, or to levy taxes or persons or bodies, within or without this state, acting as trustees or fiscal agents.
Proposition 93: Text of Proposed Law
This amendment proposed by Senate Constitutional Amendment 16 (Statutes of _ l.f the claimant is married ~d does not own property eligible for the full amount
1988, Resolution Chapter 68) expressly amends the Constitution by amending ot the exemption, property ot the spouse shall be eligible for the unused balance
sections thereof; therefore, existing provisions proposed to be deleted are printed of the exemption.
........ Second--That subdivision (p) of Section 3 of Article XIII thereof is amended to
in -'-~ ...... ~ and new provisions proposed, to be added are printed in italic read:
type to indicate that they are new.
.Property in the amount of $1,000 of a claimant who---
PROPOSED AMENDMENT TO ARTICLE XIII, SECTION 3 IlP)) ns the unmarried spouse of a deceased veteran who met the service
requirement stated in paragraphs (1) and (2) of subsection 3(o), and
First--That subdivision (o) of Section 3 of Article XIII thereof is amended to read: . (2) does not own property in excess of $10,000, and
(o) Property in the amount of $1,000 of a claimant who-- (3) is a resident of the State on the current lien date; ~1
(1) is serving in or has served in and has been discharged under honorable ~ rended in tJ~e State on Nz;'cmScr ~, ~ ~
conditions from service in the United States Army, Navy, Air Force, Marine Corps, {40r is One .........~ of ~ a_.ccca~cd
Coast Guard, or Reveflue Marine (Revenue Cutter) Service; and-- ~ ......... :~u:c ;'ctzran ~h~ me~ t-be rc.s~dcncy
(2) served either .~,;. ..... c_n.t ...... m 1~ 1 of ~ S{-~..
(i) in time of war, or ~nird--¥hat subdivision (q) of Section 3 of Article XIII thereof is amended to
read:
(ii) in time of peace in a campaign or expedition for which a medal has been !iq) Pr.operty in the amount of $1,000 of a claimant who~
issued by Congress, or
' ~ / is the parent of a deceased veteran who met the service requirement stated
(iii) in time of peace and because of a service-connected disability was released in paragraphs (1) and (2) of subsection 3 (o), and
from active duty; and-- (2) receives a pension because of the veteran's service, and a.
(3) resides in the State on the current lien date: ~
+¥)- ~:idcd in ~he (3) is a resident of the State on the current lien date; ~m4 ci,.cr
{4,} on Y.c;'crc..~r ~, ~ o~ {4°r rcs:.dcd in One £tatc. on Nc.;'cr.2'~cr &, ~ o~
~)' ~ t4te t4me of c,n~y im~ one of t-he bra::c~a oft. he .... ~ t ......... d"- -~r is t-he parent oft ficcc~--~l ........ wt~ me~ t-he ~:a .............
~aragraph ~ of t4~ ~zbrcct~on. ~ .......................... m ~ ~ ~t ......... o
Either parent of~--°'-''''a d' '~ee*'a~g~°;g~r'~ ~b claim this exemption.
An unmarried person who owns property valued at $5,000 or more, or a married An unmarried person who owns property valued at $5,000 or more, or a married
person, who, together with the spouse, owns property valued at $10,000 or more, person, who, together with the spouse, owns property valued at $10,000 or more,
is ineligible for this exemption. - is ineligible for this exemption.
Proposition 95: Text of Proposed' Law s~99. 7. Compensation and Expenses. Members of the board of directors shall
Continued from page 67 be compensated at the rate of one hundred dollars ($100) for each day they are
engaged in meetings of the board or its committees or subcommittees. Members
selected from a panel of names submitted for consideration by the County shall be reimbursed for actual expenses incurred on Corporation business,
Supervisors. Association of California; and one who shall be selected from a panel including necessary travel and child care expenses as determined by the Depart-
of names submitted for consideration by the League of California Cities. The ment of Personnel Administration.
' remaining appointee shall be a person wha in the judgment of the Governor, has 8699.8. Chairperson. The board of directors shal[ meet within 6O days of the
demonstrated a commitment to the proble'ms of hunger and homelessness, effective date of this Act for the purpose of selecting from among its membership
(2) Five members appointed by the Senate Rules Committee, four of whom an interim chairperson who shall serve until a permanent chairperson has been
shall be persons having the following qualifications: one who shall be affi'liated selected by the board. Thereqfter, the board shall annually select from its
with a privately funded agency or organization which provided services to the membership a chairperson. The chairperson shall have the power to convene
hungry or homeless prior to January l, 1987,. one who shall be a provider of special meetings of the board upon 48 hours written notice to members.
emergency nutrition services; one who shall be an official or employee of a local 8699.9. Open Meetings. Meetings of the Corporation shall be open and public
housing authority; and one who shall be affiliatdd with a Community Action in accordance with the Bagley-Keene Open Meeting Act, commencing with Section
Agency, as-defined in Government Code Section 12750. which provides services to lll£O of Chapter 1 of Part I of Division 3 of the Government Code.
hungry or homeless persons. The remaining appoin-t~'e shall be a person who, in 8699.10. Quorum; Voting. A quorum shall consist ~f eight members of the
the judgment of the Senate Rules Committee, has demonstrated a commitment to board. All decisions of the Corporation shall be made by a majority vote of the
the problems of hunger and homelessness.
(3~ Five members appbinted by the Speaker of the California Assembly, four o_f qug~9.m'l l. Appointment of Executive Director. The board shall appoint an
whom shall be persons having the following qualifications., one who shall be executive director within 1£0 days of the effective date of this chapter. The
affiliated with a provider of services to the hungry or homeless; one who shall executive director shall be responsible for managing the affairs of the Corporation
nave experience as a non-profit housing developer,, one who shall be affiliated and shall, in the judgment ~f the board, be qualified by training and experience
with a provider of federal food program services; and one who shall be dffiliated to direct the operations of the Corporation. The executive director shall be exempt
with a provider of services to homeFess adolescents. The remaining appointee shall from civil service, shall serve at the pleasure of the board, and shall be
be a person who, in the judgment of the Speaker _of the California Assembly, has compensated at the same rate as the president of the Public Utilities Commission.
demonstrated a commitment to the problems of hunger and homelessness. The executive director shall devote his or her entire time and attention to the duties
(4) The State Treasurer.
of his or her o~fice and shall not be engaged in anti other profession or occuvation.
8699.6. Qualifications and Terms of Members. 8699.12. t~eputy Director. Upon recommendation of the executive director.
(a) Members of the board shall be persons broadly reflective of the economic, the board may appoint a deputy director who shall be exempt from civil serv]~
cultural, geograpt~ic (including urban and rural), andsocial diversity of the state, and shall serve at the pleasure of the board. The executive director shall supervise
including ethnic minorities and women. However, it is not intended that formulns the activities of the deput!~ director. The board shall determine the compensation
of the deputy director.
or specific ratios be applied in order to achieve that diversity.
(b) The members shall be appointed for terms of three years. All initial 8699.13. Appropriation; Disclosure'in State Budget; Hearings.
appointments shall be made within 30 days of the effective date of this chapter. (a) The Department of Finance, in preparing the state budget and the Budget
Vacancies shall be filled within 30 days by the appointing authority empowered Bill submitted to the Legislature, shall include an item for the support of the
by Section 8699.5(§) to appoint the member whose departure created the vacancy. Corporation of Califqrnia, which item shall include all of the following.. (1) all
A person appointed tofilla vacancy shall serve for the unexpired portion of the net proceeds of penalties collected pursuant to the provisions of Division 22.5 of
term in which the vacancy occurred. Members of the board shall be eligible for the Health and Safety Code, except as otherwise provided in Section 31040 thereof;
reappotntment. (£) all proceeds from the sale of bonds issued pursuant to Article 3 of this chapter,.
· G88
123
(3) such other amounts as matt from time to time be appropriated by the for the issuance of the Bonds, the Corporation may provide for the call and
Legislature pursuant to this section,, and (4) such other amounts as may fr°m time redemption of all or any part of the Bonds on any interest payment date prior to
to time be appropriated lng law. their fixed maturity. The Bonds to be ~alled for redemption prior to maturity s~all
(b) At the conclusion of the fi_rst full J~eal year following the eff~. .tive date of be selected in such manner as the Corporation may set forth in such resolutio~ or
this chapter, the Legislature shall by appropriate committee bom p~iblic hearings resolutions. Ifa Bond is subject to call and redemption a statement to that ~'fect
to determine whether additional appropriations are required to further the shall be set forth on the face of the Bond.
purposes of this chapter, and whether adaptations are required in the housing 8699.25. Provin'on for Refunding.
homeless; nutrition, and code enfor_cemen, t progr, a ,m~. esta. blis..hed ~ t, his.A, ct. in (a) The Corporation may provide fo_r the issuance ~ ~ Bonds of the Corporation
order to further the Act's purposes. In making tliis a,et, erty.,ma, t~on,' tanne~e~g~,ta.m, re fqr the purpose of refunding any Bonds or any series,c Bonds of the Corporation
then outstanding including the payment of any ret ,.mption premium thereon
shall consider reports and other documents preparea to tne ooara a a suCh omer and any interest accrued or to accrue to the date o ' redemption, purchase, or
evidence as it shall deem necessary.
8699.14. Rules and Regulations. The Corporation shall have the power to maturity of the Bonds.
adopt, and from time to time amend and repeal, b7 action of the board, rules and (b) The proceeds of any Bonds issued for the purpose _of refu_nding of
regulations to earrg into effect the powers and purposbs of th, e,C, o, rpora, tio.n a, nd outstanding Bonds may, in the discretion of the Corporation, be applied to the
the conduct o~ its business. These rules and regulations snaa oe aaoprea in purchase, redemption prior to maturity, or retirement at maturity of any
accordance un'th the Administrative Procedures Act (Government Code, Title 2, outstanding Bonds on their earliest redemption date or dates, upon their pura~ase
Division 3, Part 1, Chapter 3.5, Sections lIMO, et seq.), shall be published as or maturity, or paid to a third person to assume the Corporation's obligation to
provided therein, and shall be consistent with the provisions of this chapter, make the payments, and may, pending that application, be placed in escrow to be
8699.15. Powers and Duties. The Corporation shall have all powers ~ect~satrffee applied to the purchase, retirement at maturity, or redemption on the date or dates
· to qffectuate the purposes of this chapter, including, but not limited to, t e determined by the Corporation.
fol[dwing powers: . (c) An7 proceeds placed in escrow may, pending their use, be_invested and
(a) To sue and be sued in its oum name. reinvested in obligations or securities authorized by resolutions oJ the Corpora-
(b) To have perpetual succession.
lion, payable or maturin~ at the time or times as are appropriate to assure the
(c} To maintain offices at such place or places within the state as it may prompt payment of the principal, interest, and redemption premium, if an~., of
designate. ' the outstanding Bonds to be refunded at maturity or redemption of the Bonds to
(d) To accept grants, contributions, and appropriations.. . be refunded either at their ea-rliest redemption date or dates or any subsequent
(e) Notwithstanding any other provision of law, to_ make and ex. ecu?.contracts redemption date or dates. The interest, income and profits, if any, earned or
and all other instruments necessary or convenient Jbr tt~f exercise o~ trs powers realized on any such investment may also be applied to the payment of the
and functions under this chapter with any governmental agenctj, private corpo- outstanding Bonds to be refunded or to the payment of interest on the refunding
ration or other entity, or individual. Bonds. After the terms of the escrow have been fu. lly satisfied and cam'ed-out, any
balance of the proceeds and interest, income and pr_off'ts, if any, earned or realized
on the investments thereof may be returned to the Corporation for use b!t the
(f) To acquire real or personal property, or any interest therein, on either a
temporary or long-term basis in its own name by gift, pure.,hase., transfer,,
foreclosure, lease, option, or otherwise, including easements or o#ter tncorporeat Corporation.
rights in property. . (d) All of the refunding Bonds are subject to this chapter in the same manner
(g) To hold, sell, assign, lease, encumber., mortgage, or otherwise d~pose of any and to the same extent as other Bonds issued pursuant to this chapter.
rea[or personal property or anti interest tt~erein. 8699.26. Separate Accounts Created Pursuant to Bondholders' Agreen, tents.
(h) To borrow money, issue Bonds, and enter into agreements, as provided in Pursuant to any agreements with the holders of particular Bonds pledging' any
this chapter, particular assets, revenues, or moneys, the Corporation may create separate
accounts in the fund to manage assets, revenue, or moneys in the manner set forth
(0 To emplo~t attorneys and such' other personnel as may be necessary to
accomplish the purposes of this chapter; ~ ..... in such agreements.
0') Notwithstanding Section 19058 of the Government Uocte: ro matce. . t, emp, or..ary 8699.27. Investment of Surplus Funds. The Corporation shall from time to
appointments to all professional staff positions for nine mont~ or unlit SUCh time time direct the State Treasurer to invest moneys in the Fund which are not
as employment lists are prepared for such positions by the State Personnel Board. required fqr its current needs, including proceeds from the sale of any Bonds, in
(k ) To do an7 and all things necessary to carry out its purposes and exercise the such eligible securities specified in Section 16430 of the Government Code tls the
powers expressly granted tnj this division. ~ Corporation shall designate.
Article 3. Bonds. Article 4. California Housing Fund.
8699.£0. Authority to Issue Bonds. The Corporation m. ay from time to time 8699.30. Creation of Fund.
issue Bonds in a principal amount which the Corporation determines necessary to (a) There is hereby created within the State Treasury the California Housing
provide sufF~?'en_ t funds for the following purposes: Fund, which is continuously appropriated for carrying out the purposes o£ this
(a) Oflalified low-income/iousing development projects; chapter without regard to fiscal years. Unlees otherwise ordered by the boi~rd of
(b) For antt other purpose set forth in this chapter; directors, the fund shall receive all proceeds of loans issued by the Corporation, all
(c) For the refunding of any Bonds. . net proceeds from the sale of Bonds; and an amount equalto not less than ten
In connection with, or incidental to, the sale and issuance of the Bonds, the percent qf aIl penalties collected under Division 2£.5 of the Health and t;afety
Corporation is authorized to provide for or cause to be provided fo. r b°nd. issyance, , Code. The Treasurer shall designate a depository to receive proceeds of such
credit enhancement or liquidity agreeme, nts or any .con~ac, ts der. ermine, ct to ?,e penalties for transmission to the State Treasury and for deposit in the Calo~rnia
necessary and appropriate to place the. tnv. estm~t m ,w?ot.e, or.tn pan.,, on t~n,e Housing Fund.
interest rate, currency, cash-flow, or oliver Oasis aesirea oy me torporat;on. ~ne (b) Pursuant to a fi'nding by the board that significant additional funding is
Bonds may be made payable in whole or in part, in currency other than lawful available fr_om other sources and that the need for funding under this article is
money of the United States if. the Corporation so provides, substantially reduced, the board may by resolution transfer mone~ts from the
8699.M. Payment of Bor[ds. Except as may otherwise be expressly provided California Housing Fund to the California Emergency Housing and Nui:rition
by resolution of the Corporation, evenj issue.of its Bonds shall be considered a Fund.
general obligation of the Corporation payable out of any assets, revenues, or 8699.31. Disbursements from the California Housing Fund. Funds shall be
moneys of the Corporation, subject onl!t to any agreements with the holders of disbursed from the California Housing Fund at the direction of the board of
particular Bonds pledging any pa~'cular assets, revenu, es, .or..moneys._ ,, directors to public or private agencies for any of the following purposes:
8699.22. Resolution Authorizing Bonds. The Bonds shati be au#~orizea oy (a) To provide long-term debt financing for qualified Iow-income housing
resolution or resolutions of the Corporation. Said resolution or resolutions shall development programs. For the purposes of this article, "qualified low-income
prescribe the form of the Bonds, shall fix the date or dates and the tYme or times housing development programs" means those programs in which at least 30
of maturity of the Bonds and shall appoint a Trustee. The Bonds may be issued as percent of the program's units remain affqrdable, for a period of at least 30 years,
serial bonds or as term bonds, or as a combination thereof, and, notwithstanding to fqmilies earning below 50 percent oft. he area median income.
any other provision of law, the amount of principal of, or interest on, Bonds (b) To fund the development of foreelosed and other distressed propertie~ hem
maturing at each date of maturity need not be equal. The Bonds shall bear interest by financial institutions. . .
at such rate or rates, be in such denominations, be in such form, be executed in (c) To establish a mortgage guarantee program for qualified low- income
such manner, be payable in such medium of payment at such place or places purchasers.
within or without the state, and contain such terms and conditions as such (d) To provide short-term low-interest loans to qualified low-income housing
resolution or resolutions may provide. The Bonds of the Corporation shall be soM development programs, not to exceed five years in duration, for predevelopment
at public or private sale by the State Treasurer at, above, or, bdo? par ?lue, on costs, including, but not limited to, site control, title searches, and p'reliminary
such terms and conditions and for such consideration, in such. mea, ium o~ payment drawings.
as the Corporation shall determine by resolution prior to tt~e sate. . ~ _ (e) To accomplish an7 other purpose set forth in this chapter, as determined by
Neither the members of the Corporation nor any person executing tl~e ~oncts the board of directors. ·
shall be liable personally on the Bonds or be subject to any personal liability or Article 5. California Emergency Housing and Nutrition Fund
acoountatn'lity by reason _of the issu. ance thereof ......
8699.23. Savings Bonds. In order to permit and .encourage t.~e part, tctpar~on 8699.40. Creation of Fund. There is hereby created within the State Treasury
of small investors in programs designed to alleviate I~unger and nometessness in the California Emergeney Housing and Nutrition Fund, which is continuously
California, the board shall be empowered to authorize the issuance of zero coupon appropriated for carrying out the purposes of this article without regard to fiscal
bonds or savings bonds in denominations not exceeding $100, provided that such years. Unless otherwise provided by resolution of the board of directors, the Fund
bonds may only be authorized by a resolution confo.rming with the provisions of shall receive eighty percent (80%) of all proceeds of penalties collected under
Section 8699.22 and other applicable provisions of t_his article. Division 22.5 of the Health and Safety Code. The Treasurer shall desig'nate a
8699.24. Provision for Redemption. In the resolution or resolutions providing depository for all such penalties for transmission to the State Treasury and for
G88
124
deposit in the California Emergency Housing and Nutrition Fund. (vi) Existing and proposed job counseling and referral programs for perso~
8699.41. Disbursements from the California Emergency Housing and Nutri- using emergen~ housing or nutrition services. Such services shall be designed to
tion Fund. Funds shall be disbursed from the California Emergency Housing meet the needs of specific groups, such as adolescents, single adults, and heads of
and Nutrition Fund at the order of the board of directors for the following household.
purposes: (rio Existing and proposed child care and education services designed to assist
(a ) To counties for the purpose of providing temporary housing and food for homeless or hungry persons find employment or permanent housing or to address
persons in immediate need of either, or both, for expanding the availability of critical development,needs of homeless chiMren or adolescents. Such services may
health and nutrition programs, employment services, education, and other basic be on-site or provided through vouchers usable in community child care and
services, and to create new and rehabilitated units of permanent low-cost housing; development programs. Services may include counseling and referral programs
provided that no more than eighty seven and one half percent (87-~ %) of the which support the enrollment of homeless adolescents in programs which ensure
annual proceeds of the Fund may be used for these purposes; and provided further their independence. Services may include youth crisis intervention programs,
that the board may disburse funds to other political subdivisions of this state 'where the county plans show they are lacking.
where historic service patterns or population factors shall in the judgment of the (viii) Existing and proposed emergency rent assistance, programs or utility
board require such disbursements, hook-up programs, security deposit revolving loan funds, and vouchers for
(b) For administration, staffing and personnel expenses, policy development single-room occupancy or other residential hotels.
and research; for demonstration projects in service or geographic areas where new (ix) Existing and proposed medical and psychological referral and social
service types or patterns are needed,, and for model programs developed or to be support services for the mentally ill.
developed by private nonprofit organizations for the purpose of enhancing the 8699.44. Approval of County Plans. Prio~ to any disbursement of fu_nds to
ability of service providers and program advocates to communicate with one any county pursuant to the provisions of Section 8699.41(a), the board sh~ll review
another and to have access to relevant and timely information in order to or cause to be reviewed and shall approve that county's application and county
strengthen their effectiveness in increasing the availability and quality of services plan. The board may impose upon any disbursement or grant of funds to any
for hungry and homeless persons; provided that no more than twelve and one half county such terms and conditions as it shall deem necessery to further the
percent (12-~ %) of the the annual proceeds of the Fund may be used for these purposes of this chapter· The board shall provide by regulation a method for
purposes, ensurin~ compliance with the terms and conditions qf any disbursement or grant
(c) The board of directors shall require that ninety percent (90%) of all funds of funas, and rt~y alter, reduce, or terminate dist~ursements or grants to any
disbursed pursuant to subdivision (a) of this section shall be allocated-among the county which~fails or r~fus~ to comply with such terms or conditions.
counties in the same pro?ortions as processing agencies within each county have 8699.4~. U~b ~of Funa~. Funds disbursed pursuant to this chapter shall only
transferred monies to the California Emergency Housing and Nutrition Fund, supplement and not supplant funds previously allocated for these purposes.
pursuant to Section 31040 of the Health and Safety Code within the preceding ' Funds may be ased fqr both capital and operating costs, as specified in the county
fis_~l year. In allocating funds prior to the termination 'of the first fiscal year plan. No county shall be required to divert existing funding for mental health
following the effective date of this chapte~ the board may utilize such lesser time alC~hEOl Or drug programs to provide for services under this chapter.
period as it shall deem appropriate. ' t~TION 4. Section 26586 of the Health and Safety Code is hereby repealed.
8699.42. Grant Application Procedure. Prior to the allocation of any moneys o~o~ ~ ~ee .... ~ · . . ...~..~
from the Calffo~rnia Emergency Housing and Nutrition Fund pursuant to t]~e
provisions of_Section 8699.41(a) any county requesting disbursements shall
submit an application, fo. r funds i~ such form us required by the board of directors.
The application shall include a copy of a county plan prepared pursuant to
Section 8699.4~ and shall also include, ~ut shall not be Bmited to, the following ........... ~ ~ ~cz,-~ ...... ~ of t-he ~mc,:,':g; m:,~c by t-be pcrsr, r~ mr2r,-:g t-be
information..
(a) Data reflecting the full extent of the problem of hunger and homelessness
SECTION 5. Section 26587 of the Health and Safety Code is hereby amended
within the recipient county, the number and resources of existing agencies within to read:
the recipient county which are responsible in whole or in part for alleviating the 26587. When Findings to be Certified to District Attorney. If the examination
problem, and the amount of additional resources which the applicant believes will ~or anSys~is is foundthteo hbe .correct,
be required to fully alleviate the condition of hunger and homelessncss within the ~ccr, ~u:y ~ ealth officer may c~rtif~ the facts found to the district
recipient county; attorney of the county, t~---~-'-~'~ .... c ~ be ............... a ,~ e ~ : ·
(b~ A description of programs for the alleviation of hunger and homelessness
in. wnich the recipient is currently engaged, including data reflecting the cost and SECTION 6. Seetion26802oftheHealthandSafetyCodeisherebyamended
the amount of service provided by such programs; to read:
(c) A desdription of programs for the al[eviation of hunger and homelessness 26802. One-halfofallfineseolleetedbyanyeourtorjudgeforanyviolationof
in which the recipient proposes to engage, including data reflecting the antici- any provision of this division except as provided in section 31010, shall be paid into
pated cost and the amount _of service provided by such programs, the State Treasury to the credit of the General Fund.
(d) Evidence that the plan has been coordinated with and reviewed by the
SECTION 7. Section 26812 of the Health and Safety Code is hereby repealed
Federal Emergency Management Act Board (s), if such Boards exist in the county, o~o~o · · . ~,~ ·
(e) Such additional data as the board of directors may require. ~:-~'~:~-
8699.43. Adoption of County Plans. Any county applyingfor an allocation of
moneys from the California Emergency Housing and Nutrition Fund shall .':z~cc o~ warnk-:g.
prepare and submit with the application provided for in Section 8699.42 a county SECTION 8. Division 22.5 (commencing with Section 31000) is hereby added
plan. The plan shall be prepared in accordance with the following terms and to the Health and Safety Code to read:
conditions:
(a) The Board of Supervisors shall appoint a committee of no fewer than nine DIVISION 22.5. ENFORCEMENT OF HOUSING AND
members, or- may utilize an existing committee which otherwise satires the FOOD PItEPAtlATION LA WS
requirements of this section. The committee shall include representatives of cities Ob~PTE~ I. OFFE~VbE$ ~lVI~ G£1VE~£ P~OVlbtO~$
within the county which provide homeless or nutrition programs, representatives .31000. Statement. of Intent It is the intent of the People to provide through
of local Housing Authorities, and ]~ublic or private agencies providing services to this Div~ion an atternattve method for enforcement of housing and food
no.m. eless or hungry persons within the county. The Corporation may require pre~paration, la~ws, in or. de~. to supplement but not to replace, misdemeanor
actctitional membership on this committee, en. torcement. ~ o this en~ the People hereby find and declare that the problems of
(b) In consultation with, and pursuant to guidelines and regulations promul- hunger and homelessness are matters of statewide concern, and that a uniform
gated by, the Corporation, the committee shall prepare a plan addressing citation system of fines and penalties for housing and food preparation off~
problems of hunger and homelessness within the county. The plan shall include is require_ (n orde~ to ,e~sure statewide conformity in enforcement It is the further
such information as required by the Corporation. The plan must provide for intent of the People that this div~'on shall be mandatory upon all counties,
transitional as well as crisis servic~e, and may propose funding for the following
issuing agencies, and processing agencies in this state.
programs.. 31001. Infraction Penalties. Notwithstanding any other provin'on of law
(0 Existing and proposed emergency shelters for homeless families and imposing a greater penalty, any person who violates any provision of any par~
individuals. Such shelters must include an array of short-term supportive services chapter of a division, or division included within Section 31002 is guilty of an
and transitional services. Funds may be used for staffing and operational costs as ~nfra,ctio, n, f~nd upon co.n~ction shall be suty'ect to a penalty not to exceed two
well as capital outlay· Funds may be used for emergency needs such as storage nunarea ]iJty ($250) dollars. Each day's violation is a separate and distinct
· services or daytime service centers. ' ' offense.
(ii) Existing and ?roposed transitional housing services. 31002. Violations of Housing and Food Preparation Laws. For the purposes
(iii) Existing ana proposed emergency food services; costs of transportation of this division, and notwithstanding any other provision of law, a violation of
and storage of surplus food and distribution to agencies serving the hungry and any provision of the following parts, chapters of a division, or divisions of th~s
ho, meless; home delivered meal services for elderly or adult disabled individuals Code, or any standard, rule, or regulation adopted or promulgated pursuant to the
wt~o are at risk of becoming homeless or institutionalized, following parts, chapters of a div~'on, or divisions of this Code, shall constitute
fly) Existing and proposed nutrition information and referral programs which an i~nfra_ction and not a m~sdemeanor, except as provided in Section 31003:
assist in the receipt of benefits from existing federal, state and other emergency ~ f.a, JFart 1.5 (commencing with Section 17910) of Division 13, relating to
programs, or which promote maximum statutory and regulatory flexibility for ouildings for human habitation,, the building standdrds published in the State
increasing participation in such programs. Build!n,g bta,ndards ~,d.e. rdating t.o the. provi~'ons of Part ~.a of Division ~. or
(v) Existing and proposed health screening services in homeless dnd emergency any orner rute or regutation promulgatect pursuant to the provistons of Part 1.5 of
sites. These ma~l include referral for treatment of alcohol and drug dependency. Division 13.
G88 125
(b) Chapter 5, exclusively, of Division 21 (commencing with Section 26000), sion shall be established by the issuing agency in consultation with the court
relating to food subject to the same limitations as bail and surcharges established under Section
1269b of the Penal Code and Chapter 12 (commencing with Section 76000) of Title
(c) Chapter 4 '(retail fo_od facilities), Chapter 5 (cold storage), Chapter 5.5
(frozen food), Chapter 6 (bakeries), Chapter 7 (food sanitation), and Chapter 12 8 of the Government Code. The Judicial Council in consultation with the courts,
(frozen foods), exclusively, of Division 22 (commencing ~ith Section 27000), shall ensure that the infraction penalties are reasonable and, to the extent possible,
relating to foods, restaurants, bakeries, frozen foods, and retail food processing, uniform throughout the state. In addition, the Judicial Council shall work with
31003. Misdemeanor Penalties. Notwithstanding any other section of this local issuing agencies and the courts to ensure, to the extent possible, that a
chapter, any violation of a provision of a par~ chapter of a division, or division, of $50,000,000 per year and a maximum of $90,000,000 per year is
included within Section 31002, or a standard, rule, or regulation ado~.ted or minimum
promulgated pursuant to a provision ora part, chapter ora division, or division, collected in infraction penalties statewide.
included within Section 31002, may in the discretion of the prosecutor be charged 31017. Processing Fee. Notwithstanding any other provision of law, includ-
ing but not limited to any provision relating to state funding of trial courts by
as a misdemeanor, punishable as provided in the respective part, chapter of a block grants or other means, each processing agency may assess a processing fee
division, or division so violated, whenever the condition causing the violation for each violation in an amoun~ as determined by the processing agency, that is
continues to exist unabated for twenty-four (24) hours from the time and date of
the fi'rst notice of violation issued pursuant to this division, or if the condition sufficient, together with other such fees, to provide a total amount equal to the
results in injury to any person. Prior notice of a violation shall not be an element actual costs of the processing agency and courts in processing all infraction
citations issued under the provisions of this chapter.
of the misdemeanor offense.
31004. Construction. Except as specificall~t provided, the provisions of this 31018. Termination of Proceedings. If the infraction penalty and processing
division shall not be construed as repealing, either directly or by implication, any fee are received by the person authorized to receive the deposit of the infraction
of the existing sections in the parts, chapters of any division, or divisions, included penalty by the time and date fixed for appearance on the notice of violation, the
within Section 31002, but shall be construed as constituting an alternative method proceedings under this chapter shall terminate.
of enforcing the provisions of those parts, chapters of divisions, or divisions.' It is 31019. Contest of Proceedings. Ifa person appears before the person a~tho-
not intended that any of the powers or rights grantdd to state or local agencies to rized to receive a deposit of the infraction penalty in response to a notice of
enforce the parts, chapters of divisions, or divisions, included within Section 31002 violation and contests i~ the processing agency shall proceed in accordance with
be weakened in any manner including but not limited to, the power or right to Section 31024.
enter or inspect premises, to seek abatement, to seek injunctions, to require 31020. Notice of Delinquent Violation.
registrations, permits or licenses, to suspend or revoke registrations, permits or (a) If the payment of the infraction penalty and processing fee is not received
licenses, to seize, embargo, quarantine, tag condemn any buiMing or article or to by the person authorizgd to receive a deposit of the infraction penalty by the time
declare an article a nuisance. , and date fixed for appearance on the notice of violation, the processing agency .
31005. Amendment and Repeal. This division malt be amended or repealed shall serve or mail to the person believed to be in violation a notice of delinquent
violation.
eecthe procedures set forth in this section. If anlt portion of subdivision (a~ is
lared invalid, then subdivision (b) shall be the exclusive means of amending (b) Delivery of a notice of delinquent violation under this section may be made
by personal service or by fi'rst-clnss mail addressed to the person believed to be in
or repealing this division.
(a) This division may be amended to further its purposes by statute, passed in violation. '
each house by rollcall vote entered in the journaL two-thirds of the membership 31021. Contents of Notice. The notice of delinquent violation shall contain
concurring and signed blt the Governor, if_ at least 1£ days prior to passage in each the information spedfied in Section 31014, and additionally shall contain a notice
house the bill in its ]?hal form has been delivered to the board for distribution to in bom type that, unless the person believed to be in violation makes payment _of
the news media and to every person who has requested the boaid to send copies of the penalty, or causes payment of the penalty to be made, in person or thwug, h the
mail within ten days after mailing of the notice bf delinquent violation, a wa rrant
such bills to him or her.
(b) This division may be amended'or repealed by a statute that becomes for the arrest of the person may be issued. If the person appears before and makes
effective only when approved by the electors, payment to, or sends payment by mail to, the person authorized to receive a
deposit of the penaltzj within ten court days of the mailing of the notice of
CHAPTEB .9. PROCEDURE ON VIOLATIONS delinquent violation, the penalty shall consist of the amount of the original
penatty.
31010. Application of Chapter. This chapter governs the procedure for
enforcement and prosecution of any infraction offense d&fined in Section 31002 of 31022. Copy of Original Notice of Violation. Within ten days qf a request, by
this division, mail or in person, the issuing agency shall provide to any person who has received
31011. "Processing Agency': For the purposes of this division, 'processing a notice of delinquent violation, or his or her agen~ a photostatic copy of the
agency" means any citll, county, court within a county, or private vendor, or any original notice of violation. The issuing agency may charge a fee ~_ ffici~nt to
subdivision of any such entity, which processes notices qf parking violations and recover the actual cost of providing the copy, not to exceed two d6[lars ($2).
notices of delinquent parking violations pursuant to the' provisions of Article 3 Failure to comply with a request for a copy of the original notice of violation shall
(commencing with Section 40200) of Chapter 1 of Division 17 of the Vehicle Code. constitute a dismissal of the charge.
31012. "Issuing Agency". For }he purposes of this division, "issuing agency" 31023. Appearance; Termination of Proceed. in. gs; Beferral. to Court., .
means any entity ofs~ate or localgovernment empowered to enforce the provisions (a) If the person served with a notice _of delinquent viotation, or liis or her
of any part, chapter of a division, or division of'this Code included in Section agen~ appears before the person authorized to receive a deposit of the penaltfl and
31002, except any processing agency defi'ned in oection 31011. makes payment of the penalty and anlt applicable assessments and fees, the
31013. "Issuing Agency Official': For the purposes of this chapter, "issuing proceedings under this chapter s. hall terminate. · , ,
agency officia, l" means any person employed by an issuing agency for the (b) If the person served with a notice _of delinquent viotation, or his ~r net
purpose, in whole or in par~ of enforcing the provisions of anlt part, chapter of a agent, appears before the person authorized to receive a deposit o_f the penalti,~ and
divi~'on, or division of this Code included in Section 31002. refuses to pay the penalty and any applicable assessments and fees, br otherwise
31014. Notice: Contents and Procedure. Notwithstanding any other provision contests the notice of delinquent violation, the processing agency shall proceed in
accordance with Section 310£4.
ob~law, an issuing agency official may prepare in triplicate, on a form approved
the Judicial Council, a written notice of violation when the enforcement (c) Ifa complaint has been fi'led in court pursuant to the provisions of 31027,
official has reasonable cause to believe that any person has violated a provision of the person served with a notice of d. el.i?qu, ent vio_lati, on shall be ref. e, rred ? the.
a par~ chapter of a division, or division included in Section 31002. For all such court, and the processing agency shatt take no Jurther action on me notice oj
violations, notice shall be given as follows: delinquent violation.
(a ) At the time of the d(s~overy of the infraction, the enforcement offi~'al shall (d) If the person served with a notice o_f delinquent violation does not appear
personally present to the person ~elieved to be in viol[~ti.on:, if present o,n the before tI~e person authorized to receive a dkposit of the penalty, or otherwise make
premises, a notice setting forth the violation. Such notice st;att include re. terence payment of the penalty and any applicable assessments and fees, within the time
to the sect'on and subdivision of this Code so violated, the time and date of the stated on ?he notice of delinquent violation, the processing agency shall file a
inspection, a brief description of the substance of the violation, and a time and complaint and a copy of the notice of delinquent violation with a court of
place for appearance by the violator. The time sp'ecified shall be at least ten. dalts competent jurisdiction, and proceedings shall be had in accordance with S. ection
after such not'ce of violation is delivered. Every written notice of a violation 31027.
pursuant to this section shall also include a statement of the penaltlt and fees fo. r 31024. Procedure upon Contest of Violation.
that violation and the address of the person authorizear to receive a dep°sit °f the (a) If the person served with a notice of violation or a notice of delinquent
penalt!t, to whom payments thereof may be sen~ and a statement in bom print violation appears before the person authorized to receive a deposit of the penalty
that payments of the penalt!l for such offenses may be sent through the mail. The and contests the violation, the processing agency shall do either of ihe following.
(1) If the processing agency is sati_sfi'ed that the violation did not occur vr that
giving of notice pursuant to this section shall be complete upon delivery of a coplt the person served with a notice of violbtion or a notice of delinquent violation was
of such notice to such person. '
(b) If a person believed to be in violation of this chapter is not present on the not responsible for the violation, the processing agency shall cancel the notice qf
premises at the time of the discovery of the infraction, the issuing agency official violation or notice of delinquent violation and make an adequate record of the
shall cause a copy of }ha notice desbri3ed in subdivision (a) of this Section to be reasons/'or canceling the notice; or
deposited in the United States mail addressed to the violator at his or her current (2} ~he processing agency shall set a trial date and provide documentai~ion to
address, as shoum by the records of any public agency. Such copy s,h. all be m, ail~e,d the court as specified blt local court rule. Except as the rules may ~rovide
within 48 hours of the inspection at which the infraction was aiscoverea. ~ ne otherwise, the processing agency shall record the person's name and address, and
delivery of notice pursuant to this subdivision is complete upon the expiration of verify whether the person appearing has received a notice of violation conforming
10 dalts after the deposit of such notice, to Section 31014 or a notice of delinquent violation conforming to Section 310£0. If
31015. Place to Appear. The place specified in the notice of violation shall be the person appearing has not received the notice of delinquent violation conform-
the offices of the processing agency nearest to the site of the violation, ing to Section 310£0, the processing agency shall serve the person with a notice o~,,
31016. Amount of Penaltlt. The infraction penaltlt imposed under this divi- delinquent violation conforming to Section 31020. The processing agency shall
126 G88
assign a specific date and time as approved by the court for appearance by the including but not limited to any provision relating to state funding of ~'al courts
person contesting the violation and shall then file a complaint and a copy of the by block grant or other means, the total amount of penalties received by a
not'ce of deBnquent violation with the court pursuant to Sect'on 31027 within 15 processing agency or court under this division shall be allocated as follows:
days. The processing agency shall notify the person contesting the violation of the (a) An amount equal to ten percent shall be retained in the county treasury or
filing and the date and time for appearance. Thereafter all proceedings including general fund, at the direction of the Board of Supervisors, for the purpose of
the collection of any penalties and fees shall be conduc~e~ by the court in the same paying administrative costs incurred by issuing agencies under this division;
manner as infraction violations of the Vehicle Code. (b) An amount equal to eighty percent shall be transferred each month to the
(b) Neither the outcome of a processing agency ? action pursuant to paragraph California Emergency Housing and Nutrition Fund, pursuant to the provisions of
(1) of subdivision (a) of this section, nor the court? verdict upon a referral Section 8699.40 of the Government Code;
pursuant to paragraph (2) of subdivision (a) of this section, shall be admissible (c) An amount equal to ten percent shall be transferred each month to the
in any subsequent criminal proceeding. ' ~lifornia Ho_us(rig Fund, pursuant to the provisions of Section 8699.30 of the
31025. Circumstances Bequiring Termination of Proceedings on Notice of Government Code.
Delinquent Violation. The processing agency shall terminate proceedings on the (d) All processing fees shall be deposited with the county for reimbursement to
notice of. delinquent violation in either of the following cases: the processing agency or court.
(a) upon receipt of collected penalties and applicable fees for that notice of (e) Pursuant to a finding by the board of directors of the Corporation for
Ca!ifornia that amounts ~etained in county treasuries and general funds under
deBnquentthe penalty.vi°lati°n' The termination under this subdivision is by satisfaction of subdivision (a) of this section are insufficient to pay administrative costs incurred
(b) Upon a verdict of not guilty from a court of competent jurisdiction, by issuing agencies under this division the board may increase the allocation of
31026. Deposit of. Penalties. funds under subdivision (a) of this ~'ction up to but not exceeding an amount
Any penalties which are received by a processing agency or court under this equal to twenty-five percent (25%) of the total amount o_f penalties received by a
chapter shall be deposited pursuant to chapter 3 of this division, processing agency or court under this div,'on, and may make such other
allocations _of funds to the Califqrnia Emergency Housing and Nutrition Fund
31027, FiBng of Complaint. Notice of Delinquent Violation; Jurisdiction of and the California Housing Fund as may be required to achieve the purposes of
Court .
this subdivision.
(a) When a processing agency files a complaint with the court pursuant to
Section 31023 or Section 31024, a copy of the notice of delinquent violation issued ' 31041. State Funding of Courts. Except as provided in Section 31017 and
for service under Section 31020 shall be filed with the court within 15 days and, 31040, nothing in this division is intended to affect reduce, or otherwise alter the
participation of any county in the Court Funding Trust Account or other programs
writtenif preparednoticein totheappear.f°rm approved by the Judicial Council shall be treated as a providing state funding of trial courts pursuant to Chapter 13 (commencing with
(b) After filing of a complaint or a notice of delinquent violation under this Section 77000) of Title 8 of the Government Code.
sectiorg }he court shall exercise all further jurisdiction over the violation. Any SECTION 9. To the extent that this Act is inconsistent with any other
fines or forfeitures collected by the court after filing of a complaint, shall be governmental statute or special act or parts thereof, this Act is controlling and
collected, areposited, and disbursed pursua'nt to t[ie provisions of chapter 3 of this shall be liberally construed to effect its purpose.
division. SECTION IO. If any provision of this Act or the application of any provision
of this Act to any person or circumstance, shall be held invalid, the remainder of
CHAPTEB 3. DISPOSITION OF FUNDS this Act, to the extent that it can be given effect, shall not be affected thereby, and
3104a Disposition of Funds. Notwithstanding any other provision of law, to this end the provisions of this Act are severable.
Proposition 96: Text of Proposed Law following: any laboratory test which indicates exposure to or infection by the
Continued from page 71 AIDS virus, AIDS-related condition, or other communicable diseases,, any state-
shouM continue to monitor their own health and should consult a physician as AIDS-relatedment by the inmatecondition,Or minOrhas beent° medicalexposedPersonnelto the AIDSthatvirus,he or orShehashaSanyAIDScommu.°r an
appropriate." nicable disease,, the results of any medical examination or test which indicates that
the inmate or minor has tested positive for antibodies to the AIDS virus, has been
If the person subject to the test is a minor, copies of the test result shall also be exposed to the AIDS virus has an AIDS-related condition, or is infected with AIDS
sent to the minor? parents or guardian, or any communicable dis'~se; provided, that information subject to disclosure
(e) The court shall order all persons, other than the test subject, who receive test shall not include information communicated to or obtained by a scientific
results pursuant to Sections 199.96 or 199.97, to maintain the confidentiaBty of research study pursuant'to prior written approval expressly waiving disclosure
personal identifying data relating to the test results except for disclosure which under this section by the officer in charge of the facility. ,
may be necessary to obtain medical or psychological care or advice. (c) The officer in charge 9f the facility shelf notify all employees, medical
(f) The specimens and the results of tests ordered pursuant to Sections 199.96 personnel, contract personnel, and volunteers providing services at such facility
~. nn dg' l~.gz shqll not be admissible evidence in any criminal or juvenile proceed- who have or may have direct contact with the inmate or minor in question, or with
bodily fluids from such inmate or minor, of the substance of the information
(g) Any person performing testing, transmitting test results, or disclosing received under subsections (a) and (b) so that such persons can take appropriate
information pursuant to the provisions of this chapter shall be immune from civil action to provi.de for the care of such inmate or minor, the safety of other inmates
liability for any action undertaken in accordance with the provisions of this or minors, and their own safety.
chapter. , (d) The officer in charge and all persons to whom information is disclosed
199.99. Custodial Safety. pursuant to this section shall maintain the con_fidentiality _of personal identifying
(a) Any medical personnel employed by, under contract to, or receiving data regarding such information, except for disclosure authorized hereunder or as
payment from the State of California, any agency thereof, or any county city, or may be necessary to ootain medical or psychological care or advice.
city and county to provide service at any state prison, t~'e Medical Faci"lity, any (e) Any person who wilfully discloses personal identifying data regarding
Youth Authority institution, any county jail, city jail, hospital jail ward, juvenile information obtained under this section 'to any person who is not a peace officer
hall, juvenile detention facility or any other facility in which adults are heM in or an employee ora federal, state, or local public health agency except as
custody or minors are detain"e~, or any medical personnel employed, under authorized hereunder, oy court order, with the written consent of the ~atient or as
contract, or receiving payment to provide services to persons in custody or otherwise authorized by law, is guilty of a misdemeanor.
detained at any of the foregoing facilities, who receives information as specified SECTION 2. Effqctive Date; Betrospeci;'ve Application.
herein that an inmate or minor at such a facility has been exposed to or infected This initiative and its statutory amendments shall take effect the day after the
by the AIDS virus or has an AIDS-related condition or any communicable disease, election and shall be construed to apply retrospectively to pending complaints
shall communicate Such information to the officer in charge of the facility in and petitions, regardless of when the underlying actions took place, and to
which such inmate or minor is in custody or aTetained, in_formation subject to disclosure hereunder obtained prior to its effective date, to
(b) Information subject to disclosure under subsection (a) shall include the the maximum extent permitted by law.
ProPosition 98: Text of Proposed Law restricted for community college purposes, no transfer or allocation of funds
Continued from page 79 pursuant to this section shall be required at any time that the Director of Finance
and the Chancellor of Community Colleges mutually determine that current
XIIIB, up to a maximum of four percent (4%) of the total amount required annual expenditures per student for community colleges in this state equal or
pursuant to Section 8(b) of this Article, to that pom'on of the State School Fund exceed the average annual expenditure per student of the ten states with the
restricted for elementary and high school purposes, and to that portion of the State highest annual expenditures per student for COmmunity colleges.
School Fund restricted for community college purposes respectively in proportion (b) Notwithstanding the provisions of Article XIIIB, funds allocated pursuant
to the enrollment in school districts and community c'ollege distg'~ respectively, to this section shall not constitute appropriations subject to limitation, but
(1) With respect to funds allocated to that portion of the State School Fund appropriation limits established in Article XIIIB shall be annually increased for
restricted for elementary and high school purposes no transfer or allocation of any such allocations made in the prior year.
funds pursuant to this seca'on shall be required at "any time that the Director of (c) From any funds transferred to the State School Fund pursuant to para-
Finance and the Superintendent of Public Instruction mutually determine that graph (a) of this Section, the Controller shall each year allocate to each school
current annual expenditures per student equal or exceed the average annual district and-community college district an equal amount per enrollment in school
expenditure per student of the ten'states with the highest annual expenditures per districts from the amount in that portion of the State School Fund restricted for
student for elementary and high schools, and that average clas size equals or is less elementary and high school purposes and an equal amount per enrollment in
than the average clas size of the ten states with the lowest class size for elementary community college districts from that portion of the State School Fund restricted
and high schools. · for community college purposes.
(2) With respect to funds allocated to that portion of the State School Fund (d) All revenues allocated pursuant to subdivision (a) of this section, together
G88
127'
with an amount equal to the total amount of revenues allocated pursuant to attained of total teacher loads of less than 100 total students per teacher in all
subdivision (a ) of this section in all prior years, as adjusted if required by Section secondary school classes in academic subjects as defined by the Superintendem' of
8(b) (2) of Article XVI, shall be expended solely for the purposes of instructional Public Instruction.
improvement and accountability as required blt law. (£) Instructional supplies, instructiona~ equipment, instructional match'als
(e) Any school district maintaining an elemeniary or secondary school shall and support services necessary to improve school conditions.
(3) Direct student services needed to ensure that each student makes academic
develop and cause to be prepared an annual audit accounting for such funds and progress necessary to be promoted to the next appropriate ~rade level.
shall adopt a School Accountability Report Card for each school. (4) Staff development which improves services to stuctents or increases
SECTION 7. Seetion &319.6 is hereby added to Artiele 9.of Chapter ofg. of Part quality and effectiveness of instructional staff designed and implemented by
9.0 of Division 9. of Title 2 of the Education Code to read as follows: classroom teachers and other participating school district personnel, including the
33126. School Accountability tleport Card school principal with the aid of outside personnel as necessary. Classroom
In order to promote a model statewide standard of instructional accountability teachers shall comprise the majority of any group designated to design such st, afl
and conditions for teaching and learning, the Superintendent of Public Instruc- development programs for instructional personnel.
($) Compensation of teachers.
tion shall by March 1, 1089, develop and present to the Board of Education for (b) Funds transfer/ed to each school district, pursuant to this section shall be
adoption a storewide model School Accountability Report Card. deposited in a separate account and shall be maintained and appropriated
(a) The model School Accountability Report Card shall include, but is not separatelyfr~omfundsfrom all other sources. Funds appropriated pursuant to this
limited to, assessment of the following school conditions: section shhll supplement other resources of each school district and shall not
(1) Student achievement in and progress toward meet'ng reading, writing, supplant any other funds.
arithmetic and other academic goals. SECTION 10. Section 14020.1 is hereby added to Article 1 Chapter 1 of Part 9
of Division 1 of Title 1 of the Education Code to read as follows:
(2) Progress toward reducing drop-out rates.
(3) Estimated expenditures per student, and types, of se. rv~ces funded. 14020.1. Instructional Improvement and Accountability.
(4) Progress toward reducing class sizes and teaching toaas. The amount transferred to Section B of the State School Fund pursuam! to
(5) Any assignment of teachers outside their subject areas of competence. Sect'on 8.5 of Articl~ XVI of the State Constitutio. n shall to the m. axi,m.um,ex~en, t
(6) Quality and currenc~ of textbooks and other instructional materials, feasible be expended or encumbered during the year receivea so~e~y ~or the
(7) The availability of qualified personnel to provide counseling and other purposes of instructional improvement and accountabili~.
student support services. (a) For the purposes of this section, "instructional improvement and account-
(8) Availability of qualifi~, substitute teachers, ability"shall mean expenditures for instructional activities for college sites which
(9) Safety, cleanliness, and adequac~ of school facilities. - directly benefi't the instruction of students and shall be limi-ted to expenditures for
(I0) Adequacy of teacher evaluations and opportunities for professional the £ollowing:
improvement. (1) Programs which require individual aSSessment and counseling of stud,~nts
(11) Classroom discipline and climate for learning, for the purpose of designing a curriculum for each student and establishing a
(12) Teacher and staff training, and curriculum improvement programs, period of time within which to achieve the goals of that curriculum, and the
(13) Ouali~ of school instruction and leadership. ' support services needed to achieve these goals, provided that any such program
(b) In developing the statewide model School Accountabilitlt Report, the shall first have been approved by the Board of Governors of Community Colleges.
Superintendent of Public Instruction shall consult with a Task Force on Instruc- (2) Instructional supplies, instructional equipmen~ and instructional materi-
tional Improvement, to be appointed by the Superintendent, composed of als and support services necessary to improve campus conditions.
practicing classroom teachers, school administrators, parents, school board mem- ' (3) Faculty development which improves instruction and increases the quality
bers, classified employees, and educational research specialists, provided that the and effectiveness of instructional staff as mutually determined by faculty and
majori~ of the task force shall consist of practicing classroom teachers, the community college district governing board.
SECTION 8. Section 35256 is hereby added to Article 8 of Chapter 2 of Part 20 (4) Compensation of faculty.
of Division 3 of Title 2 of the Education Code to read as follows: (b) Funds transferred to each community college district pursuant to this
section shall be deposited in a separate account and shall be maintained and
35256. School Accountability Report Card
The governing board of each school district maintaining an elementary or appropriated separately frqm funds from all other sources. Funds appropriated
secondary school shall by September 30, 1989, or the beginning of the school year pursuant to this section shall supplement other resources of each commanity
develop and cause to be implemented for each school in the school district a School college district and shall not supplant funds appropriated#om any other so:'~ree.
Accountability Report Card. SECTION 11. Section 14022 is added to the Education Code to read as follows:
14022. (a) For the purposes of Section 8 and Section 8.5 of Article XVI of the
(a) The School Accountability Report Card shall include, but is not limited to, California Constitution, 'enrollment' shall mean:
the conditions listed in Education Code Section 33126. (1) In community college districts, full-time equivalent students receiving
(b) Not less than triennially, the governing board of each school district shall
compare the content of the school district's School Accountability Report Card to services, and
the model School Accountability Report Card adopted by the State Board of (2) In school districts, average daily attendance when students are counted as
Education. Variances among school districts shall be permitted where necessary to average daily attendance and avera, ge daily attendance equivalents for services
account for local needs, not counted in average daily attenaance.
(c) The Governing Board of each school district shall annually issue a School (b) Determination of enrollment shall be based upon actual data from ;grior
Accountability Report Card for each school in the school district, publicize such years and for the next succeeding year such enrollments shall be estimated
reports, and not;fy parents or guardians of students that a copy will be provided enrollments adjusted for actual data as actual data becomes available.
upon request. SECTION 12. Section 41302.5 is added to the Education Code to re~d as
SECTION 9. Section 41300.1 is hereby added to Article 1 of Chapter 3 of Part follows:
24 of Division 3 of Title 2 of the Education Code to read as follows: 41302.5. For the purposes of ~ection 8 and Section 8.5 of Article XV1 of the
41300.1 Instructional lmprovemen.t and Accountability. California Constitution, 'school districts'shall include county boards of e~fuca-
The amount transferred to Section A of the State School Fund pursuant to tion, county superintendents of schools and direct elementary and secondary level
Section 8.5 of Articl~ XVI of the State Constitution shall to the maximum extent instructional services provided b~ the State of California.
fqasible be expended or encumbered during the fiscal year received and solely for SECTION 13. No provision of this Act may be changed except to further its
the purpose of instructional improvement and accountability, purposes by a bill passed by a vote of two-thirds of the membership of both houses
(a) For the purpose of this section, "instructional improvement and account- of the Legislature and signed blt the Governor.
ability' shall mean expenditures for instructional activities for school sites which SECTION 14. Severability
If any provision of this Act, or the application of any provision of this Act to
directly benefit the instruction of students, and shall be limited to expenditures any person or circumstance, shall be held invalid, the remainder of this Act, ~o the
for the following:
(1) Lower pupil-teacher ratios until a ratio is attained of not more than 20 extent that it can be given effect, shall not be affected thereby, and to this end the
students per teacher providing direct instruction in any class, and until a goal is provisions of this Act are seoerable.
Proposition 100: Analysis good drivers on January 2, 1989. The reductions would:
Continued from page88 ~ Lower rates 20 percent below those charged on
· Creates an Office of Insurance ConsUmer Advocate January 1, 1988;
in the State Department of Justice, and · Apply to private passenger vehicles, trucks with a
· Establishes a Senior Bureau of Investigations in the load capacity of 1,500 pounds or less, and mc,tot-
Department of Insurance to assist senior citizens cycles; and
· Apply to the liability, medical payment and collision
with
health-care
insurance.
portions of the insurance rates.
Good Driver and Other Motor Vehicle Insurance Pro- This measure generally defines a good driver as a
visions person who during the last three years (1) held a valid
1. Rate Reductions. This measure requires insurance driver's license, (2) had no more than one moving
companies to reduce motor vehicle insurance rates for violation, and (3) had no accident in which he or she Was
128 G88
principally at fault. Additionally, the person can never Other Provisions
have been convicted of various crimes including driving 1. Attorney Fees. The measure provides that, except
under the influence of alcohol or drugs, automobile for existing statutory limits on attorney fees, fees for all
insurance fraud, or theft of a motor vehicle, types of cases shall not be set by law, but are to be
This measure allows the Insurance Commissioner to negotiated without restriction by the attorney and client.
exempt a company from this rate reduction under certain 2. Claims Settlement Practices. The measure requires
conditions and after a public hearing, an insurance company to act in good faith toward, and to
2. Territorial Rating. The measure prohibits insur- deal fairly with, its policyholders and third persons.
ance companies from setting automobile insurance rates 3. Conflict-of-Interest Employment. The measure
based on where the insured person lives (referred to as prohibits the Insurance Commissioner and the Insurance
"territorial rating"), unless there is clear and convincing Consumer Advocate from being employed by an insur-
evidence that such a method is a valid indicator of claims ance company, insurance trade association, or any broker
experience, or agent licensed by the Department of Insurance for a
3. Consumer Assistance. The measure requires the period of 12 months after leaving their respective posi-
Department of Insurance to establish a statewide system tions.
to provide individuals with information comparing the 4. State Antitrust Laws. The measure make~ insur-
prices of automobile insurance. As part of this system, the ance companies subject to the state's antitrust laws.
Department of Motor Vehicles would notify individuals 5. Sale of Insurance by Banks. The measure also
that information on automobile insurance prices is avail- expands the authority of commercial banks to sell all
able from the Department of Insurance. types of insurance. Generally, under current insurance
law, banks can only sell insurance which pays off a loan in
4. Investigations of Fraud. Currently, the Depart- the event of the disability or death of a borrower.
ment of Insurance investigates various types of insurance 6. Discounts or Rebates. The measure permits insur-
fraud. This measure requires insurance companies to pay ance agents and brokers to give certain discounts or
an annual fee to finance increased investigations of rebates to those who buy insurance from them. It does so
automobile insurance fraud.
by eliminating the prohibition in current law against such
At-Fault Liability System discounts or rebates.
This measure declares that "... persons who wrongfully Fiscal Effect
cause damages to others in the ownership or operation of Costs
a motor vehicle should be held legally responsible for the Departments of Insurance and Justice. This measure
full extent of the injuries they cause." This could be appropriates $10 million from the Insurance Fund to pay
interpreted to affirm the current system of at-fault motor for the administrative costs of its provisions in 1988-89. Of
vehicle liability, thereby restricting other systems such as the amount appropriated, $8 million is for the Depart-
"no-fault" insurance.
ment of Insurance and $2 million is for the Department of
Review and Approval of Insurance Rate Filings Justice. The Insurance Fund is supported by fees and
assessments on the insurance industry. Given the current
This measure requires insurance companies to provide balance in this fund, fees and assessments would have to
the Department of Insurance with information on how be increased to cover these additional administrative
they determine their insurance rates by January 2, 1989. costs.
Additionally, this information must be provided when- In the years following, the ongoing c6sts could be
ever rates are changed. This requirement applies to such somewhat lower or higher, depending on workload.
insurance as motor vehicle (including rates for good Department of Motor Vehicles (DMV). The Depart-
drivers), fire, liability and disability. The principal excep- ment of Motor Vehicles would incur annual costs of about
tions are life and workers' compensation insurance. $100,000 to include notices regarding the availability of
In general, the measure requires the Department of information on automobile insurance prices in its annual
Insurance to hold a hearing and review and approve rate renewal mailings.
changes whenever the proposed rate increase exceeds
specified percentages. The department may exempt cer- Revenues
tain types of insurance--except private passenger auto- Insurance companies pay a tax based on the amount of
mobile insurance--from the department's rate review gross premiums they receive each year from insurance
and approval process, sold in California. These tax revenues are deposited in the
State General Fund.
Office of the Insurance Consumer Advocate This measure requires insurance companies to grant a
This' measure establishes this office in the State Depart- good driver discount. It also requires the Department of
ment of Justice to participate in insurance-related pro- Insurance to review certain proposed insurance rate
ceedings. The Attorney General--who is the head of the changes. Information from the DMV indicates that over
Department of Justice--would appoint the Insurance half of the drivers in California could quality for the good
Consumer Advocate. driver discount. Such discounts, by themselves, would
Seniors Bureau of Investigations reduce state insurance tax revenues by about $20 million
in the first year they are granted. This estimate assumes
This measure establishes this bureau in the Depart- that no offsetting adjustments would be made in other
ment of Insurance to assist senior citizens with health- insurance rates to compensate for this discount. Whether
care insurance policies. It also regulates various business such adjustments would occur is unknown.
practices relating to seniors' health-care insurance. The ongoing revenue impact of this measure also is
129
unknown. It would depend upon what happens to insur- $500,000 annually, from fees paid by insurance companies
anco rates in the future, on automobile policies. These revenues would be used to
Department of Insurance, The Department of Insur- fund increased insurance fraud investigations.
anco would receive unknown revenues, possibly over
Proposition 100: Text of Proposed Law the plan. The commissioner shall require that rates charged to such applic,,nts
shall not include any charge for commission in recognition of the fact that no
Continued from page 87 agent is involved in the transaction.
11629.604 Rollback of rates. (a) Effective ]anuary 2, 1989, every insurer shall SECTION 6. Investigation and Prosecution of Automobile-Insurance Fraud
adjust its rates for good drivers for bodily injury, property damage liability, Section 12998 is added to Article 5 of Chapter 2 of Division 3 of the Insurance
medical payment, and collision coverage such that those rates are at least 20 Code to read:
percent less than the amount charged for the comparable risks as of January 1, 12998. Each insurer shall pay an annual fee, to be determined by the
commissioner but not to exceed 10 cents for each automobile liability policy,
1988. automobile physical damage policy, automobile collision policy, as those terms are
(b) Any insurer may petition the Insurance Commissioner for part'al or
complete exemption from the provisions of subdivision (a) of this section on a defined in Section 660, and any combination thereof, delivered or issued for
showing, by clear and convincing evidence, that its overall rates for private delive . in this state, or the purpose of funding increased investigation and
passenger automobile insurance would be inadequate pursuant to the provisions p~o~7~cu~n of fraudu~°nt automobile insurance claims. All moneys received by
of Section 1852 of the Insurance Code· No such peti'tion shall be granted except the commissioner pursuant to this section shall be transmitted to the State
after a public hearing complying with the provisions of Sections 1852.4, 1852.5, Treasury to the credit of the Automobile Insurance Fraud Investigation and
185£.5 1852.9, and 1852 of the lnsurance Code. which account is hereby created. All moneys in such aCCount are hereby
11629.605 Automobile insurance rating plans. (a) Every insurer shall file Prosecution Account of the Insurance Commissioner's Regulatory Trust Fund,
with the department its automobile insurance rating plan and every amendment continuously appropriated to the department and are to be used exclusively b§, the
thereto. The commissioner shall disapprove any automobile insurance rating plan Bureau of Fraudulent Claims and authorized governmental agencies for the
inconsistent with this article. The commissioner, shall by regulatibn adopt standards for the fair and
(b) The commissioner shall not permit the use of any automobile insurance investigation and prosecution of fraudulent automobile insurance claims.
rating plan that discriminates on the basis of race, language, color, religion, equitable distribution of grants to authorized governmental agencies, as defi'ned
in Section 13003, to further the purposes of this section.
SECTION 7. Public Hearings
Chapter 3 of Division 3 of the Insurance Code is added to read as follows:
ancestry, or national origin. . . .
(c) The commissioner shall not permtt the use of .any automobde msum~ncq
rating plan that discriminates ~n the basis .of geographic territories not jusiifiea,
by clear-and-convincing evidence, to be valid a predictor of losses. CItAPTEB 3
(d) Every automobile insurance rating plan shall to the maximum extent
practicable, provide that rates for any vehicle for which the principal operator has Put;LlC HF~I~I~vCS
heM an operator's license for at least three years, shall depend on driving record. 13600. Notwithstanding any other provision of law, whenever the Commis-
(e) Every automobile insurance rating plan shall provide at least a 20 percent sioner is required to hold a hearing, the hearing shall be conducted in accordance
discount for every good driver, when compared to a driver having similar with the following:
characteristics but not qualifying for the good driver rate. (a) Reasonable notice shall be given of the purpose and nature of the hearing
11629.606 Right to hearing on claims of discrimination. (a) Every person and of the opportunity for public participation.
who claims to have been the victim of unfair discrimination in automobile (b) Any person desiring to do so shall be provided a reasonable opportun:ity to
insurance rates may pea'tion the commissioner for a hearing on that claim. If the present his or her views.
petition establishes a prima facia case of unfair discrimination, the commissioner (c) An administrative record shall be compiled, containing all evidence upon
shall conduct a hearing, to which Sections 1852.5, 1852.6~ and 1852.9 shall apply, which the decia¥on is based, all admissible evidence offered by any part:?, all
The insurer has the burden o_f proof in the bearing, documents required by law to be filed with regard to the subject of the hei~ring,
(b) The Commissioner shall as a part of the filing requirements adopted and all comments made by any person. Except as provided by Section 1852..9, the
pursuant to Seca'on 1852.1, require the filing of a schedule for private passenger
record shall be open to examination by any person.
automobile insurance, showing: 13601. Any hearing fo.r the purpose of reviewing or adopting a rate, rating
(1) Current and historic pure-premium losses and loss adjustment expenses, on plan, rating system, underwriting rules, policy forms, or classification s:,istem
both a paid and an incurred basis, by territory and z!p ,code; and, ,., shall be conducted as £ollows:
(2) The ratio of those losses and expenses to statewide tosses ana expenses °] me (a ) Any insurer whose rates, rating plan, rating s~stem, or underwriting rules
insurer, and the territorial rating factor for each territory, are to be reviewed in the proceeding and the Insurance C.o...nsum. er.A.dvocateish,a,l.!
11629.607 Consumer assistance in shopping for automobile insur- be deemed a party to the proceeding. Any person ma~u pecLnon fo mcervene : n.
ance. (a) The commissioner shall contract to establish a computerized system to proceeding. The petition shall be granted except where the commissioner cteter-
store and retrieve price-comparison data on basic automobile insurance. The mines that the position of the petitioner is already fully represented by another
system shall be available no later than July 1, 1989. party and that intervention by the petitioner would t~e unduly burdensome. Upon·
(b) Upon determination of feasibility by the commissioner, which may be the granting of the petition the petitioner shall be deemed a party iV the
before or after July 1, 1989, the commissioner shall contract for the provision of Pr°~h f~nng/~ r~erson wishin~ to comment on matters relevan? to.fpo hea?ng a. nd,,n?t
computer terminals in publicly available loeations throughout the state, which
will provide price-comparison data to consumers on a walk-in basis for a d~[/i~"[o~i-~oke the ffrovisions of subdivision (c) of th~s sec, ao.n stiatt.o,e
permitted to make such comments, orally or in writing, upon such ~erms as me
reasonable fee .... o the commissioner may prescribe for the orderly conduct of business, and need ~ot file
(c) Every vehicle registration renewal notice shall co. ntara a notice ~f
' availability of price-comparison data and a form which the recipient may return a petition to intervene or become a parttl.
to the Department of lnsuranve requesting comparative price quotations for basic (c) Any party shall have the right to engage in discovery, to call, examine, and
automobile insurance on his or her vehicle. Tbe fo. rm shall require ~ufficient cross-examine witnesses, to introduce exhibits, and to compel testimony and
information from the vehicle owner to establish the appropriate rate for the production of records by subpoena in accordance with the rovisions of .~;ection
vehicle from ~he information filed by each insurer pursuant to subdivision (b) of 11510, subdivisions (b) and (c), of the Government Code an" f~ctions 1985, 1985.1,
and 1985.2 of the Code of Civil Procedure, subject to the reasonable control of the
Section 11629.603. ' commissioner. Oral evidence shall be only on oath or affirmation.
(dj Within fifteen days of receipt of a request for comparative Price qu°tati°ns'
the Department of Insurance shall mail to the requestor a listing o£ relevant SECTION 8. Fair Insurance Rates
price-comparison data, containing information on no less than the six lowest-cost Section 1850 of the Insurance Code is repealed.
insurers (or£ewer where less than six offer coverage for the requestor)including ,o~n ~ ..... o~ ~ cl;.~ ~r ~s t-o prc, rc..~ the t, .... ~=e .by
· ~ ,- ~: ....... en~ ~ -' n~ ~,
· but not limlted to: ' '~:~'%~',~'--~-'-,-. · ' · ' - te au~- .... t-he ex~'.c, nee
(1) The name.of each insurer,. . .. ~ ....... - ......... and ~--'~cry c, rgar.:za,,c=andt~
(£) The rate charged for ba~.c autom.obile i. nsura?ce by t~. t msurer,. · , e~-n~e~qu ......... ~,~-~,~--y:~ ~'""*' ~- .......
(3) The address and telephone number where the requesfor may apply ]or ff~ ~ ;'c,~,~, gc. ...... ~ ~ ra..~.~, ~, ~.,?,~,..~- ~.^,..~ ............
coverage, m~1~'-~ and ~'~- .... l~..a
satisfaction. ' , _ . ~^ '~..'~k~:.'...~ ..... ~-~:~a~l~46ngi~t-hi~eha,a~ismtcn~c~
(e) The application for price comparison data shall be kept confidential Upon oot-::ccn :ngurcr:,,~ ................. · . lcz....~'
completion of the request, the application shall be destroyed, t~ glve'tt~e ~ power t.o f~ and dc ,c.-m:nc a ~ate level by e
(f) The commissioner shall establish a fee schedule for (1) requests for price o~
comparison data, which shall not exceed three dollars per vehicle, and (2) filings Section 1851 of the insurance Code is amended to read as follows:
made pursuant to subdivision (b) of Section 11629.603. 1851. Scope. The provisions of this chapter shall apply to all insurance on risks
SECTION 5. Reform of the Assigned-Risk Plan or on operations in this :',ate State, except: ..........
Section 11624.2 is added to Article 4 of Chapter 1 of Part 3 of Division 2 of the (a) fleinsurance, other than joint reinsurance to the extent statea tn aructe
Insurance Code, to read as follows: (b) Life insurance.
11624.2 Any person may submit an application for coverage by the plan (c) Insurance of vessels or craft, their cargoes, marine builders' risks, marine
directly to the Department of Insurance or the Department of Motor Vehicles, protection and indemnity, or other risks comm.o.n, ly i~?,ured, und.er m. arine, as
which shall immediately forward the application to the organization operating distinguished from inland manne, insurance pol~ctes, mtana manne insurance
G88
130
shall be deemed to include insurance now or hereafter defined by statute, or by ............ , .......... ~ ...... a: .......,1__ .,
f~ hhev - t~o~ of ~ ~vr ........... ~ o~ ~v .... ~ ............ ee ~ t4~e c:a:,~cncc of
interpretation thereof, or if not so defined or interpreted, by ruling of the ~ sue.', agrccn.cnt.
cc, n'.,'rgss!cncr Commissioner or as established by general custom of the business, as ; .... . ~'conso~ ~ v,~, ..... on9 a~t ac,'~.:_~d sr,:uccc9 e~e nut,or;ccd
inland marine insurance.
~q- Workers' compensation insurance and insurance of any liability of employ- ' ..':yx, ..... o ........... ma~ be .......... ng a~n-..:..ccl :nsurcr~ ;:':,,i ~ to t-be
ers for injuries to, or death of, employees arising out of, and in the course of, ~_~E' a--cr.~cmr, cnt .... amcn~~,1rt?-.."2~' d,,~.~' ...~.:~/[ ........ -L:may be
employment when this insurance is incidental to, and written in connection with, ~ ....... rr-~:.nr9 ~ ~ m goo~ .ac,.. cn..~c~ to ~ who a~,e m':ahlc to procurc
the workers' compensation insurance issued to the same employer and cc;'cff, ng %:~.'-tee ~ ~: .......... ~ ......... v~, t~ the ase
covers the same employer interests. ~e ........... n9 fo~ .............., soeh .~ ........... to be :ucjcc. to
+~r (f) Mortgage insurance. ~ al~ of the con-.znlsslcncr.
_--~...j:. ..... ~. ............... be .......... m ........ to the cc;-.~-rzss;oncr ~
~ (g) Insurance b'ansacted hy county mutu~ ~re insurers or cotmty mutual .... :~,.~..v., as~ ..~,: ....~ ..................... on e~ be ~ ~
~ T-he co.7-_--,,;:s:cncr ~ epp~o~e o~ suet a~,~,~maea~ as a~e faun,1 by
(h) Cooperative corporations whose members consist solely bf physicians and himto .................. ~.:~L · ,1 .L
· . ~ ........r..-;.o ~ Oae use of ............ meet the standards prc:cr;.cd
surgeons, except as set forth in Article I of Chapter 3 (commencing with Section t-his c.':.aptcr ami xoa0r ac~;~.'-ic9 a~d p ....... t-ha~ a~e ~ .._r .............
1280.5) of this part. ............................
Article 2 of Chapter 9 of Part 2 of Division 1 of the Insurance Code is repealed ctkc.-.;qsc ::.ccr.:"ztcnt ':.-'.th the prc;~s".cns of f~ chapter.
· A~ e~ty time .......... ~. ........... a~e m ...... the .........: ..... may rc;:c;v
and added to read as f0li0ws: ~ .... r ........ " ..... ~t. ~..:...~s'~'-":- of the .m. ......... .... .s to .... ...... ]- ....... ~ ........... '- ami if' c~.cr~'
~__,:~.u,_pcrtalnkng to ~t~ ...... of insurancc t,o which the Fro;'i:;cn~ of ~ chaffer ase .q~eeme~. sFccil;Sng i~ ·:;hat ~ ~,h ae~ o~ ~',~/ee i~ unfair o~ unrca:ord
-~v ....... ame ~ cthcr;;is-: ......... nt .._.,L the .......... ef/ahie chart ........ :-'-
be ...... ~ ............... ~. , ~ ..... ,t.~..e of ~ ...... ~ e~ ~ ~ gcc~ causc, a~ ;tcr ,.caring upon
Ne eeto ~ be ~ t~ be c;cc=~;'c ~ ~ su-h ee~e ie .......... ].% ~ ~ ,~eee ..... '~ ~-z ........ ~ ~ ......... t9 .........*,-he ............... may
.... mme~ ...... l. es~ to tbe ..............to ......... i. ato i, ~v,d,~ ..... t'bev .......... of this .... v ....~,~, ............. 0
e~ if .......... d v~ ...... h% ...... of ......z..-~ ..... ~- ........ e~ .......g a
~[~ ..........gq,cup e~ asseeietie~ P, ka~ has ~et ..... ~,nc~ ": t-he provisions
.. -~, ~cnsi~cra~cn ~ be ~,, ~ ~e cxtcnt apptieak~, to ts~ ~ l~"esped c..a~tcr app!!cahld to ~..
ave ~ ~-v ................. ~ cut:i~ PMs ...... to ............n e~t ....... r,.~ Article 2
~_ch~ds, to a. ~sof~kte ~ f~, .~.c.r:::'ri,~n{~ ~ ~ conY.::gcnc:cs, to pest Making and Use of Bates
_~a~~ ............ ~ ...... a~t ......spee~ap~tot, l~ 1852. Standards in making and using mtes. (a) No insurer shall charge a
...... e~t to a~ .............- ................ d .......... rate that is exc~sive, inadequate, or unfqirly discriminatory.
~. ....... t-his ...... . a~ va the e~e :of ....... flee ..................... ~ ~...~. .... a..-. ..... :~ra ....,may .... be, (b) A rote is neither excessive nor inadequate if it gives the reasonably effic7'ent
~ to the e,x-pee~ of t-be ~ ......... e ............. ~ fee ......r ...... insurer the opportunit~ to earn a net after-tax return on equity comparable to
~r, .,1 pefied. ........suck ~v ........ . ~s , ......... other businesses presenting a similar ddgree of risk.
........ rouen ,may.~e be ~· va t-be ....... g ~ use of ..... to .......dg, 1852.1. Filings. (a) On or before ]anuary 2, 1989, ever~ insurer or rating
' ' " ....... " ..... ,1 ..... ~ ' '~:- organization shall file with the commissioner the manual or plan of rates,
po.lc:,'..o:=ors,~ ?'~ Premmm ~"'v..-':c..-~zcr: e~ suhsc.-i.':c:s. ............ e~ ........ d by ms~,,~s~e to ...... classifications, rating schedule, poZicyfee,_ ratingruZe, andothersimi/arinforma-
tion needed to determine the rate level then in effect for a line, subline, or class
...... r e~ ~.~.~, of ....... rsmay ..... fi~ ..... of .............. e~of o/insurance.
~7,7;'~i~'~:::-~:~ ~,~,o~.~.~.or. ht:...: ....o, ~ ~%~_.~ Cb) Thereaftqr, fi'Zings shall be made whenever rates are changed, as follows..
............. ;;'; ...... t- .......· :u~:;xs;on o~ con.~:.':aY;on t..crca*. (1) F/lings that change rates but are certified by the insurer not to exceed the
~ ~ may be ~ by ................ f~ t-he ...............of .....neat applicable prior approval band, as _defined in Section 1852.2, shall be filed not
........ am }. ............................... may be ........ to f~" later than the effective date of the change and may be used immediate£y, subject
........................ ~ ...... ~ ~, ............................ &~ ~ to the authority of the commissioner to order otherwise. '
n.c=u~;n~ ;'a:5;a~n-. ~ i~ ...~..~ ~- .... ,19 o, ~ ,- ......... · · , ..,~ ~._a.~v... ~.~..c'--L ~,--.~,1--J' (2) Filings that change rates beyond the applicable prior approval band shall
may ........ ~ ~ ...... ~ ~s'iS~ ..... e v .......eff~ upon .~scs be filed no later than ninety days ~_efore the proposed effective date and shall not
~ ................ ~ ............ ns tn ............. va ~ mag' ~ be used without the prior approval of the commissioner.
~.o ....... ~. b~. ~. ~s~,. ~ ...... ~r...cn., ~ ~ bed (c) Eve~ filing shall be 'accompanied by sufficient supporting data to
t~m~,~_:e_,~o~ ~::~crs;cn ..... ~ .~:e~,~_."azar~' o~ a~y cthcr rca:0nable..,, ccn:idcra~cn:.. _,1 Such establish that the rates are not excessive, inadequate, or unfairly discriminatory.
~..~'^'^-"^llv*'~' ............. d,a~ ................ . , ~ ao~v.:.:....l:, to ~ nolr~ u:,~cr the sa.mc o~ The supporting data shall include, but not be limited to, the following:
.......... ~ .._ sa.mc c:rcu::'..s.anc~9 e~ ccna:..cn:. , (1) Supporting actuarial data in sufficient detail to just;fy any rate level
l~a. SuSjcc~ to an4 in cor..~'.ix~cc ':.~tk t-be pro'd~on: of t~ c'haptcr changes and statistically demonstrate the differences or corrections, or both,
authcrlzkng insurcrs to be ..-nc,,'nhcrs o~ suYscrlhc, rs of ra.~.ng oe ...... ,--y
~,1 ....organi~a~ relcoant to rating plan definitions and rate dlfferences.
...... o~ to ~,-o-~ va ~ ................... ~ o~ jo~ ......... ce, ~ o~ ...... k-zuror9 (2) An exhibit com.~a, ring the proposed rates to the previous rates stated in
~ ae~ i~ concoct with cach :thcr ~t ;;St.~, cthcra ~ rc:pcct to ~ malices percentages. This exhibit shall show the date the preceding rates were submitted
to the commissioner.
pc:talnlng to t-be m~d(4~ of cato: o~ :aging ::,-stc:r,s t-be prcpa:a5on o~ u,ak-k:g of
.......... ~ o~ ~ ............ r:,'n~. - .... ' ' ~t (32 A statement of all underwriting rules imposed by the insurer.
2 ..... :oa..ona, me ~ of ~ o~ cxTcnsc sta.~s.~cs o~ othc: i.~c.wr,,:..'.;an ~ (d) The commissioner shall adopt regulations *pecifying how multiple classes
~ata, o~ ca::ylng o~ of :csca,-ch.
, o~o ~ un,~ .~p^~, to an9 ................. to the ..... of ~ ..... of commercial insurance shall be aggregated into rate filings. Aggregation shall
........................... v ........ s ....... ~ hR-es ...... ~ prov. ides. uffi~'ent information for the commissioner to make the findings required
sy:tcms, t-he prcpara.'~on e~ n.cSdng of !::surf':ce ~ e~ bend fz.7..s, undcr;',~ff in this chapter.
~ ~ sur~[~.ys, impeet4om ~ L':;-cs~ga~ons,-t4~ .~arn..is?Sng of t~ o~ c~cn:c (e) For purposes of this article, a filing shall be deemed to have been made
..........~,1_:,,^,1°~: ........ .................. ~._~. ....... on a~ ..... o~ .... . ·...g o~ of. ......... · · ~c,~,°* .... ...... ,1~_ when received by the commissioner. If the commissioner determines that a filing
......................... g a ........... ~.~ o~ ~ va t4~ ........... is inadequately documented, the filing shall not be deemed to have been made
co:r.~-r, on ..... managcmcnta. .... , ........ o~ con~ol, a~ee...crc~)' .... authofiz0d,:,.,_ t-o. aeC, i~. concert hcS:;ccn ~ntil the commissioner receives such supplemental materials as he or she may
o~ ...... :~ ..... :[~ ..... t-he ...... as if ~ ........... d e ::ng.c :nmrcr, a~ to t-he order.
....... t-ha~ .................... to ........~ ...... t-no o~ .... rc .a.-r.:..c~ u:surcrs 1852.2 Prior approval bands. (a) The applicable bands in any 12-month
....... ng ........... a~e ..... by ........... to act va .................ee ...... ~ period shall be:
....;.;~%~;; ~o~ .....as ~ t-ney ........... a e ~ ~ (1) Seven and one-half percent for personal lines.
· '~.~i ..... cr..hcr: ~ suh.z]r'.hcrs of ~ o~ ~ orga.':izaSor, s may use (2) Fifteen percent for any commercial line, sub-line, or class.
~ ,~;~. ...... ~ :·~,~,~. 9 ............... e ~des e~ peiiey e~ ............ of ..... (b) For purposes of calculating rate changes, no adjustment to the prior
~-~.. ............................... · ............... ly, ~ ~ as ~. ..... cd va approval bands may be made for any claimed subsidy of any state-mandated
..... v:.~: ......,~,y.~, an4 ........ ~, shait n~ .~. ~ ~ ........... e~ ~ program such as the assigned-risk plan. However, in determining whether a filing
orgca'::7.a~on: ee ct~or; to ~m. ....~. .....~ ~ ~ ~ ,~ ..... a_:~,.^a meets the regulatory criteria the commissioner may consider such claims of
~ ~ ........ - e~ .......... the ...... ' ............. (c) For purposesofdetermining whether a rate change is within the applicable
-~vt..~ by ~ ...... ~ v.~ ........ on, o~ t-be un~cr';.'n.n:7. ~fles o~ pot4eg o~ h0nd prior approval band, the effect of the rate change on the insurer's statewide or
, gnepa~e4 by ~ ,.,at~g o, ....... ·~.~ ...... on ....... ~,~be ........ntva ...... territorial written premiums shall determine the perventage rate change.
to support ~ F. ndlng ~ a~ agrccr..cnt to so a&k. crc cxhsts, a~l may be use4 on!y 1852.3 Decision whether to ham a hearing on the filing.
G88 131
(a) The commissioner shall publish a weekly list of all filings, which shall participation. Applications shall be made to the commissioner for reimbursement
identify the filing insurer, the lines, sublines, or classes affected, the percentage of the expenses of administrative proceedings and to the court for reimbursement
change in rates, whether the insurer has certified that the filing is within the of the expenses of judicial review. Awards shall be made after conclusion vi' the
applicable prior approval band, and other pertinent information. The list shall be proceeding and shall be based on the reasonable cost of the services and the party's
provided by mail to any person who has, in the preceding twelve months, contribution to the decision. Awards shall be made only where the finar,~cial
requested in writing receipt of the publication and paid any reasonable fee burden of private enforcement makes the award appropriate. If the person has
established by the commissioner, made a substantial contribution to the proceeding, reimbursement shal~! be
(b) Upon receipt of a filing the commissioner shall create a public record ordered. Beimbursement shall be paid by the insurer. If the commissioner finds
containing all information contained in the filing, that any person has abused the processes established by this act for personal gain
(c) Within twenty-five days from the date of publication of the weekly list or advantage, the commissioner may bar such person from appearing in any
required in subdivision (a ) of this section containing notice of the filing any proceeding conducted pursuant to this article for a term not to exceed three years.
person may petition the commissioner to bom a hearing on the filing. The 1852.7 Exemptions. (a) This article shall not apply to any policy for wMch
petitions received shall become part of the public record of the filing. Failure to the annual premium exceeds $500,000.
file a petition shall not preclude any person from pa~'cipating in anal hearing if (b) The commissioner may adopt regulations exempting specified classes from
one is ordered. The petition shall be grant_ed if it meets any of the following: the requirements of this am'de. No exemption shall be granted unless the
(1) If the filing is outside the applicable prior approval band and the petition commissioner finds:
raises non-frivolous claims that the rates would be excessive, inadequate, or (1) The class has exhibited relative price stability in recent years.
unfairly discriminatory. (2) There is sufficient competition in the market, and consumers have demon-
(2) If the filing is within the applicable prior approval band and the petition strated widespread ability to shop freely among competitors, to support a finding
contains competent evidence that the rates would be excessive, inadequate, or that competition would prevent the maintenance of excessive rates.
unfairly discriminatory. (3) The market does not have a history of excessive or inadequate prices.
(d) The commissioner shall, notwithstanding the absence _ora petition, hold a (4) The exemption will not contribute to problems of unavailability, unaffor-
hearing on any filing outside the applicable prior approval band to determine dability, or reduced coverage. '
whether the rates set forth in the filing are excessive, inadequate, or unfairly (c] No exemption shall be granted for private-passenger automobile insurance.
discriminatory, if any of the following criteria are met: (d) Exemptions shall expire no more than three years after their adoption.
(I) It appears that insureds coveredby the filing will be among the ten percent They may be renewed by adoption of an appropriate regulaJi, on. , , .
of the market paying the highest premiums. 18528 Rating plans. (a) An insurer shall adhere to a firing untess cna:~gea
(2) The filing covers two percent or more of a market For purposes of this by a subsequent filing.
calculation, filings of affiliated companies are deemed to have the market share (b) The commissioner shall by regulation adopt standards for rating plans
of the entire group of affiliated companies. (including experience rating plans, schedule rating plans, individual risk pre-
(e) The commissioner may bom a hearing at any other time, before or after the mium modification plans, and expense reduction plans) designed to modify rates
filing becomes effective, when it appears to him or her that the rates spedified in in the development of premiums for individual risks. Such standards shall permit
the filing are excessive, inadequate, or unfqirly discriminatory, recognition of expecied differences in loss or experience characteristics, and ~hall
(f) Within ninety days of a filing outs~de the applicable prior approval band, be designed so such plans are reasonable and equitable in their applivation, are
the commissioner shall issue a -decision either approving or disapproving a filing not unfairly discriminatory, violative of public policy, or otherwise contrary to the
or ordering a hearing on the filing. A decision to approve or disappr, ove..a filing public interest Such standards shal[ not prevent the development of new or
outside the applicable prior approval band shall be in writing and sl~ati contain innovative rating methods which otherwise comply with this article. Such rating
the findings required by section 1852.4. A decision to hold a hearing and a plans shall be filed in accordance with the regulations adopted by the commis-
decision denying a petition for a hearing, shall be in writing and shall state the sioner. The regulation shall establish maximum debits and credits that may result
reasons therefor, and other method~ of risk management, and shall require insurers to mai:atain
1852.4 Decision. (a) The commissioner shall issue a written decision, based from application qf a rating plan, shall encourage loss control, safety progi'ams,
documentation of the basis for the debits or credits applied under any plan. Once
it has been filed and approved, use ~f the rating plan shall be manda, tory and
such plan shall be applied uniformly for eligible risks in a manner that is not
on the evidence of record, approving or disapproving in whole or in par~ any
filing outn'de the applicable prior approval band and any filing on which a
hearing is held. No po~'on of a filing shall be approved unless its rates are neither
excessive, inadequate, nor unfairly discriminatory. 1852.9 Trade secrets. Any person seeking confidential treatment of informa- (b) In determining whether rates are excessive, inadequate, or unfairly dis- unfairly discriminatory.
criminatory, the commissioner shall make findings on each of the following: tion submitted pursuant to this article shall so -designate that informatior,~ and
(l) The estimated premium volumg acquisition costs, administrative expenses, shall state the grounds upon which confidentiality is sought Inforr~_ation shall
losses, loss-adjustment expenses, investment returns (including long-term capital not be treated as conJ'ulential unless the claima.nt, proves, th. at its disclos?e
gains), and taxes, likely to cause signifiva, nt competitive injury and tl~at suet, t~arm outweig~s tt~e
(2) Historical losses per exposure and the basis for any deviation of the value of disclosure to the pablic. The person seeking confidentiality shall have the
estimated future losses from past experience, burden of making such a showing. A party, other than another insurer, sha. ll halve
(3) The extent of competition in the line, subline, or class of insurance in each access to the conf(deqtial information under approp.~ate p~ro~e.ctive~orctez: l~e
affect.ed territory, the ability of consumers to shop competing insurers effectively commissioner shall adopt regulations providing guidetines Jot identifying conj,-
and the extent to which competition in the line, subline, or class of insurance can
dential information.
be expected to maintain fair rates. 185£.91 Transitional prov~'ous. For purposes of computing the applicable
(4) The relative efficiency of the insurer when compared to other insurers, prior approval band, no rate in effect prior to ]anuary 2, 1989, shall be considered.
including the insurer's use of cost-control programs. . . . The commissioner, upon the motion of any person or on his or her own motion,
(5) The quality of se.rvive, bus.ed on all. evidence before me commissioner may review any rate change made bet. ween January 1, 1988, and January 2,, 1989,
including but not limited to comptaints to the department to determine whether the rate meets the requirements of Section 185£. A snowing
that an insurer has increased rates between January 1, 1988, and ]anuary 2, 1989,
(6) The extent to which the rating system provides adequate incentives for more than the increase in the California consumer price index shall be prima facia
insureds to minimize risks.
(7) The extent to which the insurer assists its insured, in risk reduction, evidence that the rate charged on January ~ 1989, is excessive.
(8) The fairness of any underwriting policy of the insurer placed in issue by 1853. Rating and advisory filings. (a) A licensed rating or advisory organi-
zation may file historic loss cost data, which any member insurer ma~t incort~orate
in the supporting documentation of its rate filing. The rating or aa~,~iso, rI/
organization may not specify a f~lly developed advisory rate, may not proviete
trending or specify prospective loss costs, and ma~ not provide historic or
any party.
(9) The need for, and expected availability of, reinsurance.
(c) For filings out~'de the applicable prior approval bands, the burden of
establishing that rates are not excessive, inadequate,, or un£airly discriminatory
shall rest with the filing insurer. For filings within the applicqble prior approval prospective expenses, profit, or contingencies.
bands, the burden of establishing that rates are excessive; inadequate, or unJairty (b) The commissioner may, aft_er a public hearing, exempt from the require-
discriminatory shall rest with the party challenging the, rates, ments of this article for a peri-od not beyond December 31, 1990, any i~,~,,rer
(d) The commissioner's decision may order such adjustmen, t in rates as ma~y b.e having nationwide gross premiums of less than five million aollars
necessary to prevent the rates from bm'ny excessive, in .~. ua. te, or un~airty ($5~000,000.00), if the commissioner finds that there does not exist an available
discriminatory and may require refund of any premiums corrected pursuant to an source of actuarial services sufficient to enaple such. (usurers to. meet1 ~1e.
excessive or unfairly discriminato.ry rate. ..... · ..... requirements of this a~'cle. This exemption may be extended to December 31~. 99,
(e) Except as ext-e~ed for good cause, the deci~'on shatt issue within ~ aays o~ upon a finding by the commissioner, after a public hearing that such ca;~acity
the order to bom a hearing, remains unavailable.
1852.5 Judo'al review. (a) Notwithstanding the provistons of section 1858.6~ SECTION 9. Consumer Advocacy
judicial review of a commissioner's decision pursuant to this article, .or. of a Article 9 is added to Chapter 6 of Part 2 of Division 3 of Title 2 of the
decision not to hoM a hearing pursuant to this article, may be had tnj petition for Government Code to read as follows:
a writ of mandate pursuant to Section 1094.5 of the Code of Civil P_roqed, u. re... Article 9
(b) A decision of the commissioner to holara hearing is nqt a Jinat attm~ms-
trative decision amt shall not be subject to judicial review. Office of the Insurance Consumer Advocate
1852.6 Intervenor funding. Any natura, l person,' or any nonprofit, organic: 126£0. There is hereby created in the Department of ]ustice the Offwe of the
tion other than a nonprofit organization wt~ose principat p.ur~, se is ~o serve me Insurance Consumer Advocate.
interests of for-profit bufi'nesses, may, if they have participated in an~ proceed~n[l 1£6£1. The Attorney General shall appoint the Insurance Consumer Advocate,
conducted pursuant to this a~'cle, apply for reimburse. ,ment o.t reaso, naote, who shall report direetl[t to the Attorney General, who shall serve at the pleasure
advocate's fees, expert witness fees, and ott~er reasonaote expenses o.t such of the Attorney General
139, G88
125££. The Office of Insurance Consumer Advocate shall employ personnel imo an in:::rar, ce cc~n~act, ~ v:!uaLb cznsi~cr~ffzn
suffi~ent to ~o~ its duties. :~cci~cd, ~r~mLc~ ~ ~r~dod ~ ~ ~ F~!icy, ~ aFF~icaff0n ~ ~ ins~rancc,
1~6~3. The ln~rance Consumer Advocate ma~ inte~ene as a matter of dght ~':uckczn:~dcraSzn~a;;c~ngm~e...w n~
in an~ judi~al or administrati~ proceeding in which matters relating to ~ ~ ~crs~n n~cd ~ ~ ........: ...... ~ m' ~ v~..~-~:~" ~ namcd ~ ~ ~rlnc~pal,
insurance are involved. ~:-~ · ..... -. -~: ....... ~ ........ ,~,..~
12624. The In~rance Commissioner shall fullp cooperate ~th the Instance ':.'~, dlrccfiy ~ ~na~rcct!y, F~$':Angb' accc~s ~ rccclvc:
Consumer Advocate in an~ pwceeding in which he or she app~rs before the ff~!2/~ a
commissioner and any proceeding to which th~ are ~th ~i~. The coo~ration ~ Pas~cnt~ ~ c~mmLs~;n; ~ ~ ~ L~;~rcrs ~ ~ agcn~s
shall include providing complete access to all r~ords in the ~ssession of the ~-~, ....... ~ ....~ ....... ~...c..~ ~dcr ~ c;dc, ~ c~rc;;ly .... u ....a
Depa~ment of ln~rance. ~
12625. The provisions of this a~icle are not exclusi~, and the remedi~ ~ ~:ur~cc Su:inc:s ~ ~ Sta~c ~ ~tScr t~n ~ admitted insurcr
pwvided in this a~icle shall be in addi~on to any other remedi~ providd in any : .............. ~.-, ~-~ ....... ..... ~ ...:~;~rv~" ~ ~ e
other law or availab& under the common law. 7~.7. ~ ~c:;;n, knc!u~ng ~ ~ u~itcd ~ ~ ~c:s;n
1~626. Eve~ raw filing and evew pe~'~on filed pursuant W A~icle 2 c~tcd undcr ~ c;~c ~ c~cm~cd undc: ~ c~dc from
(commen~ng with Set,on 1~2~ of Chapwr 9of Pay 2 W Division I of the ..... ~ ....... ~ .....
....... , ~ agrcc~ ~ ~ pcr~on c~nccrn~ng
Instance C~e shall ~ Mmultaneo~ly se~e~ on the [~urance Consumer ............ ~ .................. a ...........
Advocate. ..... ~ ...., ....... ~:, ~-~:--, ~ .~ ~ .~ ,
1262Z Sectiom lI~2 and ll~ of the Govemment Code shall not apply W the p~r~;n ~ ~ ~ ccm~2ss~n ~ ma) ........ a:
De~ment of Insurance ~th r~ct W any pwceMing W which the I~urance .... ~ ....... a.~ ........ ~ ....~ .............
Co~mer Adv~ate is a ~ff. _~u .... .~ _.~
SE~ION 10. PubLe Disclosure of Insurer Opera,ohs ~ ~: ....... . ...........~ ............ , .........~
Section ~6 is added to Article 10 of Chapter 1 of Part ~ of DMsion 1 of the .... ~ ......... ~ ......... : .............. ~-~ .... ~ ..... ~- ~-~
Insur~ee Code, to read ~ fo~ows: ~ rcccL'o~ ~ un!aw~ rc~atc ~ ~..~ ~ a
926. At least annually, evew insurer shallfi& with the depa~ment the ~ ~ ..... ~ .......... ~ ..... e_.~ ..........~,~ .................
following info~aHon: ~ ~ ~--~ ..... ~ ~ ~-~- ~-~. ~ .... k~a ......
(a) Eve~ fqrm ff poli~, endorsemen~ and ~der. ~ ....................... u__~.,
(b) The following i~fo~ation for each line and ~bline of i~urance, and for ........ .e ~ ~ ..... ~ ~ ~ ...... ~ ~~-~
each class deggnated b~ the commisgone~ for each of the pHor five years: ~- - ~-~- ' ~..~:~ ...... ~ ....
(1) Premiums walden and earned, a ........ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ .........
(2) ~sses in~e~ ~i~ and unpai~ including bss~ in~ed but not ~ ....... ~ ...........~ ~ ........... ~ ~ ..........
reposed separatel~ stated. ~ ~:_:,~a ~ ~ ~ ~ ~ ~ ~..,~,~_~:_~ ~
3) Resemes, and indication whether the rescues are discounted to pr~ent .............. ~ .... ~ ~ ~
(4) Expenses incu~ed and~id. ' ~ ~ ~ccn~cd ~ ~ inaur~cc ~ ~ ~ ~ ~n:ur~ee ~rakcr
(5) In~stment in,me, including realized and unrealized capital gains. ........ ~ ............. ~ ....... ~~~
(6) The number and W~ of ~li~es ~sued renewe~ cancelle~ and not ~ .............. ~:~ ---a ...... ~ ..........
renewed, and the number of new polices. ~ p~zr ~ J~nu~-y ~ I~, ~ :uY~i~ary ~ ~atc !iccnscd ~ ~ in,at,ncc
(A)(D CaliThe~numberofexposures.°mia and nation,de rote leal in~o~ation providing the hollowing.. ~(z~ccPt ...... ~ ..... ~ ~ .................... ~ ~ r~a .... ~ ~e~'~ ~ ..................... ......
(B) The number of clai~. '"t~ ~"~:',' --~ .............~ ..... v~ ~
(C) Commissions, general expenses, taxes, lic~ses and fees, and acqu~ition .......... ~'~:~~ :~:. ~*~:L~.~L~':[Z_~
expenses, makc I~ pur:u~nt ~ D!;~zi~n g (co:~cnckng .... ~ e ..... !~), DL'L~on 9
(8) Compadsom of the following:
(A ) ~ss m~os for agents cancelled and for all agents for the most recent gear. ......... ~ ............... e .......
(~) ~ mtio~for i~ure& cancdled or not ren~e~andfor dl i,~re&for ~ ~ ~-~ .... ~ ~ ........ , ~ ~ .............
the most recent year 9f the expe~en~ pe~ used for ratemaking. ' ..................... - · ~e_, .
' (C) The avgrage d~ductib&for the most mc~nt year of the ex~enc~ pe~od P:~c~ Co~c except ~ ~ term ~ ~ ....... ~
~edfor ratemaMng ~th the a~rage deductib&for the most recent samp& ff~r .... u ....~ ~ ~n:~ct a ~a:t n ........... ~-- ~ pro~ds~n:
availab&. ~ .......................
(9) Schedule o/commissions. ~ ~ ~ ~ ............................. ~ ~ ................
(10) Any changes implemented to reduced or contain expem~. . ~ ~: ,,z,~ng ~ ~ ~ ~,~c ~ ~ ~c.~..~n
(11) Exmndi~resfor ~ ~ ..... a d~ r~a~_~l ~ ~ M ~
(~) ~rade asw~ation mem~rshiv~. ....................... ~
(B) ~bb~ing. dcF;s~s ~ ~ state.
SubdMsion (d) (1) of~e~on 6~ of the Gove~ent Code is amended to read: ..x~,~:~ ~,~ ~ ~ ~ ~_,. ~_,. ......... u~ ........... ~ .....
(1) Appffeations filed ~th any state agency responsible for the relation or ..................................
super~sion of the issu~ee of securities or of ~eiM Msfitufions, MeludMg, but '~ ..... ~ ' ~ ..... :
not limited to, b~ks, sa~ngs ~d 1o~ associations, industfi~ lo~ eomp~es, and ~ ~ ~ ....... , ~ ................. e ...............
credit ~i0ns; ~ ~ ccm~n!cs. ~_,~,r ~ ........~._ ~_~.: ..... a .................
SE~ION 11. F~r Competition amzmnt
SeeEons 750, 7~.1,751, 752, 7~, 755, 755.7, 761, ~d 1~ of the Imur~ce Code ~ ............ ~.~ ~ v ........... ~ ~ ........ ~ ~
are repe~ed. - ..... ~ ~:-~ ............ ,., ~. ~ ·
:~]].~Y~"~'~ ~L~_~,~_~~ ~~7~_~'~~ Section 1~ of the Bmhess ~d Professions Code is added to read as follows:
..... ~ ....... ~ .................. ~ ............. ~ 167~. No~t~ta~ing any other pwvision of law, this chapter appli~ to the
~ ~~ ~ : .................. ........ ~ ~-~-', ~ ~ ~ ~ .... ..... "~ ~ ~-~'~-" ....... bu~ness of insurance. Nothing in th~ act shall prohibit in~rers or licens~ rafl'ng
........................ ~ ~ ...... ~ ~ ....... ~ r ...... or adviso~ organi~o~ from engaging in joint ac~vi~ to pool historic loss data.
........ ~ .............. ~ ..... ~ ...... ~ ~ ~ ~ ........ ~m&:~n Nothing in this act ~hal[ prohibit in~rers from engaging in anR joint aetioity
~ ~=~n;:; vraceco, 4 ~=arcrs ~ ~ vt;dacca; ~ ~ ~ ~ntcrc:t 4 ~ ~si6le .~der C~apter ~ (eommenang wit6 Section ~) of ea~ ~ o~
......... ~ ~ ..... ~ ~ ~ ....... 1 ~ ............ ~ ................ Di~bn 2 of the l~rance C~e, A~icle 4 (commencing ~th Seth'on 11620) of
~ ....... ~ .............. ~ ~ ....... z ~ 4 ~ ~ ~ ~ Cha~ter 1 of Pa~ 3 of Div~bn 2 of the ln~ran~ Code, or an~ other joint
~ ~ ~ ~ ~ .... ~ ..... ~ ..... ~.~m ~ rcff~ .... n 4 m;urcr unae~a~'~ asso~on or organi~on established by law.
~ ~ ~ ~ Section 7~ ~ added to Chapter 6 0f Di~i0n 1 of the F~ci~ Code, to read
~-r~ ............. ~ ~ ....... ~ .........g ....... ~ ~ ~ follows:
........... . ...... ~ 7~. No bank licemed ~ an instance agent or brokeg or which owns or
~ n~mcr;a; ...... ~ ...... a ~ ..... ~cc~- ~ ~ a~:c~cc ~ ~ rc~aS;~, contro~ an in~ran~ agen~ or brokeg nor an7 directog office~ agent, emploTee
~ ~ ~=~I~.L~?:, =f~r ~::e~e~= b:~;.c:~ ~:~-:~: ;;~:L or a/~liate o/an~ ~ch b~nk, shall rmuire, as a condition vrecedent to
i~cn~c< ~ cr~a~g :~:i~c: ~ ~ ~ ~ ~::r~cc ~ .a;';r ~ the purchase of real or ~rso~l prope~7 or to lending mone7 upon the se~
~ ................... ~~4 ....... $ ............. ~7; ofr~lor~rson.lprope~,or~awnditionprer~u~'tefortheren~alqfan~
~ ......................... ~ .................... ~ ~ ............... ~ ~ch l~n or for the ~o~an~ ofan~ other act in connecHon therewith, that the
..... ~ ......... 0n ~ ........ ~ ~ ............. ~ -..~. ~. ~ .......... ~ ~rson for whom the burchase is to ~ ~nan~d or to whom the mon~ is to be
.h;~s.~ng ~.~ dc..~..~cnt ~ ~ ~uS~c. l~ned or for whom the exte~on, renal or other act is to be granted or
. ~mtcnt~g~la~arc~cnacf~g~~~f;rtk~ ~omed negotia~ an7 i~ran~ or rene~l thereof thwugh a papular
~~ ~~ cnac~cn~,c~nf~ng ;5:~,~ k~F~r~cc ~ i~rance agent or broker. The prov~ons of Sec~on 771 of the Insurance Code
................ ~ .................................... shall also be appli~ble to th~ secaon.
~ ~ Ln:urcr, ~ ~ ~ agent, ~-~'--- ~ ~ ...... ~cr:~n~y ~ Section 781 is added to Chapter 6 of Di~sion 1 of the F~ei~ Code, to read:
............ ~ ~ ..... ~ ~ ..... ~ ~ in~rccfly, ~ ~ knduccmont ~ cntcr 781. (a) ~e total inv~t bp a bank, which h~ obtaind a ce~ficate of
G~ 133
authority to transact any class of insurance business in this state pursuant to Part (b) Investigating insurers, brokers, agents, and others engaged in the business
£ (commencing with Section 680) of the Insurance Code, into its insurance of insurance.
underwriting activities ma~t not exceed 10 percent of the capital stock and surplus (c) Vigorously pursuing enforcement and disciplinary actions against insurcrs,
of the bank. brokers, agents, and others engaged in the business of insurance. .
(b) A bank may make a loan or extend credit to, or purchase or invest in (d) Informing and educating seniors about their legal rights as consumers of
securities of or issue a guarantee, acceptance or letter of credit, including an seniors health-care insurance policies.
endorsement or standby letter of credit, on behalf of an insurer which is an (e) Auditing insurers, brokers, agents, and others engaged in the business of
affiliate of the bank only if (1) the aggregate amount of all such transactions insurance for compliance with legal requirements.
between the bank and that insurer will not exceed 10 percent of the capital stock '(f) Evaluating policy forms and premium levels.
and surplus of the bank, and (2) the transaction is on terms and conditions that (g) Becommending legislation and regulations to reduce the incidence of
are consistent with safe and sound banking practices. Each such loan, extension of unfair and deceptive practices against seniors with regard to health insurancc.
credit, guarantee, acceptance or letter of credit must be secured at the time of the The commissioner shall include within his or her annual report to the Governor
transaction by collateral having a market value equal to at least 100 percent of the a summary of the actions and accomplishments under this article.
amount of the loan, extension of credit, guarantee, acceptance or letter of credit. 10198.01 For purposes of this article, "seniors health-care insurance policies" .
(c) As used in this section, "affiliate" has the meaning set forth in Section 150 includes the following types of polici~ soM to seniors eligible for Medicare by
of the Corporations Code, and "insurer" has the meaning set forth in Section 23 of reason of age:
the Insurance Code. (a) A policy to supplement Medicare.
Section 772 of the Financial Code is repealed and reenacted, to read as follows: (b) A dread-disease policy.
~oo~ ~..,, ....... ~ (c) A hospital indemnity policy. ·
~ ~ Nc,~;,~t~gtan'~-d~ng t-be ~rc,vlslz, r.g of e~zc.~c,r, .... ~ ~u~j~, to ..... (d) A major-medical or surgical policy.
rcg'~c~ns ~ rulcs ~ the :u~crlr~tcr~dcr~t ma;,' ~rcsc~bc, ~ bank may ir. scsi m ~.e) Skilled nursing home policies and long-term custodial or home health-care
the capital s~c,ck, c,~llga2c,n:, o~ c,'.~cr :ccuri.~c:'of one o~ mc,rc cc,~c,ra.~c,n:, policy.
~ No such cc,~c,ra~c,n m~y ~ ~s ~n i.'::ur:,::cc, cc. mpa::y, k'::ura,ncc agcn'., o~
.......... u~:ckc:. ~ ;:cSiSit:c,n :kall ~ be dccr,,,cd to cxc!u~c ctSc: F:::!u~!c, (f) Other, similar policies. - .
.......... 10198.02 All policyholders and prospective policyholders of seniors hea[tt~-
rc:~.~c,~c,::; ;;'irk rc:~cct to t-be actl;~,~c: of ~h cc,.-~c,ra,~ic,::;, care insurance policies are entitled to all of the following:
772. Notwithstanding the provisions of Section 1335, and subject to such (a) The right to truthful and honest advertising.
regulations and rules as the superintendent may prescribe, a bank may invest in (b) The right to a fair return on their money.
the capital stock, obligations, or other securities of one or more corporations. (c~ The right to fair salespractices.
SECTION !2. Truth and Fairness in Policy Forms (d) The right to a readable policy.
Section 381.5 is added to the Insurance Code to read as follows: (e) The right to shop effectively in a competitive market for insuiance.
381.5 The commissioner may examine policy forms used by insurers and may (f) The right to prompt and fair claims procedures and settlement practices.
prohibit the use of any form he or she finds to be deceptioe, misleading or (g) The right to 'prompt redress of complaints.
contrary to the public interest. . ' (h) The right to swift and meaningful enforcement of the law.
SECTION 13. Fair Insurance Claims and Underwriting Practices 10198.03 An insurer, broker, agent, and other person engaged in the busiz~ess
Section 790.031 is added to Article 6.5 of Chapter 1 of Part 2 of Division 1 of the of insurance shall not knowingly recommehdfor sale, or sell, an insurance poBcy
Insurance Code to read as follows:, to supplement Medicare insurance directly to a Medi-Cal beneficiary. Upon sal~; of
790.031 Any person engaged in the business of insurance in the State of any insurance policy to supplement Medicare, the poh'cyhoMer shallsign and date
California is required to act in good fqith toward, and to deal faidy with, current a statement verifying that they are not eligible for, nor do they receive, Medi-Cal
and prospective policyholders and other persons intended.to be protected by any~ benefits. Ve~flqcation shall be required on the insurance policy enrollment' or
policy of insurance. A policyholder or a third-party may t~ring an action against application Jorm.
an insurer or licensee for violation of the provisions of this article, including but 10198.04 With regard to the provisions of this article, all insurers, brokers,
not limited to subdivision (h) _of Section 790.03. agents, and others engaged in the business of insurance owe a policyholder or
In accordance with the Unruh Civil Bights Act, Civil Code section tl, an insurer prospective policyholder of a seniors health-care insurance policy a du~ of
shall not arbitrarily discriminate against individuals in the setting of insurance honesty, good-faith, and fqir dealing. This duty is in addition to any other duty,
rates or in the denial of insurance coverage, whether express or impli-ed, that may exist.
The purpose of this article is to regulate unfair insurance practices, including 10198.05 (a ) No insurer, agent, broker, or other person engaged in the business
unfair claims practices, by providing state-court remedies, inclu, ding compensa- of inSUrance or any other person or entit~ shall develop or use a list of naraes,
tory and exemplary damages, to policyholders and claimants who are victims of addresses, or phone numbers compiled in a manner that has the eapacit~' or
unfair insurance practices. It is specifically intended that these remedies $e tendency to deceive or mislead the policyholder or potential policyholder fqr the
construed to regulate the business of insurance regardless of whether the policy purpose of selling or otherwise transferring seniors health-care insurance poli~des.
was purchased individually or as a member ora group, and regardless of whether (b) No insurer, agent, broker, or other person engaged in the business' of
or not the policy was purchased or provided by or through an employer, and insurance or any other person or entit~ shall represent themselves as a government
thereby to provide that statedaw remedies are available notwithstanding the agency, nonprofit or charitable institutioh, or seniors organization, or represen-
provisions of the Employee Betirement and Income Securi~ Act, 29 U.S.C. section tative thereof, to any policyholder or prospective policyholder of a seniors
1001 et seq. health-care insurance policy in a manner that may have the capacity or tendency
Any award of punitive damages against an insurer shall not be passed on to to deceive or mislead the policyholder or pFospective policyhoMer.
policyholders directly or indirectly. 10198.05 No insurer, agent, broker, or other person engaged in the busin~ of
SECTION 14. Prohibition of Conflicts of Interest insurance shall cause a policyholder to replace a seniors health-care insurance
Section 12907 is added to Chapter 1 of Division 3 of Part 6 of the Insurance Code policy unnecessarily. It shall be presumed that any third, or greater, policy soM to
to read as follows: ' a policyholder in any twelve-month period is unnecessary within the meanini; of
12987. a/st is unlawful for any person who has served as Insurance Commis- this section.
sioner or Insurance Consumer Advocate to accept any employment with, to 10198.07 No insurer shall pay or offer to pay, and no agent or broker shall
accept any compensation from, to undertake representation of qr to hoM a accept, compensation for the sale of any seniors health-care insurance policy
material financial interest m any insurance company, insurance tracte association, which varies by more lhan ten percent of the annual premium between the im'tial
or licensee of the Department of Insurance for a period of twelve months after compensation paid or received for the.fi'rst ~tear the polic~t is in force and
leaving office, renewal compensation paid or recciv~d in any subsequent year. This sec?.ion
SECTION 15. Responsibility for Automobile 'Accidents applies even if renewal compensation is not offered or. paid. .
Section 3393.6 is added to the Civil Code to read: 10198.08 (a) Annually insurers shall submit to tt~e commissioner tt~eir toss
33~3.6 It is the will .of the People that persons who wrongfully cause damages ratio for each policy form of seniors health-care insurance, based on experience of
to others in the ownership or operation of a motor vehicle shouM be hem legally all policies issued or in force in this state during the preceding calendar year. The
responsible for the full extent of the injuries they cause. It is the intent of the submissions of each insurer shall be public documents. The commissioner s,~all
People that the provisions of this act be construed to be in conflict witt~ the provide the Legislature and the Governor with a summary of said submissions.
provisions of any other initiative statute passed at the same election dealing with (b) After January 1, 1990, no seniors health-care insurance policy shall be add
compensation for motor vehicle accidents. Accordingly, it is the will of the People in this state unless the policy's outline of coverage, as described in Section 10195,
that any other provision of any other m'easure passed at the same eldction as this prominently and conspicuously displays that policy's loss ratio for the insure:~, as
act and dealing with compensation for motor vehicle accidents, shall be of no reported to the commissioner.
force or effect unless the other measure receives a higher number of affirmative (c) Seniors health-care insurance policies shall have a minimum loss ratio of 05
votes, pervent for individual policies and 75 percent for group policies.
SECTION 16. Seniors Health-Care Insurance Protection (d) It shall be an unfair insurance.practicc to report incurred losses that are not
Article 6 is added to Chapter 1 of Part 2 of Division 2 of the Insurance Code, to supported by a good-faith belief that losses in the reported amount will be paid
read as follows: witMn a reasonable time not to exceed five years. .
10198. There is in the Department of Insurance a Seniors Bureau of Investi- 10198.09' (a) As prescribed in this section, the commissioner shall have tt~e
gation. The bureau shall be organized and operated exclusively fo_r the purpose of authority to assess administrative penalties against insurers, agents, brokers, and
administering and enforcing the provisions of this article and bther provisions of others engaged in the business of insurance or any other person or entity for
law relating to seniors health-care insurance policies. The bureau shal. l take afl. violations of this article.
actions necessary to fully and faithfully implement the provisions of trois articte, (bi Whenever the commissioner reasonably believes that any insurer, agent,
including but not limited to the following: · broker, or other person engaged in the business of insurance or any other person
(a) Receiving complaints from seniors, or entity has violated this article, he or she shall make and serve upon the insurer,
134
agent, broker, or other person engaged in the business of insurance or any other 13700. The moneys appropriated pursuant to this act shall be funded entirely
person or entity, a notice of hearing. The notice shall state the commissionet's by fees assessed b~ the commissioner as follows:
intent to assess administrative penalties, the time and place of the hearing and the (a) The commissioner shall establish a schedule of fees for filings made
conduct, condition, or ground upon which the commissioner is holding such pursuant to section 1852.1 that will produce revenues sufficient to carry out the
hearing and proposing the assessment of penalties. The hearing shall be hem provisions of Sections 4, 8, and 9 of this act
within 30 days after such notice is served. Within 30 days after the conclusion of (b) For each year commencing with the 1589-90 fiscal year, the commis-
the hearing the commissioner shall issue an order specifying the amount of sioner shall establish a schedule of fees for filings made pursuant to section
penalties to be paid, if any. Penalties shall be paid into the state insurance fund. 10198.08 that will produce revenues sufficient to carry out the provisions of
(c) Any broker, agent, or other person engaged in the business of insurance, Section 16 of this act.
other than an insurer, or any other person or entitg who violates the p?ovisions of (c) The commissioner shall establish ~ schedule of modest fees for use of the
this article is liable for administrative penalties of no less than one thousand r consumer information program created by Section 11629.606.
dollars ($1,000) and no more than twenty-five thousand dollars ($25,000) for each Said fees shall be deposited in the Insurance Fund.
violation. 13701. (a) For fiscal year 1988-89, there is hereby appropriated from the
(d) Any insurer which violates the provisions of this article is liable for Insurance Fund, for the purpose of carrying out this ac~ the following amounts,
administrative penalties of no less than ten thousand dollars ($10,000) and no which shall be in addition to amounts otherwise appropriated:
more than one hundred thousand dollars ($100, O00) for each.Violation. (1) To the Department of Insurance, the sum of eight million dollars
(e) The powers vested in the commissioner by this section 'shall be in addition
t~ any and all other powers and remedies vested in the commissioner by law.
($6000,000.00).
(£) To the Department pf ]ustice, the sum of two million dollars ($2,000,,000.00).
10198.10 Actions fqr injunctive relief, compensatory damages, punitive dam- (b) It is the will o_f the People that, for fisc_al year 1589-90 and each year
ages, restitution, penalties, or any other remedy provided in law or equity may be thereafter, the Legislhture appropriate from the Insurance Fund an amount
brought in superior court by the Attorney Genera~ a district attorney, or a city sufficient to fund adequately the activities of state government specS'ed in this
attorney on behalf of the people of the State of California, or by any person act
againstanyperson violating orthreatening to violate, thisarticle. Thecourtshall SECTION 19. Amendment
award reasonable attorneys fees for succ. qssful prosecution of sach actions. (a) Except as provided in subdivision (b) of this section, this act may be
10158.11 Any person who intentionally violates any provision of this a~'cle is amended or repealed only by one of the following two procedures:
guilty of a public offqnse punishable by imprisonment in the county jail not (1) This act may b-e amended to farther its purposes by statute passed in each
exceeding one year or by imprisonment in the state prison, house by roll-call vote entered in the journal, two-thirds of the membership
10198.12 The requirements and remedies provided by this article are in concurring, and signed by the Governor, if at least twelve days prior to passage in
addition to any other requirements and remedies provided by law. each house the bill is in its final form.
SECTION 17. Regulation of Attorneys' Fees (2) This act may be amended or repealed by a statute that becomes effective
Section 6146.6 of the Business and Professions Code is added, to read as follows: when approved by the electors.
6146.6 In addition to any other obligation imposed upon attorneys by law, (b) Notwithstanding the provisions of subdivision (a) of this section, Sections
attorneys shall advise prospective clients in writing that fees are not set by law, 15 and 17 of this act may be amended or repealed by statute approved by the
but are negotiable without restriction between attorney and client Fees shall not electors after the effective date of this act or by subsequent statute passed by the
be set by law. The existing right of clients to negotiate fees without restriction and Legislature and signed by the Governor as otherwise provided by law.
to receive written fee agreements is hereby ratified. SECTION 20. Severabilit!t
When fees are based on the amount recovered, the contract shall specifically If any provision o~f this act, .or the application o~f any such provision, to any
state whether the calculation is based on recovery before or after deduction of costs person or circumstances, shall be held invalid, the remainder of this ac~ to the
and expenses, extent it can be given effect, or the application of sach provision to persons or
The provisions of this section do not apply to any matter for which attorneys' circumstances other than those as to which it is hem invalid, shall not be affected
fees are set by statute existing on January 1, 1988. thereby, and to this end the provisions of this act are severable.
SECTION 18. Appropriations and Assessments SECTION 21. Liberal Construction
Article 8 is added to Chapter 2~ of Division 3 of the Insurance Code to read as This act shall be liberally construed and applied to promote its underlying
follows: purposes.
Proposition 101: Analysis percent of economic losses (such as medical costs and loss
Continued from page 90 of wages, not paid by other sources). These limits do not
· 50 percent of the rates in effect on October 31, 1988; apply to situations in which the injuries resulted in death
or or in serious and permanent injury or disfigurement.
· 50 percent of the rates in effect on October 31,. 1987,. 2. Limits on Attorney Fees. The measure limits attor-
adjusted for inflation by the Physicians' Services ney contingency fees to 25 percent of the economic losses
component of the California Consumer Price Index recovered by the injured person if a claim is filed with an
(CCPI). insurance company. These limits do not apply to situa-
The resulting reduced rates: tions in which the injuries ~resulted in death or in serious
· Cannot be increased during the period November and permanent injury or disfigurement.
1988 through November 1989.
Expiration of Provisions
· Thereafter, these rates can be increased by no more
than the annual change in the Physicians' Services The provisions of this measure expire at the end of
component of the CCPI during the period November December 1992.
1989 through December 1992.
This measure applies to private and commercial motor Fiscal Effect
vehicles including automobiles, motorcycles, trucks and Costs
buses. It does not apply to "off-road-type" vehicles which
are not registered with the Department of Motor Vehi- Department of Insurance. This measure would in-
cles. crease the Department of Insurance's. administrative
The measure requires each affected insurance com- costs by about $2 million during 1988-89. In years follow-
pany to file a report with the Department of Insurance.by lng, these costs could be somewhat lower or higher,
December 1988, showing compliance with the rate depending on workload. These costs, payable from the
reductions. Insurance Fund, may require additional fees and assess-
ments to be levied on the insurance industry.
Limits on Claims for Noneeonomie Damages and State and Local Governments. While some local gov-
Attorney Fees ernments purchase insurance, most "self-insure" by rely-
1. Limits on Noneeonomie Damages. In general, the lng upon their own resources to pay for losses and claims
measure limits claims for noneconomic losses for bodily resulting from motor vehicle accidents. The state also is
injury resulting from the use of a motor vehicle. It limits self-insured against such losses and claims. Because this
noneconomic losses (such as pain and suffering) to 25 measure reduces certain types of motor vehicle insurance
G88 135
rates, and limits claims for noneconomic losses, it would This measure requires that the rates for the bodily
result in unknown savings to the affected state and local 'injury liability and uninsured motorist components of
governments, motor vehicle insurance policies be reduced. These two
Courts. Because this measure places limits on Court components account for about 40 percent of total motor
act-/ons for noneeonomic damage claims, it may reduce, to vehicle insurance premiums. The required rate reduc-
an unknown extent, annual state and local court costs and tions--by themselves--would reduce state insurance l:ax
local court revenues, revenues by about $50 million a year. This estimate
assumes that no offsetting adjustments are made in other
Revenues insukance rateS--not restricted by this measure--to co:m-
pensate ~oi these reductions. Whether such adjustments
Insurance companies pay a tax, based on the amount of would occur is unknown.
gross premiums' they receive each year from insurance
sold in California. These tax revenues are deposited in the The rate 'ieduetions required by this measure will
State General Fund. eXPire after four years, at the end of 1992.
ProPosition 101: Text of Proposed LaW motor ~ehicle provided by policies issued or renewed in this state with an effective
date on or after November 9, 198~ the maximum premium rate charged by each
Continued from page 91 motor vehicle liability insurer admitted in this state shall be the lower of the
inconvenience, mental suffering emotional distresg loss of society, loss of following:
companionship, loss of consortium, injury to reputation, humiliation, or any (1) The insurer's premium rate in effect on October 31, 1988, reduced bit 50
combination of the above, percent.
(5) "Person' means a natural person and not a corporation, partnership, (£) The insurer's premium rate in effect on October 31, 1987, increased in an
association, or trust, amount not to exceed the amount of the Physicians' Services component of the
(6) "Use of a motor vehicle" means operating maintaining loading or Consumer Price lndex applicable to California for the period of time from October
unloading a motor vehicle. 1, 1987, to November 1, 198~ reduced by 50 percent.
(b) No claim to rec~ver noneC° nomic losses in exvess of 25 percent of economic The maximum p~emium rate shall also apply to premium rates for any
losses, resulh'ng from or caused by an accident arising out of the use of a motor uninsured motorist coverage of bodily injury.
vehicle, shall be included in a complaint or other pleading unless the court enters (c) No insurer required to reduce premium rates pursuant to subdivision (b)
an order allowing an amended pleading to be filed that includes a claim for may increase premium rates for coverage for bodily injury arising out of the use
noneconomic losses in excess 0f25 percent of economic losses. The court may allow of any motor vehicle for any policy issued or ~enewed with an effective d~te before
the filing of an amended pleading claiming noneconomic losses in excess of 25 November 9, 1989. For any policy issued or renewed with an effective date f','om
percent of economic losses on a motion by the party seeking the amended pleading November 9, 1989, to December 31, 1982, the premium rates for coverage for bodily
if the court finds that the plaintiff has established that there is a substantial injury ari~"ng out of the use of any motor vehicle shall not be increased at' an
probability ?hat the plaintiff will prevail on the claim that the limitations annual rate in excess oft he Physicians'Services component of the Consumer Price
p_[ov, ided in. S. eetiqn 3333.6 6f the. Civil Code. do not apply on the bas~ of the Index applicable to California fo; the l£-month period preceding the increa,'e.
findings vi' the physician seteetect pursuant to subdivision (c), the findings of (d) Each insurer required to reduce premium rates pursuant to subdivision (b)
~her physicians, and any other relevant informa#on the court wishes to consider, shall file a report evidencing compliance with its provisions with the commis-
J~e court shall not grant a motion allowing tha filing of an amended pleading sioner by December 9, 1988. The report shall set forth the insurer's premium rates
thatincludesqclaim fornoneeonomicdamagesinexcessof25percentof economic in effect on October 81, 1987, and October 31, 198~ for coverage of liability for
dama~e~ if me motion for the order is not filed within two years after the bodily injury, and the reduced premium rates in effect on and aft_er November 9,
comptaint or initial pleading is filed. ~ within 30 days of any change in premium rates for coverage of liability for bodily
(c) Ifa defendant disputes that the plaintiff's injury meets the requirements of 1988. From November 9, 1989, to December 31, 1992, each insurer shall file a report
Section 3333.6 of.the Civil Code, the plaintiff shall be examined by a neutral injury arising out of the use of any motor vehicle with the commissioner. The
physician selected pur.sua.nt to this subdiv~'on. The county medical association report shall set forth the insurer's premium rates in effect prior to the change in
for the county in which tl:e action has been filed shall furnish, upon request of premium rates, for coverage of liability for bodily injury, and the insurer's l;ew
either party, the names of three physicians whose specialties qualify them to premium rates.
evaluate the injury, whose practices are located in the county in which the action (e) (I) Each motor vehicle 'liability insurer admitted in this state, including
has been filed, and who have agreed to provide examinations for the purposes of an insurer admitted i~fter November ~ 1988 that did not have premium rates in
this section. If the county medical association ii unable to fu_.rnish the names of effect for new business on October31, 1988, for any coverage of liability for bodily
three physicians, the Board of Medical Quality Assurance shall furnish the names, injury aristng out of the use of a motor vehicle because it did not offer that
If there are not three physicians whose practices are located in the county in which coverage on or before that date shall not increase premium rates initially imposed
the action has been filed, wh4~e specialties qualif!! them to evaluate the injury, in excess of the amounts specified in subdivisicn (c), shall file a report of any
and who have agreedt to provide examinat;'ons for the purposes of this section, the change in premium rates as required by subdivision (d), and, if applicable~ si'~all
county medical association or the Board of Medical Quality Assurance, as be subject to paragraph (£).
applicable, shall furnish the names of three qualified physicians whose practices [£). If a motor vehicle liability insurer described in paragraph (1) is a
are located in a nearby county and whose practi'ces am closest to the county in subsidiary of is controlled by, is a surviving corporation of or is subject to
which the action has been filed. The plaintiff and d_ef~dant shall each eliminate common control along with an insurer required to reduce premium rates pursaant
one name. The remaining physician shall examine the plaintiff and farnish copies ~o subdivision (b), it may not have premium rates in excess of those permitted for
of his or her written findings to the plaintiff, defendan~ and the court. Both the insurer required to reduce premium rates pursuant to subdivision (b).
parti~ shall share equall!t in the costs of the examination. The examination For the purposes of this paragrapl~ "control" has the meaning set fo, rtt, t in
provided pursuant to this subdivision shall be in addition to other discovery subdivision (a) of Section 160 of the Corporations Code, ''subsidiary' has the
provided for by lew. lf the plaintiff refases to submit to the examination, the court meaning set forth in Section 189 of the Corporations Code, and ''surviving
shall deny plaintifj% motion for an order allowing an amended pleading to be corporation" has the meaning set forth in Section 190 of the Corporations Code.
(3) Ifa motor vehicle h'ability insurer described in pa-ragraph (1) is not subiect
filedeconomicthatlosses.includ~ a claim for noneconomic losses in excess of 25 percent of to paragraph (£), then prior to the offer of any coverage of liability for boitily
(d) 'This section does not apply to either survival actions provided for in injury arising out of the use of a motor vehicle, it shall file its premium rates with
Section 573 of the Probate Code or wrongful death actions, the commissioner and obtain the commissioner's approval of those rates. Para-
(e) This section only applies to causes of action arising from accidents that graph (1) shall apply to any subsequent increase in premium rates.
occur on or after November 9, 1988 and on or before December $1, 199£. (f) This section applies to policies issued pursuant to Article 4 (commencing
SEC. 6. Section 1852.5 is added to the Insurance Code, to read: with Section 116£0) of Chapter 1 of Part $ of Division 2.
1852.5. (a) For the purposes of this section: (g) The commissioner shall enforce the provisions of this section in accordance
(1) "Bodily injury" means injury to a person which ari&es out of the use of a with Article ? (commencing with Section 1858) including but not limited to,
motor vehicle as a motor vehicle and sickness, disease, or death that results from means of appropriate suspensions and revocations of certificates of authority and
penalties.
the injury. Bodily injury does not mean injury occurring during the use of a motor
vehicle but not arising out of that use. (h) Except as provided in this section, the rating and clessification of motor
(2~ "Motor vehicle" means any vehicle designed primarily fo_r use on streets vehicle insurance shall be regulated in accordance with the provisions of Sec~'ion
and highways and subject to motor vehicle registration under the laws of 1852 in effect on ]anuary 1, 1988.
California. (i) Except as expressly provided, this section shall not affect the Insurance
(3~ "Person' means a natural person and not a corporation, partnership, Code or any regulations issued pursuant to the Insurance Code·
association, or trust. SEC. 7. Section 3333.6 of the Civil Code, added by Section 4 qf tbis measure
(4) "Use of a motor vehicle" mean~ operating maintaining, loading, or and Section 1852.5 of the Insurance Code, added by Section 6 of this measure, are
unloading a motor vehicle, dependent on each other and are not severable.
(b) For any coverage of liability for bodily injury arising out of the nse of a SEC. 8. (a) Except as provided in subdivision {b}, the provisions of ~'his
136 G88
measure shall not be amended b~t the Legislature by any bill which becomes (b) For any bill with an operative date on or after ]anuartd L lt~3,, or that
operative on or before December $1, 199~, unless the bill (1) furthers the puraoses amends or repeals Section 6147 of the Business and Professions Code, as amended
of this act and is passed in each house by rollcall vote entered in the journal, by Section $ of this measure, the Legislature may amend or repeal the provisions
two-thirds of the membership concurring or (2) becomes effective only when of this measure by whatever vote is otherwise applicable to the bill and the bill
approved by the electors, need not be approved by the electors.
Proposition 102: Analysis tional years in prison for each violation, in addition to the
Continued from page 94 prison term imposed for the sex crime or assault.
tion and persons to whom the infection may have been Consent and Confidentiality Related to HIV Testing.
transmitted, current law does not require health officers The measure (1) eliminates the express requirement that
to do so. Health officers may alert persons who potentially consent for an HIV test be in writing and (2) prohibits
have been exposed to the virus if the infected person physicians from being held criminally or civilly liable for
provides written consent to the health officer to do so. If disclosing test results without consent to (a) persons who
the health officer contacts a person who may have been may have been infected by the test subject, such as sexual
exposed to the virus, the health officer must keep confi- partners, and (b) other medical personnel involved in
dential the identity of the infected person, treating the test subject. The measure also reduces fines
Exposing Others to HIV. Current law does not im- and penalties for violation of provisions requiring that test
pose specific criminal penalties on persons who know- results be kept confidential.
ingly expose others to HIV. Current law makes no Protective Clothing. The measure prohibits any em-
provision for testing of persons charges with crimes to ployer from inhibiting or interfering with an employee's
determine whether they are infected with the HIV. decision to wear any type of protective clothing, such as
Proposal gloves or a mask, the employee believes necessary to
protect against HIV infection, unless the clothing inter-
This measure makes various changes to existing laws feres with the employee's ability to perform his or her job.
that affect reporting, investigation, confidentiality, and Biological Hazard Labels. The measure requires
penalties related to HIV infection. The measure also health facilities and clinics to place biological hazard
changes references in existing law from testing for HIV labels on all items soiled by, or containing body fluids of,
antibodies to testing for evidence of infection. The mca- persons who are HIV-infected.
sure contains the following specific provisions: Compliance with the Measure. Failure to comply
Reporting and Investigation of HIV-Infected Per- with specified provisions of the measure or State Depart-
sons. The measure requires health care providers to ment of Health Services regulations implementing these
report the names of HIV-infected persons to local health provisions would be a misdemeanor, punishable by im-
officers and requires HIV-infected persons to report their prisonment in a county jail or a fine or both.
own names and the names of their contacts to local health
officers. It also directs local health officers (1) to imme- Fiscal Effect
diately investigate cases of AIDS and HIV infection and The measure has three potentially major, and a variety
(2) to take all measures "reasonably necessary" to pre- of minor or unknown, fiscal effects:
vent transmission of infection. The measure requires the 1. Reporting and Investigation of Cases. The fiscal
State Department of Health Services to adopt regulations impact of this provision could vary greatly depending on
specifying procedures for case investigation and "rea- the number of persons who test positive for HIV infec-
sonably necessary" methods for preventing transmission tion, the number of cases investigated, the costs of
of HIV infection, investigating cases, and the types of measures determined
Elimination of Restrictions on Using HIV Antibody to be reasonably necessary to prevent transmission of
Test Results. The measure removes current restrictions infection. The costs are potentially in the tens of millions
on using HIV antibody test results for determining insur- of dollars annually. Costs could significantly exceed this
ability or employability of individuals. It also allows use of amount if additional measures beyond tracing of contacts,
HIV test results in criminal or civil actions against such as widespread testing, are determined to be "rea-
infected persons and provides that physicians and nurses sonably necessary" to prevent the spread of the disease.
cannot be held liable for damages resulting from their 2. Elimination of Restrictions on Using Test Re-
disclosure of test results to certain persons, suits. The costs of this provision to government health
Testing Persons Charged with Crimes. The measure care programs ultimately could be in the tens to hundreds
allows involuntary HIV testing of persons charged with of millions of dollars annually if insurance Companies
prostitution, certain sex crimes, or assault by means likely institute HIV testing programs to eliminate or reduce
to produce great bodily injury. The State Department of their costs related to AIDS. This is because the annual
Justice would be required to keep the test results on file costs of AIDS care in California will grow substantially
and provide them to the courts, legal personnel, and law over time. Currently, a majority of this care is funded by
enforcement agencies upon request, insurance companies. Allowing insurance companies to
Criminal Penalties for Persons Who Knowingly Expose deny coverage based on HIV tests could shift a significant
Others to the HIV. Anyone who donates blood or portion of these costs to public programs.
engages in prostitution, knowing that he or she is infected Potential costs resulting from employer testing pro-
with HIV, would be guilty of a felony, punishable by grams are unknown. If a substantial number of people
imprisonment in state prison for five, seven, or nine years, lose their jobs as a result of HIV testing, there could be
In addition, anyone who commits certain crimes (in- substantial unemployment compensation and other costs.
eluding rape, sexual battery, and assault by means likely 3. Testing of Criminal Offenders. The fiscal impact of
to produce great bodily injury), knowing that he or she is this provision is unknown, but could vary greatly, de-
infected with HIV, would be sentenced to three addi- pending on how it is implemented. If all persons charged
G88
137 '
with prostitution, sex crimes, or assault by means likely to porting of HIV test results.
produce great bodily injury are ordered to submit to · Requiring clinics and health facilities to label items
blood testing under the measure, the costs to local soiled by HIV-infected persons.
governments could range up to several hundred thousand Summary of Fiscal Effect. In summary, the fiscal
dollars annually. However, because the measure does not impact of this measure is unknown. It could be as high as
require HIV testing of all offenders but merely permits it, tens or hundreds of millions of dollars, depending on (1)
the costs of this provision could be considerably less. the types of measures determined to be "reasonably
Minor or Unknown Fiscal Effects. The following pro- necessary" to prevent further spread of the disease, (2)
visions would have minor or unknown fiscal effect: the costs for investigating HIV cases, (3) the extent of
· Imposing additional penalties for persons who know- actions by insurance companies and employers to exclude
ingly expose others to HIV through sex crimes, persons who are HIV-infected, and (4) the number of
certain assaults, or donation of blood. , criminal offenders who would be required to submit to a
· Changing existing restrictions on disclosure and re- blood test.
Proposition 102: Text of Proposed Law (5; Other medical personnel involved in the treatment of the subject of the test.
(b) Notwithstan[ling Section 199.21 or any other provision of law, no regisfi;red
Continued from page 95 nurse who has knowledge of the results of any test indicative of infection by any
detect an,'~hc,~ca t~ the evidence of infection by any probable causative agent of probable causative agent of AIDS shall be held criminally or civilly liable for
AIDS on a cadaver when an autopsy is performed or body parts are donated disclosing the results of the tests, if confirmed to be positive,' without the
pursuant to the Uniform Anatomical Gift Act, provided for pursuant to Chapter 3.5 authorization of the subject of the test to other medical ~ersonnel involved ir,: the
(commencing with Section 7150) of Part 1 of Division 7. treatment of the subject of the test.
~- (e) The requirements of subdivision (a) do not apply when blood is tested (c) This seciion is ~ermissive on .the part of the attending physician and
as part of a scientific investigation conducted either by medical researchers surgeon, and all requirements and other authorization for the disclosure of test
operating under institutional review board approval or by the state department in results indicative of infection b!l any probable causative agent of AIDS are limited
accordance with a protocol for unlinked testing. For purposes of this section, to the provisions contained in this chapter, Chapter 1.12 (commencing with
unJ"~kc,d ,'c,;F~g the term "unlinked testing" means that blood samples are Section 1~9.30), and Sections 1603.1 and 1603.3.
obtained anonymously or that the individual's .name and.o?er ident~.'ng (d) Nothing contained in this section shall be construed to impose any duty
upon any physician and surgeon or registered nurse to notify anyone of the fact
information is removed in a manner that precludes the test results rrom ever ~emg that a patient has tested positive for any rest indicative of infection by any
linked to a particular individual in the study.
An individual or entity conducting unlinked testing as defined in this probable causative agent of AIDS, except to any of the following:
subdiv~'on shall be exempt from the reporting requirements of Section 199.24. (1) The subject of the test.
Alternative test sites provided for pursuant to Article 8 (commencing with Section (2) A person authorized to consent to the test pursuant to subdivision (b) of
1630) of Chapter 4 of Division 2 shall not be eligible to conduct unlinked testing, Section 199.22.
as defined in this subdivision. . (3) The local health officer pursuant to Section 199.24.
SEC. 7. Section 199.23 of the Health and Safety Code is amended to read: SEC. 11. Section 199.26 is added to the Health and Safety Code, to read:
~o~ ~:~^- ~ ..... a~- ...... ~ The Stat~ Denartment of Health 199.26. (a) Each local health officer is hereby directed to use every avaifable
Se~ff~s,'an¢~l~[e'~nati"~ve°~ fft~e~$'v'i'~d~i for pursuant to A~cle 8 (commencing means to ascertain the existence of, and immediatel~ to investigate, all reported
with Section 1630) of Chapter 4 of Division 2, any blood bank or plasma center, cases of persons who have been diagnosed with AIDS or who test positive for any
including a blood bank or plasma center owned or operated by a public entity, or test indicating infection by any probable causative agent of AIDS within his or
anyphysicianandsurgeon,shallnotbe[c!dliableforanydamagesresultingfrom her'jurisdiction, to ascertain the sources and possible transmittal of these
the notification of test results, as set forth in this chapter, or pursuant to paragraph infections, and to take all measures reasonably necessary to prevent the transmis-
(3) of subdivision (a) of-,, ~i~ or subdivision (c) of; Section 1603.3;e~ ar,,.cndc~ sion of infection. These measures shall include, but not be limited to, notification
by ~ ~ ef t~e ~ Rc~'d~ Sca~n. of these findings to the test subject's s~ouse, to other known sexual partners ~ the
SEC. 8. Section 199.24 is added to the Health and Safety Code, to read: test subject, and to any othdr person the public health officer has reasonable,~use
199.24. Notua'thstanding Section 199.21 or anff other 'prove'on of law, any to believe has been exposed to any probable causative agent of AIDS under
physician and surgeon, blood banlg plasma center, entity, or county that operates conditions posing a substantial risk of infection to that person.
an alternative test site established pursuant to Article S (co. mme ,ncin~ with SeC%Oans (b) Nothing contained in this section shall be construed to require the use °f
1630) of_ Chapter 4 of Div,'on 2, or alterna?ve test site, w. no~ t?o,w,s, orr ~as quarantine or isolationfo, r the management of AIDS The use ofauthority vested
reasonable cause to b~lieve, that apetient or aonor nas oeen mTectea off, o in Califo. rnia 's local health of~'cers to quarantine or isolate shall not be afj¢cted
tested positive in, any test indicating infection by any probable causative agent of by the changes in the law made by the Paul Gann Public Health Act.
AIDS, shall within 48 hours, promptly report this fact to the local health officer SEC. 12. Section 199.27 of the Health and Safety Code, as added by Chapter
in the county where the patient or donor resides. This information, together with 663 of the Statutes of 1987, is repealed.
the name of the person, if known, and the nature of associated supervening ma ~, 4~ ~ ~ rccc,~;Sr.g a t~ f~
disease, if present shall b~ transmitted to the, !.oc~. l hefi~!th, of~cer..in a.~d~a~ee h=r.=: -::r.-r. unc,~cg~=%' yin, ~ m~. ~
with the regulations adopted pursuant to suoaivision (o/oy oecuon zaa. zo.
requirements of this section do not apply .to unlinked testin$ as defined in ........ ~ ..... ~ , ~ ..........
subdivision (e) of Section 199.22. ~ ac -~'v.c,,z~= t4~ t~ ~ ~ me~e~ ~ cz; ....... ~ .
SEC. 9. Section 199.25 of the Health and Safety Code is repealed. ~'r' ~ , ~ ....... ~.a~a '
,.t. ........ a~ ~ ~he las or~c,rc,ff, a test t~ .............. te ~he.l~. L~i///////,~..., ................... . __ , .. ~ ............................ ,.~ ,_ _,_:_
........ o ..... :--'~ ...... ' ~:~.~ t .... '~-'-~ ~ a -~racn ~ si~ p'-aua::t t~ su~dl;~=c,n t~ the ~ ew, ee~.
.................. [ . . · , ..... n-. a ........ ~- .... S._y mey "-'-~- ta _s.,.:-
SEC. 10. Section 199.25 is added to the Health and Safety Code, to read: ~ ~--r--- .....~-~- .... ..................... . .~ . . ~ ....._
199.95. (a) Notwithstanding Section 199.21 or any other provision of law, no "-"~'a~a~-'~a~'~'--~ =;~-c;=r'ma:,admi~'~e-"te~i4'a~eh~-'-~'
...... a:__ ~,, :a_.t.._ .... _.a_ id---~--- ch=ac.cna.ca w.xc.. ;; ..... ~ ....... ·
physician and surgeon who has knowledge of the results o/ anff 'test indicative of v ................. · ~. v ..... 3. ~"--·"'~ a ..... '
:_~:.-'~..~t -~-' ..... *'~ ~" ...........ir.c,~
infef..tion b~ any probable causative agent of AIDS shall be held criminally or ~ ........ r...~.~, a ..................~ ._ ~ ~ eemae~ v
civilly liable for disclosing the results of the tests, if confirmM to be positive,
without the authorization of the subject of the teat to an~ of the following: SEC. 13. Section 199.27 of the Health and. Safety Code, as added by Chapter
(1) The subject of the test. 1427 of the Statutes of 1987, is repealed. '
(2) Ant. t person authorized to consent to the test pursuant to subdivisi°n (b) °f ....... -09r {4+ .......
Section 199.22. ........ ~ .............. '---
(3) A person believed to be the spouse of the subject o£ the test.
~ ~, .......... 3:7 , -- .....
(4) Antt per~on with whoin the ~ubject of the test is bdieve t° have had sexual ............. ' ~ c.'hcr ~c ....
cont~ct,ora,wothercontaetbelievedto~oseathreatofinfecti°nt°thatper~°n' I~ e~e 8eekle~s ~m, the :ur;c,:.. {'~' l::'-r~.:::: e~ ~a~ P--,~- -,- ...........
he ........ ~ ~ cr.r, acxt itr he o~ she is ~n~cr ~ years ~ ~ flui& of pa~en~ of the cBn~ infected by any probabk ~aa'~ ag~t of
~ NaP;d~t~ng Fara~aF~ ~ whcn ~ :u~jcct ~ ~ ~ ~ ~ m~nzr a~uirM immune d~en~ ~ndw~ (AIDS).
agjuggcg ~ ~ a ~cFcndcnt c~d ~ ~ court ;m-ru=t ~ ~ccficn ~ ~ ~ SEC. 19. Section 1~ ~ added to the HeMth ~d S~e~ Code, to read:
....... ~ .................................. ~~cff~c~ 128Z To the ~tent ~i.ed by federal la~ a h~lth fa~li~ shall pla~ a
~ ............. ,_~...~_.~ .... ~ .......~ ~ ....... ~ ........... ~ ~ ~ ~ ~ biologi~l ha~ rd la~l on all it~ kno~ to the health f~Bty to be soiled
Wcff~z ~ ............ C;~c. or containing b~y fluids of mg~ts ff the h~lth fa~li~ t~t am inf~ted b~
~ W~zn cz~gzn: :S~A! ~ ~ ~b~:~zd ~ ~ :uSjzce ;~:~ne ~ ang probable ~a~'~ ~ent ff~uired immu~ d~en~ ~ndrome (AIDS).
:uh~;~alan ~ '::kcn .qcccaa&5' ~ re:der a;Fra~Na~o ~ ~ ~ FracSoo SEC. ~. S~fion 1~1 is added to ~e He~th ~d S~e~ Code, to read:
~rcvca~a~vc me.urea. 1621. B ~. a felon~ pun~ble by imprisonment in the state p~on for fi~,
........... s~en, or nine year~ for any ~aon to donate blo~ wheth~ the ~rson is a paid
or a ~lunteer dono~ ~ the ~rson knows that he or she h$ been inf~ted ~ any
~.~eN~:'~t~at=~g~ .~:~_. Scc~zna I~.~ ~ ....~ .., .......... .~.,~ ~ rca~g ~ ~ ~ probable ~ao'~ ag~t of a~uir~ immune d~ ~ndrome (AIDS), or
~ ..... ~ ~ ~u~, ':Atkaut ':,~ttc~ a'a'&a~za~a, the ~r~n knows that he or she ~ t~tM ~'~ ~ definM in Secgon 1~.1~ for
~ D!ac!aoo ~ ~ rcau!ta~ k~t~c ..... ~ ~ ~-~0~-""t .... m' ......... ..... a__ ~o ".a.."t SccSan any t~t indica~'~ ff ipfec~on by any pro~ble ~agve ag~t ff acquffed
I~.~ ~ !~.21. immune d~Men~ ~ndrome
~ Prgg~dc ':.~ttcn au'&g~za~cn ~ ~ ....... a:._~ ........... ~ ...... "- ~ t~_,c ..... For puwoses ffth~ sec~'og the t~ '$l~d" means 'human whole blo~"and
~ ~ subject ~ accordance 'Mth Set,gna I~.~ ~ I~.21. "human whole bl~ ded~ti~" ~ defind for puwos~ of th~ chapter and
SEC. 14. Section 1~.~ h added to the HeMth ~d Sde~ Code, to read: in~es~'~bl%~ com~nen~,~?Ld~nd in ~ivigon (0 of Section 1~.1.
a~. z~. section ~ is aaaea to the PenM C~e, to read:
I~.2Z E~personwhoisinfomedthatheorsheh~t~tdpo~tiveforany 2~. (a) Any person who commits one or more of the offe~es listed in
t~t indica~'ng infection by any probable ~usaff~ ag~t of AIDS shall ~thin ~Mivision (b) ~th knowledge t~t he or she ~ inf~ted ~ any probable
s~n da~s, re~ to the local health offidal the name and addr~s of any ~son ca~ati~ ag~t of a~uired immune defi~ syndwme (AIDS) or that he or she
from whom the disease mag ha~ ~en wntracted and to whom the disuse may ~s t~ted positi~, as defined in Sec~on 1~. 19 of the Health and ~afeW C~e, for
ha~ been tran~i~d, any probable ~usa~'~ ag~t of a~uired immune ~en~ ~ndwme (AIDS) at
SEC. 15. Section 1~.~ h added to the HeMth ~d Sde~ Code, to read: the ~'me of the commis~on of those offenses, shall ~ a three-year enhan~-
1~.28. (a) Except ~ ~ovided in su~ivi~om (c) and (d), all infoma~on ment for each viola~on in addiSOn to }he sentence provided under those sec~ons.
received by state and l~l health depa~ts put, ant to Sec~on 1~.24 and (b] Subdivigon (a) shall apply to all of the follo~ng offense:
Section 1~.27 shall be confid~tiaL and the State Depa~ment of Health Semices (1) Rape in ~olation of Sec~n ~1.
and any l~al health officer r<eiving a ~b~ena for thee records shall ~s~ a (2) Unlawful intercourse with a female und~ age 18 in violation of Sec~on
pHvilege pur~ant to Sec~'on 1~0 of the Evidence C~e. 261.5.
(b) Not later than 1~ days after the eff<~'~ date of th~ s<tion, the Director (3) Rape of a ~e in viola~on of Section ~2.
of Health Se~i~ shall adopt mgula~ons: (4) Un~wful sMomF in violation of Section 286.
(1) ~veming the trammisgon and maint~an~ of confMen~al infomation (5) Unlawful oral copulation in ~ola~on of Sec~on 2~.
tra~ieed pur~ant to S<tion 1~.24. (6) ~wd and las~vious conduct with a ch~Td under the age of 14 in ~ola~on
(2) ~tablishing procdur~ for the use of infoma~on r~o~ed put, ant to of &ction 2~.
Sec~on l~.24 by the State De~ment of H~lth Se~ aM local health officers (7) Bape by forsgn obje~ in viola~on of Sec~on 289.
to control the wread of AIDS. ' (8) S~l ba~ in viola~on of S<~on 2~.4.
(9) Assault by m~m likely to p~uce great b~ily inju~ in violation of
(3) &tablish guidelin~ that are ~sonably n<~sa~ to print the ~an~is- Section 2~.
~on of AIDS. SEC. ~. Section ~7f is added to the PenM Code, to read:
(c) Any info~ation obtained by a phy$~n and surgeon before, dudng,
~7~ An~ person who violat~ subdiv~ion (b) of ~c~on ~7 ~th knowledge
afte~ or as a r~lt of an ~amina~on ora ~nt who h~ t~ted ~g~'~ for an~ that he or she ~ infected by any probable causative ag~t of acquired immune
t~t indicating infec~on for any probable cabal'ye agent of AIDS and any d(~en~ ~ndrome (AIDS) or that he or she has tested pog~'ve, as defined in
info~a~on tra~i~M pur~ant to Set,on 1~.24, shall be adm~ble in any of acquired immune ~en~ ~ndmme (AIDS)
the follo~ng.. Sec~on 1~.19 of the Health and ~feW CMe, for any pm~ble causa~ve ag~t qf
(1) A ~minal acffon against a ~t charged ~th a violation ff any imp~onment in the state p~on for fi~ s~n, or nine years. .
pm~sionofthischapteg Sec~on1621 orSec~on~Tfor~oftheP~alCMe. SEC. ~. Secfion l~.l is added to the PenM Code, toread:
(2) A ~vil action against the p~nt for the tran~ittaL or thr~tened
transmittal of an~ probable causa~'~ ag~t of AIDS to an uninfected person or
1202.1. (a) No~it~tanding any other provision of la~ in any ~se wher~n
~sons. a person is charged with a viola~on of an offqnse l~ted in ~bdivision (d), bl~
The pdvileg~ provided by Sec~n ~ of the Evidenw C~e and S~on 199.20 sampl~ may be taken from the ~son so charged and may be ~bmi~ed and
t~ted for the presence of ~iden~ of anu probable ~usa~'~ agent of a~uired
am not appli~ble in any prose~on or p?~eding d~bed in th~ ~bdivision. immune d~en~ ~ndrome (AIDS). The r~ul~ of thee t~ts sha~ no~'th-
(d) Any physi~an and ~rgeon, health offing or s~use, shall be compet~t standing any other provigon of lam be ~bject to.~mmun~a~'on and disclosure
and may ~ required to t~t~y in any of the follo~ng: in the same manner as the r~ults of ~ny other bodilyfluM test. ~ch ~son t~ted
(1) A ~minal Scion against the patient charged with a ~ola~on of any under this sec~on shall ~ infomed of the resul~ ff the bled t~t
pwviMon of this chapte~ Section 1621, or S<tion ~7f or 2~ of the Penal Code. (b) Not~t~tanding Sec~on 1~.21 of the Health and ~feW C~e, the re~lts
(2) A ~vil scion agai~t the ~t for the transmi~al of any pro~ble of the bl~ test or t~ to det~t infec~n by any pmbaMe causa~'ve ag~t of
~usati~ ag~t of AIDS to an uninfected ~rson or persom, acquired immune d~en~ ~ndmme (AIDS) shall be tra~ieed b~ the cl~k
The pdvileg~ provided bp Sec~om 97~ 971, ~ ~, a~ 1014 of the Evid~ce of the cou~ to the D~ment of Jus~ce, which shall include the re~lts of those
Code and 'Section 1~.20 are not applicable in a~y prose~tions or precedings ~rsons t~ted under th~ sec~on in the state summa~ ~minal h~to~ info~-
des~bed in this subdivision. ~'on.
d (e) B~ulations adopted pur~nt to th~ ~c~on shall require a finding bF the (c) No~'t~tandi~ Sec~on 1~.21 of the Health and ~afeW Code, the cou~
irector that an~ public use of infomation re~ed pursuant to Section 1~.24 or the defense aeom~, the pmse~'ng attomeB and the l~l law enforc~ent
Sec~'on 1~.27 is essen~al to consol the ~read of AID~ age~ in~lved in a ~minal in~s~a~n or prosecu~on under Sec~on ~7 or
~) Nothing in this section shall pwhiMt a judge in a ~vil ac~on from isling ~Tf shall, upon requ~ be provided by the Depa~ent of Jus~e with the r~ults
protecti~ orders fashioned to prot<t the pdv~ of any palp or any ~mess. of any t~t or tests as to the person under investigaHon or ~ing prose~ted under
SEC. 16. Section 1~.~ is added to the HeMth ~d Sde~ C~e, to read: t~ose sections ~ the re~]ts are on file ~th the de~ent
1~.2~. Anemployershall notinhibitorinte~erewithan~ployee~d~sion (d) For puwos~ of this section, sexual offenses include any of the following:
to ~ar an~ protec~'~ clothing gowns, glove, or other prot~ti~ gear thai the (1) Ba~ in violation of Sec~on ~1.
employee aeems nec~sa~ for protec~on agaimt ~ntamination by any probable (2) Unlawful int~urse with a female under age 18 in viola~on of Sec~'on
causative agent of AIDS unless the pwtecti~ gear ~ses a direct baird to others 261.5.
in the ~r~place or pre~nts the employee from pe~oming the no~al duti~ of (3) Rape of a ~o~e in violation of S~tion 262.
his or her job. Nothing in th~ sec~on shall ~ de~ed to impose a duty, (4) Unla~ul sodomy in viola~on of Sec~on 286.
requiremen~ or obligation on the employer or any other person other than the (5) Unlawful oral copula~on in viola~on of Sec~on 2~.
employee to pap fog furnish, or reimburse the employee for the pwtec~'~ gear. (6) Soli~'ng, agr~ing to engage in, or engaging in, any act of pms~'tution in
SEC. 17. Section 1~.29 is added to the HeM~ ~d S~e~ Code, to read: violaHon ofsuMivi~on (b) of Sec~on
(7) ~ and las~vious conduct with a chiM under the age of 14 in violation
1~.29. (a) Any person who refuses to give any infomation, to make any
repo~ to comply ~th an~ pro~ control procedure or examina~n, or to p~o~ of Sec~on 2~.
any other duty or ac~ r~uired by th~ chapte~ or who violat~ this chapt~ or any (8) Rape b~ foreign object in ~ola~on of Section 289.
~le or regulation ff the State Depa~ment of Health Sem~ ~ed pur~ant to (9) ~ual bb~ in viola~on of Seetion 2~.4.
this chapter is guitty of a misdem~nor. (10) Assault bg m~ns likel~ to pr~uce great bodily inju~ in violation of
(bi Any phy~an and ~rgeon who fails to comply with the re~ing ~'on 2~.
requirements of this c~pter shall be liable for an addi~onal ~vil ~nalW of t~ SEC '24. In the event that any sec~on, ~bdivision, or ~ion thereof of this
hundr~ fifW dollars ($250) for each violation, act is deemed uncomti~tional b~ a proper cou~ of lam then that section,
SEC. 18. Section 1~.5 is added to ~e He~ ~d S~e~ Code, to read: ~bdivision, or ~m~n th~eofshall be st~ckenfmm the act ~d all oth~ sectio~
12~.5. To the extent permi~ed by federal law, a clinic shall pla~ a biologi~l ~bdiv~'ong and ~ions th~eof shall r~ain in force alterable only by the
ha~rd label on all items known to the dinic to ~ soiled bg or containing b~y ~ople, a~rding to pr~ss. ' ·
139
Proposition 103: Analysis the insurance industry. Given the current balance in this
Continued from page 98 fund, fees and assessments would have to be increased to
In general, this measure defines a good driver as a cover these costs.
In years following, these costs could be somewhat lower
person who, during the last th?ee years, has (a) held a or higher, depending on workload.
driver's license and (b) had no more than one conviction State and Local Governments. While some local gov-
for a moving violation, ernments purchase insurance, most "self-insure" by rely-
2. Determining Factors for Rates. In general, the ing upon their own resources to pay losses and claims.
measure requires that rates and premiums for automobile The state is generally self-insured, but does purchase
insurance be determined on the basis of the insured some liability and fire insurance. Because this measure
person's driving record, miles driven and number of years reduces the rates for certain types of insurance, including
of driving experience, motor vehicle, fire and liability, it would result in un-
known savings to the state and those local governments
Other Insurance-Related Provisions that purchase such insurance.
1. Antitrust Laws. The measure makes insurance
companies subject to the state's antitrust laws. Revenues
2. Election of Insurance Commissioner. The measure Insurance companies pay a tax based on the amount of
requires that the Insurance Commissioner be elected, the gross premiums they receive each year from insurance
first election taking place in 1990. sold in California. These tax revenues are deposited in tlhe
3. Consumer Assistance. The measure requires the State General Fund.
establishment of a nonprofit corporation to represent the Starting in November 1988, this measure requires that
interests of insurance consumers. Additionally, the mca- rates for motor vehicle, fire and liability insurance be
sure requires the Insurance Commissioner to provide reduced. These lines of insurance account for about 45
consumers--upon request a~d for a reasonable fee--with percent of all California insurance premiums. A good
a comparison of the rate~ for each personal (that is, driver discount takes effect a year later. The Department
noncommercial) type of insurance offered in California. of Insurance's new role in reviewing and approving
In general, this would include rates for private automo- proposed rate changes also takes effect in November
bile, homeowner's and renter's insurance. 1989. The rate reductions and the good driver discounts
4. Discounts or Rebates. The measure permits insur- combined normally would reduce state insurance l:ax
ance agents and brokers to give certain discounts or revenues by about $125 million a year. This estimate
rebates to those who buy insurance from them. It does so assumes that about 50 percent of the drivers would
by eliminating the prohibition in current law against such qualify for the discount. It also assumes that no offsetting
discounts or rebates, adjustments would be made in other insurance rates. The
resulting state revenue loss, however, will not occur
Fiscal Effect , because this measure provides that for the period Novem-
Costs ber 1988 to January 1991 the State Board of Equalizati.on
Department of Insurance. This measure would in- shall adjust the state tax rate on gross premiums to offSet
crease the Department of Insurance's administrative these premium reductions.
costs by between $10 million to $15 million during Thereafter, there would be an unknown General Fund
1988-89. These costs would be financed out of the Insur- revenue loss to the extent these rate reductions and
ance Fund which is supported by fees and assessments on discounts continue.
Proposition 103: Text of Proposed Law appropriation for this subdivision.
Continued from page 99 Emergency Authority
amendorrejectadecisiononlyunderSectionll517(c) and(e)andsolelyonthe 1861.11. In the event that the commissioner finds that (a) insurers i'~ave
basis of the record; (d) Section llS13.5'shall apply to the commissioner; (e) substantially withdrawn from any insurance market covered by this article,
including insurance described by Section 660, and (b) a market assistance plan
discove~ shall be liberally construed and disputes determined by the adminis- wouM not be suffi_dent to make insurance available, the commissioner yhall
trative law judge.
1861.09. Judicial review shall be in accordance with Section 1858.6. For establish a joint underwriting authority in the manner set forth by Section 11891,
without the prior creation of a market assistance plan.
PdecisiUrposes of judicial review, a decision to hold a hearing is not a final order or
on; however, a decision not to bom a hearing is final. Group Insurance Plans
Consumer Participation 1861.12. Any insurer may issue any insurance coverage on a group plan,
1861.10. (a) Any person may initiate or intervene in any proceeding permit- without restriction as to the purpose of the group, occupation or type of group.
ted or established pursuant to this chapter, challenge an~ action of the commis- Group insurance rates shall not be considered to be unfairly discriminatoz~/, if
sioner under this article, and enforce any provision of this article, they are averaged broadl~ among persons insured under the group plan.
(b) The commissioner or a court shall award reasonable advocacy and witness Application
fees and expenses to any person who demonstrates that (1) the person represents 1861.13. This a~'cle shall apply to all insurance on risks or on operations in
the interests of consumers, and, (2) that he or she has made a substantial this state, except those listed in Section 1851.
contribution to the adoption of any order, regulation or decision by the commis-
sioner or a court. Where such advocacy occurs in response to a rate application, the Enforcement & Penalties
award shall be paid by the applicant. 1861.14. Violations of this article shall be subject to the penalties set fon~h in
(c) (1) The commissioner shall require every insurer to enclose notices in everY Section 1859.1. In addition to the other penalties provided in this chapter, the
policy or renewal premium bill informing policyholders of the opportu- commissioner may suspend or revoke, in whole or in part, the ce~ficai'e qf
nity to join an independan~ non-profit corporation which shall advocate the authority of any insurer which fails to comply with the provisions of this articlb.
SECTION 4. Elected Commissioner
interests of insurance consumers in any forum. This organi, z. ation, shall be
established by an interim board of public members designated tst the commis- Section 12900 is added to the Insurance Code to read:
sioner and operated by individuals who are democratically elected from its 12900. (a) The commissioner shall be elected by the People in the same ?.ime,
membership. The corporation shall proportionately reimburse insurers fqr any place and manner and for the same term as the Governor.
additional costs incurred by insertion of the enclosure, except no postage shall be SECTION 5. Insurance Company Filing Fees
charged for any enclosure weighing les~ than ~ of an ounce. (2) .The. commissioner Section 12979 is added to the Insurance Code to read:
shallby regulation determine the content of th$ enclosures and otl~.er ?.roce,ctures 12979. Notwithstanding the provisions of Section 1£978~ the commiss~oner
necessan~ for implementation of this provision. The legislature stuart matte no shall establish a schedule of filing fees to be paid by insurers to cover any
140 G88
administratite or operational costs arising from the provisions of Article 10 .
(commencing with Section 1861.01) of Chapter 9 ff Pa~ 2 ff Divigon 1. m
SE~ION 6. Transitional Adjus~ent of Gross Premiums T~
Section12202.1. I~02.1thdithi~d~~ois added to the Revenue & T~ation Code to read:thegwsspremi_ Notwi~stan_ng...e rate spec~.~_ ~y.ectioa l~paid by
urns
tax
in~rers for
any
premiums
collectd
~en
No~m~r
~ and ]anua~ L 1~1 ~hall b~ adjusted ~ the Board of ~uali~on in
]anua~ of each year ~o that the gross premium tax re~nu~ collected for e~h
~or ~lendar ~ear shall be ~uffi~ent to com~n~at~ for chang~ in ~ch r~,u~
~ a~g including chang~ in anti~pated revenues, a~'ng from th~ act In
~l~lating the n~essa~ adjustmen~ the Board of ~ualiza~on shall co~der the
gww& in premiums in &e most recent three Fear ~ and the im~ct of
general economic factors including, but not limited to, t~ inflation and int~t
rates.
SE~ION 7. Repeal of E~sting ~w ~ ~ ~ ~ ~ ~ ~ k~a~cqxatc '--~ .... · ......... ~L.
SecUons l~, l~O, l~O.l, l~O.g, l~O.3,1~, l~, l~.~, l~.7,1~7.~, l~,
Article a (eo~eneing ~th SeeUon 1~4) of Chapter 0 of P~t ~ of Dillon 1, ~d
ArEcle $ (commencing ~th Section 750) of Chapter 1 of P~t ~ of DMsion 1, of
the Insurance Code are repe~ed.
~ -:aa~mty :naur~co, ~ ~ agcnt llm!tcd ~ ~ ~uaacSan ~ ina~r~oo wSic5
dc~calta ~ ~ .....
~ "Su5-:a: ...... ~ ~ ~ ..... :~ ........... L: ...... a · · .
· ~ ~ ~ .... :..c ~ ~ ~rpcra~cn, aaacc:aScn, ~ ~ ccr~cctcd .... * ~ ~ ~ rcac~-c...
..mug. ~ ~ d e ~ ~ ~ ..... : ....... ~ .... Z ........
=mom~t bcac;;'ad. '
cauac ~ JrccSan ~ ~ .......... ~ """ ..... ' ..... : ..............
7~7--.~.:~~ ~u~..c. ra~xg crg~n:zaScna ~
m~ug ~ ~'~ ~- related
....... a ........... L~.~. ~ ..... 2..,:.L .........a~~'~'¢ ~ .................
.................. , ............................... ~ S~tc, who ~ ~ ~ ~x~ncncc, m
~ a rating crg~mza~cn. ~ sLuglc :maurcr sh"~ ~ dccmad ~ ~ ~ ra~g ......... ~ ............ ~ ....... -a ·
~-e .......... prcmmga.mg =uc.. r~c~ ~ pl~, ~ cc~Salcner ~ ~ ~ ccnaldcraS;n
prc.caalcn an~: ~ dccmcd ~ ~ ~ ad;~aow crg~=aSo~.
~ 141
~. ...... t.,^ rulcs ~ plans ~ be promu!g=t~ ~ the eoam~issimte~
ratcma!dng ~ ~ appEcat:cn ~ ra~=g sys,~m:. ~ _ _ ....... ~., ra~=g
con:cnt ~ ~ ~cnate ~ ~ ~ ~ ~ a tc~ ~ ~ ycara -~x ......
~ ~ rating orga~iza~on ~ ---~ .... ~ ......... ~ ~ ..... wig. out ~ ~----:-~ ~cxcha~gc ;uchk~fo~aEon~cxpc~cncc~;;~tk~mg
~ eomm;z;mncr e wn..cn avv ..... ;~.. ~ ~ socking a Eccn;c
~ FJ:mg --Mtk ' ' '" --' .... '~-
.;ccn;c ~ ...... m ~ .... v ........~ ~ ..... e ~ ............. ~ cx~cn;c cx~crlcncc ~ 0rdcr ~ ~ cxpc~cncc ~ ~ ~ insurer member;
_SL~:~,:~_ ~ ~ ~ %., ........ '-- ~ ~ ~ ~ conduct ~
wkcm nctlcc; ~ cr~cr; ~ ~ ecmmk;icncr ~ prccc= ~ ~ ..... , ~ ~ngagc m ~ ;amc .......... ~ ~_.: ~ ~ ............... ~,,w~.
.......... : .........~ ~ .......... t ..... ~ ~ ~ ,_._,_ ~ ,~_,_..t.., Echatc:,. ....... ~ Commission:
~ Pcrmit ~ a~Tg~cd Ln:urcr ~ ~comc ~ mcm2cr ~ a subzcfibcr ~ ~
· ~ ..... ~ .................. ~' m;ur~cc
~ ~ v ....... ~ ~ ~ Pw ....... ~ ~ ......... ~ ~ u ..........
cn~cr ........ ~ ~ ......
rc;..~ ......................... ~ m ~ ......... ~
..... ~ m ..... r ...... ~ ~ .......... , ~ ~ ~ by ...... , ....
.... ~'":'~X
furtkcr k~vc;~ga~cn ~ ~ applicaut, ~ ~ ~ ~ prcpo;cd ~ ~ bu;mc~,
~ ~ dcc~z dcs:zablc. ~, ....... ,:~ ~ ..~,k:_ m ~ ~ e,:__ ~ ~ k~-aucc ecn~act, ~ ~ ccn;idcra~cn wMch ~ ~
~ cc~Js:izncr ~ ~ ........ apr ............. ~ .~-e
thcrcfcr.
~ pcEcic;
~iCG~OC3 ~ p~-o~. ~ ~ SC ................ ~ ......... FC ..... ~ ....... · .~_ ,,~ .... :.1 k~_~,, ~ .... '
..crc=.cr, ~ ~ ~ ~ ~ v-; .... ~ ....... ~ ~ ~ ~ ............
~ ~ ~ ~ ~ ~ ~ ............ : ......~ '"kZ'~ ~'~ .... ,_.x..,, ....................................
. ..... ~ .........~_ _a ........... cn~m"' ~ mom.cfr.tip.
~ .................... a .... ~ .......... ~crccn dmso; ~ c;n~um=cc ~ forcc ~ rcncwM ~ ;ucE~ ~ Ecnd
14~
;c!icitafion. a~[ is;uc.'~cc, bct;;'ccn (~he in;urcr p;sfiu~ ~ ~Ic~:fiug ~ ccw~2sslon bcSug namcd ~ ~m~;ct ~ ~ or8m~z;~cn ~ccnso ~ c::v~ug ~ intcrcst
~ ~ ~crscn, ~ corporation ~ pm-~cr~hlp ~m~zac~ng ~ Lu;urmuco ~gcncy ~ hrckcragc
5om ~ ~ ~ ~ ~ cmp!oycr ~ whom ~ ~ ~ccr~c~ cxccp~ug ~ ~ ccnc!mivc!y prc:~mcd ~ ha':c rccclvc~ ~ ~ co=~2:~cn ~ ~ con
d~h~ agcnt i:auc~ ~ ~ purau~ut ~ ~ cc~c. ~ cm~lcycc ~ ~ccrc~c~ ~ ~ cm~Icycr ~ ~ ma~a ~urc~cn~ly ~-~
..... , ..... ~.~.~ .... ~ .........~ ...... ~eo ......... : ~ ~ s.:~r~c~ ~ yc~-s .... ~~ ....... ~ .': ...........urr~.
ccna~crafian ad;~aca, ~ a~cca ~ a~;~ac, ~ Fcracn ccncc~Jng ................... e s----~--.z ~ ~ ...... e ..... ~ .........ng ~ m ........
Fcr~cn ~ ~ ~ ccm~Ja;~cn ~ m~y ~ccruc, ~ ~ 5u~rcctb' ~ : ....... ' .... ~ ....... ~: ........
~ W~cn ~ ~rc~Jum ~ e pc~cy ~ ~ ~ ~ 5~cd upon ~ ~ .............. ~ ~ ....... ~ ............................ d ~ s ~ az~-
....... :..~lS~,:a.~.~.. ~ .... ~.w~, ~ .... L~" e ...... ~.~..~u~ ~ ~ ~ - . ....... m ~ ~ ~ ~..c. :.~.r~.~c ..=~aac.c. ~ sac. accnacc =~.cr ~
~ such ~ ~ :lama ~ ~ 5taro ~ ~ ~cunt ~ F~cs ~ dLffcrcnca between ~: .... : ..... ~ · · · ~ .... ~:..L:J: ....... ·
...a~ ~ ~ ~ ~ app.lcaJcn ...crc.o;.
~ ~'u;cd ~ ~ ;cc~n "pcracn~ ~ ccn~cEad L~ura~cc" mca~; in;ur/ ......... ~ ........ ~ ' : .... ~ ..... ~ · · · . ·
~ ~ ~ ~ ~ ~ .... ~.~)'~r. ;parc. ~ .con ccn~ucus.y zccr~od m ~mc macocr ~ ~ acfvc agcnt undo; ;amc
~ ~ ~ ............. ~ ~ ~ ~ ~crs;n; mcn..cnc. ~ :'zb~k~::cn ~ ~ ~ ~ ....... ~ ~ !c~t ~ 5'car;; ~ ~ ~ ~ ~ ~ )'oars ~ ~ ~ ~
...... ~ ........... z ~ ........... ; ~ Ludlrcctly ca;Ting ~ ". car" ~ u;cd ~ ~ ~cficn mc~u; ~ ~ ~ ~ :cvccafcn
........ ~ ............ : ........ ~ FurFc;c; ;;4~k ~ cc~cra~cn dcsc~Sca ~ ~ ~ paymcnt ~ cc;~i;slcn ~ ~ L~surcr ~ in;ur;n~e agcnt brc?r ~
-~ ............ , ~ ~ ~ m ~; ........ ~ rr~..~u=; ~ c...cr .~ ~ ~Icwancc ~ ~ marlnc in;urcr, ~ ma2nc in;ura~ce agcnt, 5rckcr, ~
................ ~ ~ ...... ~ ~ .......... r ...... marina ~n:urcr: ~ 5clng addi~cn~ ~ ~ agcnt'; ~ ~ cc~J;;ian.
~ ........... ~ ................~g~.~ ........... --~ ..... ~ ..... ~ ......~ar ..... ~ ..... ~~ ........
G~ 143
~ T-~ paying by m~y ~ in;;rcr, ~ One rccc:;'mg by ~ i=g;r;=~ pclicyl ~=;=rcr'; ........... ~ .........~ ~ ~ ~ .... ~ ...........~ wLic5 ~ ~
.,.~,.,~,~ .................. o~,~,~ ,,,~,~, ~' rcspcct ~ ~ ~ ~ which ~th ~ ccsurctic~. ~ ~ ~ imur~ucc ~-~'-~-~,~_~. ,,~.,~' ..... ~ ~ ~ ;tatcs ,~,~,,,--~:~--' ~ Mc=icc
..... ~ ~ ~'~5,~-- ~ ~:-' ............ ~ ~ ..... . .....~:~ ,~,: ............. ~.:..~ . .
~ ................. ~p ........ ~ ........ ~ ................. ~ SE~ION 8, Technic~ Matters
rccclpt ~ ~ cc~2:icn: -:,'c-d~ ~ ocns~tutc ~ vlclati~n ~ ~ccticn ~ ~ ~ (a) Th~ act shall be liberally const~ed and applied in order to full~ promote
pcr~cn rccclvlng t,~cm wcrc liccngcd ~ ~ i,~:~r~.~cc ~ its underlying pu~oses.
~ ~~~~tc:~fs'~c~Sdcncc~ (b) Thepwvisionsofthisactshallnot~amendedbythe~gislatureexc~t
~ ........~ ~ ~ ......~ ~ ......... ~ a ~ ......... ~ ~ ar~cL, ~ ~ ~ tof~her its pu~es by a statute ~ssed in ~ch house by wll call vote entered
.........~'a ............... :at'croon ~" ............ ~"'~~ in the journal, t~-thirds e the mem~ship con~ng, or by astatute t,~at
pr~cc; ~ ~ ~ ~ ccmmlttc~ ~ ~ ~ (c) If any provi~on ff th~ act or the appli~tion thereof to any ~rson or
~ ~ .................. ~.~~~~ ........ ~ .......... ~.~ ~r~mstanc~isheMin~lid, thatinmlidityshallnotaffectotherprov~ion;~or
~ ........ ~ ......... ~ ..... ~ ~ ~ ~ ~ ~ ................ , ....~ ~ appli~tiom of t~e act w~ic~ can be gi~n effect ~it~out t~e inoalid~ro~ision or
m ................. ~ ~ ........ ~ ....... m ........ ~ ~ ~ .... ~ a~plication, and to t~is end t~e provisions of t~is act are se~rable.
Proposition 104: Analysis employer may recover the cost of benefit~sueh as
~ontinuedfrom ~age 1~ workers' eompensation--it provides to an employee who
· Permits, but does not require, insur~ee complies was injured in an accident by another person who was at
to offer an unspecified "good d~ver" discount, fault.
· Enacts other insurance-related provisions, and teen- ~. Additional Beeovery. Permits ~ injured person to
acts many provisions related to various lines of recover costs in excess of the no-fault basic benefits by
insurance which are currently in law. suing the party at fault for the accident.
· Provides that if this measure receives a higher num- 4. Noneeonomie Losses. Prohibits recovery for non-
ber of votes th~ other measures on this ballot, then eeonomie losses (such as p~n and su~ering), except in
those provisions in other measures that relate to the cases involving (a) death or (b) serious and pe~anent
business of insurance shall have no effect, disfigurement or injury. It would not limit the right to sue
for damages in eases invo]~ng (a) the operation of an
No-~au]t System uninsured vehicle, (b) harm caused intentionMly, or (e)
St~rti, g July 1, 1~8~, this measure establishes a no-fault specified crimes.
motor vehicle insur~ee system that (I) applies only to ~. Attorney Fees. Limits pl~ntiffs' attorney cont,-
bodily injury ~d (~) permits individuals to sue for losses gency fees in motor vehicle accident cases involving
which exceed specified limits, bodily injury to the following: (a) 13 percent of the basic
This measure applies to private and eommereiM motor no-fault benefits recovered; (b) ~3.~ pereent of the first
vehicles including automobiles, trucks, buses and ~ai]ers. $S0,~ recovered over the basic benefiys; (e) ~ percent
It does not apply to motorcycles and "off-road-type" of the second $~0,~ recovered over the b~ie benefits,
vehicles which are not registered with the Department of ~d (d) 13 percent of the recovery over $100,~.
Motor Vehicles. 6. Premium Reduction. Bequires insurance eompa-
This measure eontMns the foHo~ng features, nies to reduce--by ~0 pereent for a two-year period
1. "Basic" Benefits. Bequires the following min~um 1989 through June l~l)--their average statewide pre-
basic benefits to be pMd by insurance companies to mium rates for specified types of motor vehicle insurance.
injured persons regardless of who is at fault: This would include rates for basic bodily injury liabil:i~,
· Up to $10,~ for medicM expenses; uninsured motorist and b~ie no-fault benefits provided
· Up to $1~,~ for lost wages; and under this measure. This reduction does not apply to the
· $$,~ for funeral benefits, in ease the injuries result personM property liability damage, collision and eompre-
in death, hensive portions of a motor ve~ele insur~ee p°]iey.
In generM, the basic benefits would not be provided to
Other Insurance-Belated Provisions
an uMnsured motorist, a person driving a stolen ear, or a
person engaged M the eom~ssion of a felony. ,The measure enaets other motor vehicle insuranee-
TMs measure provides that the basic benefits shah be related provisions inelu~ng the following.
available only to pay medieM e~enses and lost Wages to 1. Claims Settlement Practices. Bequires that dis-
the extent that these expenses are not eovered by work- putes between an insur~ee comply and persons other
ers' compensation ~d disability benefits, th~ po~eyholders be settled by arbitration rather th~
Any dispute eoneerning payment of basic benefits by court ae~on.
would be deeided by arbi~afion, ~d not by eourt trial. ~. Penalty. Inereases the penalty from an "~raefion"
The arbitration would be conducted in aeeord~ee with to a "misdemeanor" for second ~d subsequent eon,de-
proeedures estab~shed by the Insur~ee Commissioner. tions for violation of the current fin~eia] responsibility
~. Reeove~ of. Workers' Compensation Costs. Be- laws.
striets the abi~ty of employers to be reimbursed for ~. Insurance Fraud. Increases the authority of the
medieal expenses ~d wage losses paid under workers' Insur~ee Commissioner to. Mvesfigate ~d prosecute
compensation and other similar programs when employ- insurance fraud.
ecs are injured in motor vehiele aeeidents. Currently, ~ 4. Premium Discounts. Permits, but does not require,
that insurance companies offer unspecified premium crease the Department of Insurance's administrative
diseounfs for good drivers, defined as drivers who have costs by about $2.5 million during 1988-89. In years
not been responsible for an accident, or had a moving or following, these costs could be somewhat lower or higher,
an alcohol or drug-abuse traffic violation, for at least three depending on workload. These costs, payable from the
years. Insurance Fund, may require additional fees and assess-
5. Conflict of Interest in Employment. Prohibits ments to be levied on the insurance industry.
former employees of the Department of Insurance from State and Local Governments. While some local gov-
ernments purchase insurance, most "self-insure" by rely-
representing insurance companies on certain issues that lng upon their own resources to pay for losses and claims
were pending before the department or in which that resulting from motor vehicle accidents. Because this
person participated, within one year after leaving the measure reduces certain types of motor vehicle insurance
department.
rates and limits claims for noneconomic losses, it would
6. Limitation on Setting Insurance Rates. Prohibits result in unknown savings to the state and the affected
public officials from setting or approving insurance rates local governments.
other than those for workers' compensation insurance
and assigned-risk insurance. Recovery of Workers' Compensation Costs. This mea-
sure restricts the ability of employers to be reimbursed
Reenactment of Insurance-Related Provisions for medical expenses and wage losses paid under workers'
compensation and other similar programs in motor vehi~
This measure reenacts, without modification, various cie accident cases. State and local governments, as em-
insurance-related provisions which are currently in law. ployers, would experience both costs and savings from
These include (1) the current procedures by which this restriction. The net effect is unknown.
insurance rates are regulated, (2) the requirement that Courts. Because this initiative places limits on court
the Insurance Commissioner be appointed by the Gover- actions for noneconomic damage claims, it may reduce, to
nor with the consent of the Senate, (3) provisions that an unknown extent, annual state and local court costs and
prohibit discrimination in motor vehicle liability insur- local court revenues.
ance based on various factors, and (4) provisions that
prohibit insurance agents and brokers from paying a Revenues
rebate to a buyer of insurance. Insurance companies pay a tax based on the amount of
The reenactment of these and other provisions in this gross premiums they receive each year from insurance
initiative would make future changes in these provisions sold in California. These tax revenues are deposited in the
more difficult. This is because such changes would re- State General Fund.
quire either a two-thirds vote--instead of a majority This measure requires rates for bodily injury, uninsured
vote--of the Legislature, or passage of another initiative
by the voters, motorist, and medical liability coverage to be reduced for
a two-year period. These three components account for
Effect on Other Insurance Initiatives over 40 percent of total motor vehicle insurance premi-
ums. The required rate reductions--by themselves
This measure provides that, if it receives a higher --would reduce state insurance tax revenues by about $25
number of votes than other measures on this ballot, those million a year. This estimate assumes that no offsetting
provisions in other measures that relate to the business of adjustments would be made in other insurance rates--not
insurance shall have no effect, restricted by this measure--to compensate for these
Fiscal Effect reductions. Whether such adjustments would occur is
Costs unknown.
The rate reductions required by this measure would
Department of Insurance. This measure would in- expire after two years, at the end of June 1991.
Proposition 104: Text of Proposed Law resulting from personal injury, from remunerative employment or self-
Continued from page 103 employment reduced by 90% of any income from substitute work actually
performed by the victim and by 100% of the income the victim wouM have earned
The term does not include the United States of America or any agency thereof in available appropriate substitute work which he/she was capable of performing
except with respect to motor vehicles for which it has elected to provide insurance, but unreasonably failed to undertake. Work loss does not include any loss of
(14) "Personal injury" means bodily injury, sickness or disease, including income occurring after the death of the accident victim, regardless of the cause of
death resulting therefrom, arising out of the use or occupancy of a motor vehicle such loss.
as a motor vehicle on or after July 1, 1989 which is accidental as to the person 12002. Compulsory Motor Vehicle Insurance Requirements.
suffering the injury; it does not include injury occurring during the use or (a) Each owner of a motor vehicle required to be registered in this State or
occupancy of a motor vehicle but not arising out of such use or occupancy, which is operated in this State by or with the express or implied consent of such
(15) "Punitive or exemplary damages" means awards or portions of awards ~ owner shall continuoasly provide and maintain insurance in accordance with this
which are imposed essentially as a punishment or a penalty and not as Chapter. Nothing in this Chapter shall be deemed to modify or repeal any existing
compensation to a claimant for whatever proven loss may actually have been . statutory requirements of financial responsibility including, without limitation,
incurred by such claimant. Vehicle Code Sections 16050 to 16057 inclusive.
(16) "Required loss benefits" means those benefits required by Section 12003 (b) The insurance required by this Chapter may be provided by a policy of
for economic loss arising out ~f ~ersonal injury, insurance issued by an insurer authorized to transact business in this State or, if
(17) "Use of a motor vehicte" means operating, maintaining, loading or the vehicle is registered in another state, by a policy of insurance issued by an
unloading a motor vehicle, except that such term does not include., insurer authorized to transact business either in this State or in the state in which
(a) occupying a motor vehicle as a passenger while not operating the motor the vehicle is registered.
vehicle;
(b) Conduct within the course ora business of repairing servicing or otherwise (c) Subject to the approval orr the Commissioner of Insurance. the insurance
required by this Chapter may oe provided by self-insurance by ~'flling with the
maintaining motor vehicles unleds the conduct occurs off the business premises; Commissioner in satisfactory form..
and
(c) conduct in the course _of loading or unloading a commercial v~ehicle as the (1) a contii~uing undertaking by the owner or other appropriate person to pay
term commercial vehicle is d~lined in Vehicle Code Section 260. required loss benefits with respect to every vehicle subject to the undertaking and
(18) "Work loss" means the loss, during the life of an accident victim, of to perform all other obligations imposed by this Chepter and by the motor vehicle
income such victim wouM have earned, but is unab[e to earn because of disability financial responsibility laws of this State to the same extent as would be required
G88 145
under a policy of insurance that wouM comply with this Section and with those for that vehicle had th$ owner of that vehicle obtained such a policy; and
laws; (ii) is not an insured under a policy of insurance providing insurance for some
(£) evidence that appropriate provision exists for the prompt and efficient other motor vehicle;
administration of all claims, benefits, and obligations provided by this Chapter (4) any person who intentionally attempts to cause harm, to himself or herself
and by the motor vehicle financial responsibility laws of this State; and or others, in a motor vehicle accident;
(3) evidence that reliable financial arrangements, deposits, or commitments (5) any person who suffers injury while engaged in the use or occupancy of a
exist providing assurance for payment of benefits in amounts required by this motorized vehicle with three or fewer load bearing wheels; and
Chapter and by the motor vehicle financial responsibility laws of this State and I~I any person who suffers injury while engaged in the commission of a felc,ny.
Only one insurer shall be liable to pay required loss benefits to a person
for performance of all other legal obligations relating to such benefits equivalent
to those afforded by a policy of insurance that wouM comply with this Chapter suffering personal injury, except that all owners liable pursuant to priority (6.) of
...... ' ' '" ' " ' benefits.
;nrdov~ees mt~OrcoVem~Culffsofrr~n~s~arla~eP;nrSoivb/. 'dlietdY ~an~Se:ft~tSs Su tbad~iAsioPne~SsO~ Wsehl~ ,subdivision (a) of this Section shall be jointly and severally liable for such
(d) A victim who is an insured under a policy providing for basic loss benefits
insurer.
(d) A government may provide insurance with respect to any motor vehicle in excess of required loss benefits may recover any additional benefits to which
owned or operated by it by lawfully obligating itself to pay required loss benefits such victim is entitled from his or her own insurer.
in accordance with this Chapter. . (e) If two or more insurers are obligated at the same level of priority to pay
(e) The owner of any motor vehicle required to be registered in this State who benefits in accordance with the priorities set forth in subdivision (a) of this
operates it or permits it to be operated in this State, when he or she knows or Section, the insurer against whom the claim is first made shall pay the claim as if
should know that he or she has failed to comply with the requirement that he or wholly responsible, and may thereafter recover contribution pro rata from any
she provide the compulsorry insurance under this Chapter, shall have his or her other insurer at that priority level for the costs of the benefit payment, r. If
operator's license and his or her motor vehicle registration revoked or suspended contribution is sought under priority (4), (5), or (6) of subdivision (a) of this
in accordance with procedures established therefor under the motor vehicle Section, pro ration shall be based on the number of motor vehicles involved
financial responsibility laws of this State until he or she shall provide the (f) For purposes of this Section, a parked or unoccupied motor vehicle is rwt a
insurance required by this Chapter, and shall be subject to such other penalties as motor vehicle involved in an accident unless it was so parked as to c,~use
may be provided by law. unreasonable risk of injury.
12003. Required loss benefits. · · (g) Paymentofbenefits. (1) Timeliness. Basiclossbenefitsshallbepeyable
The insurance required under Section 1200£ must at a minimum, provide the
· when loss accrues. Loss accrues not when personal injury occurs but when medical
following required loss benefits, in accordance with the provisions of Section
12005, to every accident victim for the following types of losses resulting from that expense or work loss is incurred or when death occurs. Benefits payable' for
accident: accrued losses are not due until the insurer has received reasonable proof of the
(a ) Medical expense. Benefits for medical expense, in a total amount not to fact of the loss, the amount of the loss (including the reasonableness and necessity
exceed $10,,000 per accident victim, for products, services, and accommodations of any medical expenses and the duration of any disability), and the causation o_f
furnished within three years of the accident causing the injuries, the loss by the accident or until such proof would have been received har~! the
(b) Work loss. Benefits for work loss occurring within one year from the date insurer timely requested such proof after being notified of the accrual of the loss.
of the accident causing the injuries. Because benefits for work loss are non-taxable If an insurer uses reasonable diligence to investigate whether a loss of whose
and because of savings in commuting costs and other work-related expenses, accrual it has been notified is payable, reasonable proof of loss is comptete only
ben_efits for work loss shall be 80% of the work loss (after deduction of all federal when the insurer has completed its investigation or has received information
and state taxes) suffered up to a maximum benefit amount of $1, OOO fo_r_ work loss which' demonstrates that further investigation is not reasonably necessary.
occurring in any seven day period and a maximum total benefit for all work loss (g) (2) Interest on overdue payments. Subject to the provisions of subdivi-
arising out of any one accident of $15,000 per accident victim, sion (g) (3) of this Section and to Section 1£014, such benefits are overdue if not
(c) Funeral benefit In the event death results from a motor vehicle accident paid within ihirty days after completion of reasonable proof of the loss sustained
within one year of that accident, a single lump sum fiuneral benefit in the amount in accordance with subdivision (g) (1), except that an insurer may accum:date
of gYro00 payabl~ to the estate of the deceased victim, claims for periods not exceeding one month· and benefits are not overdue if paid
12004. Optional offer, within twenty days after the period of accumulation. If reasonable proof if not
Any insurer may offer basic loss benefits with monetary and/or temporal limits supplied as to the entire claim, the amount supported by reasonable praof is
in excess of the requi?ed loss benefits required under Section 12003. Any insurer overdue i not paid within thirty days after such proof is complete. Any part ~fthe
may offer named insureds the option of purchasing any o_f the modified forms of remain~ifer of the claim that is later supported by reasonable proof is overdue ~f not
basic lbss benefits defined in Section12003 which are authorized by gection12011, paid within thirOl days aft. er such proof is complete. For the purpoire of
12008. Payment of benefits. ~ calculating the extent to which any benefits are overdue, payment shall be treated
(a) Persons eligible fo_r required loss benefits shall claim such benefits ]rom as made on the date a draft or other valid instrument was placed in the U~ited
sources of insurance in the fo_llowing order of prioritw States mail in a properly addressed, postpaid envelope, or, if not so posted, on the
(1) If the victim is an employee, and if tha personal injury results from a motor date of delivery. All overdue payments shall bear interest.at the rate of lgfo per
vehicle accident while such victim was using or occupying a motor vehicle annum.
furnished by his or her employer, the insurance applicable to such vehicle, if. any;.
(2) The insurance, if any under which the victim is or was an insured, seiectea
in accordance with Section 12015.
(g) (3) Suspension of benefits. Where an insurer has requested of a person
receiving basic loss benefits that such person undergo medical treatment or
medical rehabilitation services, and such person unreasonably refuses to co..mpl~
(3) The insurance, if any, covering a motor vehicle involved in the accident, if with such reques~ the insurer may suspend all future basic loss benefi'ts untit sucil
the victim is or was an uninsured occupant of such motor vehic, le; . . person complies with the request of the insurer, provided, however, that the
(4) The insurance covering any motor vehicle involved in the accident if the insurer shall notify the person in writing whose benefits are suspended of its
viclYm is not an insured and is occupying a motor vehicle neither owned by h. im action and the basis thereof and shall maintain proof of i~s request and the
or her nor covered by insurance, provided that an insurer providing required loss victim's r_ef~al to comply. It shall not be unreasonable for a person utilizing' only
benefits to such a victim shall be entitled to indemnit~ for those benefits and for non-medical care in accordance with a religious method of healing recogniz, rd by
the costs of processing the claim from the oumer of th~ vehicle occupied by that the laws of this State to refuse to undergo medical treatment to which such person
victim. In the event such owner has made any claim against that insurer or against conscientiously objects fqr religious reasons.
any person insured b!l that insurer, the insurer need not patt any benefits to such (h) (1) Any dispute between a victim and an insurer regar, ding the insure, r's
owner until it has been fully indemnified for required loss benefits and,. c. la. im liability to pay basic loss benefits, the amount thereof, and any interest due
processing costs incurred-or which might be incurred pursuant to this suoatmqo.n, thereon shall be submitted to arbitration pursuant to simplified procedures to be
(5) The insurance covering any motor vehicle involved in the accident if the promulgated or approved by the Commissioner which piocedures shall allow
victim is not an insured and is not occupying any motor vehicle, participation by the parties tn the select,on of the arbitrator. A decmon oy a
(6) In the event no insurance is applicable under the above priorities, ape. rs.o,n arbitrator may be vacated br modified by a master arbitrator in accordance with
suffering personal injury shall claim benefits from the owner of any motor venicte simplified procedures to be promulgated or approved by the Commissioner and on
involved in the accideng which owner shall be liable as if an insurer in addition such grounds as malt be provided by such procedures. The decision of a master
arbitrator shall be binding unless set aside by a court for fraud, corrupt, ion, bias
or misconduct of the master arbitrator, or as exceeding the powers of the raaster
arbitrator. An drbitrator or master arbitrator shall award the claimant reasonable
to any tort liability of such owner.
(b) Except as provided by a policy providing a modified form of coverage
pursuant to Section 12011, every accident victim shall be eligible for required loss
benefits without regard to faul~ except for the following classes of victims: attorncys' fees expended or incurred to obtain basic loss bene, fi, ts which the
' (1) anypersoninvolvedinamotorvehicleabcidentwhilevolunt, arilyqngaged artn'tratorormasterarbitratorfindstohavebeenwithheMordelayedun!thout
in the use or occupency of a motor vehicle known by him or her to Oe stoten or to reasonable grounds. Such awards may exveed the limits set forth in Section l£O19.
be operated without the permission of its owner; . . (h) (£) Benefits, interest, and attorneys' fees shall be the only amounts
(£) any person involved in a motor vehicle accident while engaged in tile use recoverable for any and all disputes relating to a claim for basic loss b~efits,
or occupency of a motor vehicle o~. ed by him qr h. er (or by his. or, her spouse including, without limitation, delay in payment, and no other amounts shall be
recoverable pursuant to any statute or to the common law, provided that, upon
residing in the same household) with respect to which no motor vehicte insurance pro_of that any payment has been delayed or denied b7 an insurer withot~t any
has been provided in accordance with Section 1200£;
(3) any person involved in a motor vehicle accident while engaged in the use substantial justification, the arbitrator may award, i.n addi. tion to. b, ene~?s, i~Iter.est'
ora motor vehicle not owned by him or her (or b7 his or her spouse residing in and attorneys' fe_es, treble the amount found to have Oeen aetayea or t,enied
without any substantial justification and any other consequential economic
tie same household) for which no insurance has been provided in accordance damages determined by the arbitrator to have been sustained as a result of the
with Section 1200£ if such person.
(i) would have been insured under an insurance policy constituting insurance unjust:fled delay or denial in payment. The proceedings specified by subdivisions
G88
146
(h) (1) and (0 (2) of this Section shall be the sole methods of recovering such deduction of all federal and state taxes) suffered are the benefits recoverable for
amounts, all of such work loss and no work loss for which such benefits have been paid or
(i) A victim 'S assignment or agreement to assign any basic loss benefits to are payable shall be recoverable.
become payable under this Chapter, for loss accruing in the future, is unenforce- (c) No person shall recover non-economic loss for personal injury unless the
able except as to: injury to the victim giving rise to such non-economic loss:
(1) Benefits for work loss assigned to secure payment of alimony, mainte- (1) results in death,
nance, or child support; and
(2) consists in whole or in part of a serious and permanent disfigurement, or
(2) Benefits for medieal expense to the extent that benefits are for the cost of (3) is an injury which is both serious and permanent within a reasonable
pro.ducts, services, or accommodations provided or to be provided by the ·degree of medical probability. For purposes of this sub-
asstgnee, paragraph (3), an injury is "serious" only if it has a substantial bearing on the
The assignee of a claim shall have no greater right to payment than wouM the injured person's ability to resume substantially all of his or her normal activities
victim had there been no assignment. A provider which accepts an ussignment of and life style and is "permanent" only if its effects cannot be eliminated by
medical expense benefits for products, services, or accommodations provided or to further time for recovery or by further medical treatment and care, including
be provided to a victim shall not receive or demand any additional amount for surgery.
such services from such victim except to the extent that payment of the reasonable (d) Nothing in this Section 12007 shall limit the right of any person to bring
value of or reasonable charges for such products services or accommodations as a tort action against:
were reasonably necessary is prevented by exhaustion g'f the aggregate benefit (1) a person involved in a motor vehicle accident while voluntarily engaged in
limits or the time limits for furnishing covered products, services, or aeeommoda- the use or occupancy of a motor vehicle known to him or her to be stolen, or to be
tions applicable under tl~e insurance for such victim's benefits. A ny dispute as to operated without the permission of its owner,.
the reasonable charges for (or value of) or the reasonable necessity for products, (2) a person engaged in the use of a motor vehicle with respect to which no
services, or accommodations for which the provider accepted an assigned claim insurance has been provided in accordance with Section '12002 if such perSOn
shall be resolved solely between such provider and the insurer denying payment wouM have been an insured under a policy of insurance constituting insurance
~ for allegedly unreasonable amounts or unnecessary services, but such disputes are for that vehicle had the owner of such vehicle been the named insuredunder such
not subject to the ffrbitration provisions of subdivision (h). However, any action a policy;
to resowe such a dispute must be commenced within the time allowed_for the (3) a person who intentionally attempted to cause harm in a motor vehicle
assignor of the claim to commence an arbitration proceeding, had the clbim not accident,. '
been assigned, but in no event later than one year after the insurer has denied (4)~ a person engaged in the use of a motorized Vehicle with three or fewer load
payments. If an insurer is found to have withheM or delayed payment on a claim bearing wheels;
assigned to a provider without reasonable grounds the provider may recove~ as (5) a person who, as a result of committing any one of the following offenses,
costs of the proceeding, reasonable attorncys' y~efs (based upon actual 'time for which offense that person was convicted, caused harm in a motor vehicle
expended) incurred or expended to obtain the b-enefits which were withheM or accident:
delayed without reasonable grounds. . (i) any felony;
(j) Benefits for work loss are exempt from garnishment, attachment, execution, (ii) Vehicle Code Sections £0001 or 20002 (hit and run driving);
and any other process or claim to the extent that wages or earnings are exempt (iii) Vehicle Code Sections 23152 or 25153 (driving under the influence of
under any applicable law exempting wages or earnings from legal process or
alcohol or other controlled substances).
claims. (6) the owner of any vehicle for which insurance has not been provided in
(k ), If. no basic loss benefits have been paid, an arbitration proceeding pursuant accordance with Section 12002 if such owner is legally responsible for the conduct
to subdivision (h ) for basic loss benefits ma.~ be commenced not later than one of some other person engaged in the ase of such vehicle, regardles~ of whether the
year after the victim suffers the loss. [f basic loss benefits have been paid for such person so engaged is protected by the limitations on recovery contained in
loss, an arbitration prdceeding pursuant to subdivision (h) for recdvery of further subdivisions (a), (b) and (c) of this Section; for purposes of this subdivision (d)
bencfits for such loss shall be commenced not later than one year after -the last the term "owner" does not exclude the Unitdd States of America.
payment of benefits but in no event later than one year after death of the victim. (e) The provisions of subdivisions (a), (b) and (c) ~of this Section do not apply
The limitations periods prescribed in this Seetion shall govern all arbitration ' in those instances where the person suffering personal injury is a person engaged
proceedings'for benefits under this Chapter, notwithstanding any limitations in the use or occupancy of a motorized vehicle with three or fewer load bearing
prescribedelsewhere in the laws of this State. wheels, unless such person had failed to comply with any obligation to maintain
·12006. Interstate basis for insurance, insurance with respect to the use of such motorized vehicle imposed by the laws of
(a) The insurance required by this Chapter applies whenever an insured this State.
suffers personal injury occurring within the United States of America, its
territories or possessions, or Canada.
(f) Nothing in this Section shall authorize or prohibit the recovery of punitive
· or exemplary damages from any person whose conduct in the use of a motor
(b) An insurance policy which purports to provide insurance or is soM with the vehicle which causes personal injury warrants such an award under the laws of
~resentation thai it fulfi'lls the requirements of insurance as required by this this State, but such punitive or exemplary damages shall not be paid or
Chapter is deemed to include all coverage required by this Chapter except to the
extent that such coverage has been deleted or modified in accordance with this
reimbursed by any insurer.
12008. Subrogation.
Chapter. · No insurer shall have a lien on any recovery in tort by judgment, settlement or
(c) Every insurer authorized to transact the business of providing insurance otherwise, or any right to recover from any person for basic loss benefits, whether
under this Chapter shall submit to the Commissioner of Insurance, as a condition suit has been filed or settlement has been reachdd without suit, except in those
of its continued transaction of such business within this State, a declaration that instances where a claimant is entitled to recover in tort for economic loss with
its motor vehicle insurance policies, providing protection against bodily injury respect to which basic loss benefits have been paid or are payable. Nothing in this
liabili~, and issued with respect to any motor vehicle registered in the United Section shall prohibit any insurer from obtaining subrogation from any person
States of America, its territories or possessions, or Canada, shall be deemed to who was convicted of a violation of Vehicle Code Section £3152 or Section 23153
provide the insurance required by this Chapter and to sat#fy the requirements of (driving under 'the influence of alcohol or any controlled substance). Any
the motor vehicle financial responsibility laws of this State when any insured subr, o,~ation recovery obtained by an insurer pursuant to the preceding sentence
vehicle is operated in this State. Any non-admittdd insurer may file such a form. shall oe first applied to reimburse the insured for any deductible amounts on any
Such a declaration does not obligate the insurer to provide uninsi~red motorist coverage borne by the insured with respect to the loss.
coverage or any other coverage not necessary to establish financial responsibility 1£009. Amount of work loss.
under this Chapter and the motor vehicle financial responsibility laws of this
(a~ In computing the amount of work loss of an accident victim who is
State. disabled from working as a result of personal injury, it shall be presumed, absent
(d) In the event a person who suffers_ personal injury occurring in this State is a contrary showing, that such ac~'dent victim's income but for such disability
entitled to basic loss or other first-party benefits under the insurance requirements during a given period prior to the victim's death wouM have been the product of
of m. ore than one state, such person shall ele~t to reeover under the laws of any one (1) the number of weeks in that period the victim probably wouM have
sucn state and only the benefits payable to such person under the insurance worked had the victim not been disabled, and
requirements of that state shall be due to such person: (2) the victim's "probable weekly income if employed" as determined
12007. Tort suits-preservation of right to sue for damages in certain circum- pursuant to this Section.
stances. In no event shall any work loss be computed for any period in which the victim
(a) To the extent otherwise permitted by the tort law of this State, an accident probably wouM not have worked even if not disabled.
victim (or the victim's legal representative) may recover for medical expenses, (b) For purposes of subdivin'on (a)(2) of this Section, a victim 'S "probable
work loss or funeral expenses to the extent that the amounts of those losses exceed weekly income if employed" shall be determined as follows:
the weekly or aggregate limits on the amounts of such losses for which basic loss (1) If a victim was regularly employed or self-employed or had been so
benefi'tsarepaidorpeyableorwhichwouMhavebeenpayab[ebutfortheexercise employed in the prior three months at the time of the acciden~ the victim's
of a cost reducing option authorized by Section 1£011. "probable weekly income if employed" shall be tt~e victim's probable annual
(bi Any accident victim (or the legal representative of the victim) shall have income divided by 52. The victim's probable annual income shall be the greater of'
no right to recover any damages in tort for medical expenses or work loss for which (i) twelve times the monthly gross income earned by the victim from work in
~. sic loss benefts are paid or payable or which would have been payable but for the month preceding the month in which the accident resulting in personal injury
tl~e exercise of a cost reducing option authorized by Section 1£011. Any accident occurred,, or
victim who is ineligible for basic loss benefits pursuant to Section 1£005(b) has no (ii) the average income earned by the victim during the two calendar years
right to recover any damages in tort for medical expenses or work loss for which preceding the year in which that accident occurred
such person wouM have been eligible for basic loss benefits had he or she not been (2) If a victim was seasonally or irregularly employed as of the time of the
disqualified by Section 1£005(b). Work loss benefits ofllO~o of the work loss (after accident causing personal injury, or had been unemployed for at least three
G88 147
months but less than two years, the victim's "probable weekly income if which it fails to doso. Nothing herein shall preventan insurer from using affirm
employed" shall be the total gross income of the victim during the prior two years not subject to such a ruling.
divided by the number of weeks in which the victim worked during that period. 12012. Supervision--penalties.
(3) Ifa victim had not been remuneratively employed or self-employed within (a ) The Commissioner shall regularly and ~stematically monitor the opera-
the two years next preceding the accident causing personal injury, the victim's tion of every insurer providing the insurance required under Section 12002 of this
"probable weekly income if employed"shall be presumed to be zero, provided that Chapter to assure that such insurers are in compliance with this Chapter.
the victim may rebut the presumption, by proof that the. vic. tim would, h.a~. been (b) If as a result of such review, the Commissioner finds that an insurer is in
employed during the first year after the acciden~ and Jurtner provide, d, that t~.e violation of this Chapter, with such frequency that the conduct of the insurer in
"probable weekly income if employed" shall be presumed not t.o exceed ~, % o. f t.~,e violation of the Chapter amounts to a regular and ongoing business practice, he or l
a~erage weekly gross income of a prodact~on .or.non-supervmo? w.o?er, ? ?e she may, after hearing, assess a fine against such insurer in an amount not less
private non-farm economy in the state in which the victim was aomtc~tea aunng than $1,000 nor more than $5~000, unless he or she finds that the insurer
the year preceding the year in which the accident occurred.. ..... reasonably believed that its conduct was lawful.
(4) lfa victim is disabled from po~forming one or more but less than att auties (c) If the Commissioner finds that a regular and ongoing business practive
violative of this Chapter was (1) committed by an insurer with knowledge on the
of the victim's usual and customary occupation, the victim's work loss shall, not
include any po~'on of the victim 's probable income but for the disability which part of managerial personnel of its ·illegality or with deliberate and recMess
the victim reasonably could earn despite the disability. However, if #.is mo. re disregard for whether it was legM and (2) designed specifically to deny benefits
reasonable for the victim to engage in available substitute worl~ then this to eligible victims under this Chapter, he or she may, after hearing, suspend or
limitation shall not apply, and the work loss shall i. nstead be reduced with respect revoke the insurer's license to do business in this State.
to the substitute work as provided in Section 12001(18). (d) Except as set forth in Section 12005(h) (2), no insurer to which the penalty
· 12010. Source of benefits; net loss. provisions of this Section apply, nor any officer, director, employee, or agent
(a) Where an accident victim is entitled to benefits under any federal or state thereof, shall be subject to punitive or exemplary damages for any claim arising
out of allegedly improper handling of any application for basic loss benefits, or
workers'compensation law for any medical expense incurred because of personal any act or omission of such insurer, or any officer, director, employee, or agent
injury or to have his or her employer bear such expense connected with his or her thereof in adjusting any claim for such bendf#s.
employment without regard to the employer 's fault, basic loss benefits shall not be 12013. P~d~cedures for Liability Claims and Tort Actions.
payable for such medical expenses except to the extent that the workers' (a) No.acoident victim shall make, directly or through any representative, any
compensation benefits and employer payments fail to provide for payment of demand to settle any claim for damages for personal injury on any insurer which
reasonable charges actually incurred for products, services, or accommodations for includes any amount for non-economw loss unless such accident victim or a
which basic loss benefits would otherwise be payable. Only those medical representative first complies with the following procedures. A victim desiring to
expenses actually paid or reimbursed by basic loss benefits shall be considered in make such a demand shall offer in writing to the. insurer to wh. ich. the demand
determining whether the aggregate limit on payment of basic loss benefits for will be addressed an opportunity to conduct an imtepenaent medical examinetion
medical expenses has been reached, of the victim. Within fifteen days of receipt of such offer to conduct an
(b) All benefits paid or payable under an{t state or federal wo.rk.e, rs ] ~o. mp.en- independent medical examination, the insurer shal[either (i) designate in writing
sation law or any state or federal occupational or non-occu, pati. o. nat disal~il!ty tawa date, time and place for such examination or (ii) state in writing that it u~:ives
(including Social Security) on account of disability proaucea oy personat injury the opportunity to conduct such examination. The date designated fqr such
shall be deducted from the basic loss $ _eyefits otherwise payable for work loss examination shall be at least ten days but no later than thirty days aft_er the date
during the same period on account of that same disability, and no basic loss of mailing to the accident victim (or legal representative) the written designation
beneflts for work loss shall be payable if such other benefits payable fo. r the sa.me of the date, time and place for such examination. A demand to settle a clair~ for
peribd equal or exceed the benefits ottierwise payable for work loss during that damages for personalinjury which includes an amount for non-economic loss
may b~e made (i) at any time after receipt from the insurer of a notice that it
period, waives the opportunity to conduct such examination or. (ii) fifteen .days aft. er such.
12011. Options to reduce premium costs.
(a) Insurers may offer modified forms of the co. verag.es required by Sectiqn examination. An insurer shall have no duty to consider any settlement ctamanct
12063 which enable purchasers of insurance to reduce their premiu~m costs O~ made in violation of this Section, and any settlement demand made in violation
eliminating unwantea~ unnecessary or. d. upl. ieate insura.nce co?erage, l~x.a.mpt~ o]. of this Section shall not be admissible in any action for any purpose.
such modif~t, forms of coverage inetudq, ~. t are no~t timited to, p.ro?mo, ns rn~a.~ (b) If any person who suffered personalinjury brings an action to re~over
those insured under the policy (i) wouM limit or Jorqgo required toss ofneIns non-economic losses arising out of that accident, such person may neither plead
which wouM duplicate benefits available under other insurance or ~ncome nor prove the amount of any losses for which basic loss benefits were paid c,r are
continuation plans, (ii) woulc~ limit or forego required loss benefits for medical payable in his or her action to recover non-economic losses. Ttie court shall instruct
care which wouM be provided without charge pursuant to any agreement with a the jury that, in arriving at a verdict as to the amount of demag~ for
Health Maintenance Organization or similar entity, (iii) wouM limit or fqrego non-economic losses recoverable by such a person, the jury shall not spocuk~te as
(through deductibles or waiting periods) required loss benefits for smalle~ losses to the amount of any medical expenses or other losses not proven in the action or
(provided that the deductible for medical expense shall not exceed $2,000 per consider such expenses or other losses.
person and all policies shall provide at least $5,000 per person in coverage for (c) Pretrial threshold determination. In any action where the defendant
medical expense in excess of the stated deductible), (iv) wouM limit or fqrego the contends that the plaintifff s injury does not meet the requirements 9f Section
weekly required loss bendfits payable for work loss to reflect the lack of any 12007(c), either part~ may seek summary judgment on that issue, lf such a motion
earnings by one or more insureds~or earnings insufficient to require pa~ment of is made, the court must determine at least 3O days before the date set for trial
the maximum benefit amounts specified in Section.l?~, (~b), or (v) .would a~ceepc~ whether there is any material issue of fact as to whether those requirements have
medical and medical rehabilitation services in t~ina jrom promaers ~o~ suCc~ been met and, if not, render summary judgment in accordance with the
services engaged b~ the insurer in lieu of medical expense, be. neff.ts ~or sq. c undisputed facts. If the facts regarding the nature of the injury or disfigurement
services. The insurer shall provide an appropriate agreed reductwn tn premtum and its effect on the plaintiff are undisputed, the question of whether those effects
for any policy containing any such modified, form of coverage, render tIie injury or disfigurement serious and perrq, an. e. nt, w. ithin the_m, eqning of
(b) Any reduction in or modifieation of the coverage for required loss benefits Section 12007(c), is a question of law to be d~ecid, ed. t~t t. he court, lJ tt~e co. urt
shall apply only to insureds umber the policy and not to other victims for whom renders summary judgment on this issue and finds that the party against whom
the poli~ constitutes insurance for required loss benefits, such summary judgment is rendered had no reasonable basis for its position as to
(c) Any agreement to accept such a modified, form of coverage must bq made whether the requirements of Section 12007(c) had been me~ the court shall assess
in writing by a named insured under the polic~. Any ~ch a~reeme,.nt Oy a,n.y against such party the reasonable costs and attorneys' fees (based upon actual
named insured shall be binding on every insured to whom the poticy applies time expended) incurred or expended by the other party to obtain a determir, ation
while the policy is in forve, and shall continue to be so binding with respect to any on that issue.
continuation or renewal of the policy or with respect to any other policy which (d) Bifureated jury trial of threshoM determination. In any action tried to a
extends, changes, supersedes, or replaces the policy issued to the same nam. ed jury where the defendant contends that plaintif~s injury does not mee~t the
requirements of Section 12007(c) but the defendant concedes or the court
insured by the same insurer, or with respect to reinstatement of the policy within determines that there is a material issue of fact as to whether those requirements
~0 days of any lapse thereof
(d) No such modified coverage shall be offered without giving the named have been met, then, upon niotion of the defendant, that issue shall be separately
insured the option to purchase the unm_odifie'd coverages..as specified i.n Secqo, n tried and no other evidence as to the plaintif~s damages shall be received until
12003. Any agreement to accept modifi_qd coverage (1) shall~ recite that ~t prov. taes that issue has been resolved. Afte_r resolution of that issue, the amount of the
for a coverage modification, (2) shall describe the benefit reductions resutting plaintifj's damages may be tridd before the same jury or a different jury, as the
from that modification, (3) shall state that the named insured need not accept court may in its discretion decide.
that modification to the coverage and may purchase unmodified coverage without (e) Until it has been determined in such action that a plaintiff has met the
the premium reduction given for such modification, and (4) shall be signed by a requirements of Section 12007(c), a liability insurer is not obligate~t to consider or
named insured. At or befqre the time a named insured enters into such an settle any claim of that plaintiff for non-economic losses unless it has admitted to
agreement, the insured shall be given written notice indicating the approximate such plaintiff or to the court that the plaintiff has met those requirements,
amount or magnitude of the premium reduction provided on account of such provided that nothing in this subdivision shall qffect the obligation to consider or
modiffwation. Any agreement to modify coverage complying with this Section settle any claim after such determination has been made.
(f) Non-joinder of insurers. No motor vehicle liability insurer shall be joined
shall be conclusively deemed to be valid and binding unless set ~side for fraud or as a party defendant in an action to determine the insured's liability.
mutual mistake. .
· (e) Attherequestofanyinsu. rerdesiringtof~fferaparticularformofmodified 12014. Discovery offacts about an injured person·
coverag~ the Commissioner shall provide a ruling on whether a ~'fied form of (a) Every employer shall, if a request is made by an insurer providing basic
agreement satisfies the requirements of this Section ana~ if not, the respects in loss benefits under this Chapter against whom a claim has been made, f~rnish
148 G88
' forthwittg in a form approved by the Department of Insurance, a sworn statement entitled to recover from such owner or operator shall be determined in accordance
Obfefothe earnings since the time of the personal injury and for a reasonable period with subdivisions (a) and (b) of Section 12007 as if such vehicle were a motor
re the injury of the person upon whose injury the claim is based. The sworn vehicle covered by applicable insurance, except that if the victim injured by such
statement shall state: "Under penalty of perjury I declare that I have read the
uninsured or underinsured motor vehicle wouM be exempt from the operation of
foregoing and the facts stated are true to the best of my knowledge and belief. "To subdivisions (a) and (b) of Section 12007 pursuant to subdivision (d) of Section
facilitate the insurer's investigation of these matters, every person claiming basic 12007, then subdivisions (a) and (b) of Section 12007 shall be dis'regarded in
lossreleasebenefitSof suchShall,information.Upon request by the insurer., execute a written authorization fordetermining the amount recoverable. In no event shall the benefits payable under
uninsured or underinsured motorist coverage required by law to be purchased or
(b) Every physician, hospital, cBnig or other medical institution providing offered include any amountS which the insured would be entitled to recover as
(before or after a personal injury upon which a claim for basic loss benefitS is punitive or exemplary damages or any amountS for which the owner or operator
based) any productS, services, or accommodations in relation to that or any other of such vehicle would not have been liable had such owner or operator maintained
injury, or in relation to a condition claimed to be connected with that or any other insurance in accordance with this Chapter. Nothing in the foregoing provisions of
injury, shall i~ requested to do so by the insureragainst whom the claim has been this Section shall prevent any insurer from agreeing to provide coverage for losses
i made, furnish a written report of the history, condition, prognosis, disability, whose payment is excluded by those provisions but such coverage may be provided
"~ dates of disability, treatment, and dates and costS of such treatment of the injured only pursuant to an express agreement in writing.
,, person, together with a sworn statement that the treatment or services rendered
12018. Initial premium charges.
were reasonable and necessary with respect to the injury sustained and identify- (a) During the first two years following the effective date of the California
I ing w. hich portion of the expenses for said treatment or services was incurred as a Guara. nteed Protection Plan, no insurer may establish or use statewide average
result of such injury and which portion of any disabiBty resulted from such pre.mram rates Jot the New Insurance Package which, as of the effective date of
injury, and produce forthwith and permit the inspection and copying of his/her syc~ ?re~m,~u,m rates, a~ more than 80% of the statewide average premium rates
or its records regarding such history, condition, disabiBty, dates of disability, ]or me t~ta insurance ractcage.
treatment, and dates and costS of treatment. The sworn statement shall state.. (b) For purposes of this Section, the statewide average premium rates for the
"Under penalty of perjury I declare that I have read the fo~regoing and the facts "Old Insurance Packade" shall consist of the sum of the statewide average
stated are true to the best of my knowledge and belief.' No cause of action for prem.,ium, rat.~ un~d, er that insqmr's rating system in effect for new business issued
violation of physician/patient privilege shall arise against any physician, hospi- on me aay mis ~napter is aaopted for each of the f~llowing coverages:
tat cBnic, or other medical institution completing with the provisions of this (1) bodily injury liability coverage with limitS of liabiBty for any one accident
Section. The person requesting such records and said sworn statement shall pay all of $15,000 for all damages arising frqm bodily injuries to any one person and
reasonable costS connected therewith. To facilitate the insurer's investigation o_f &?O, OOO for all damages arising'from bodily injuries to two or more persons,.
these matters, every person claiming basi~ loss benefits shall upon request by the (£) uninsured motorist coverage with similar limitS; and .
insurer, execute a written authorization for release of such information. (3) primary automobile medical paymentS coverage with a Bruit of liability of
(c) In the event of any dispute regarding an insurer 's right to discovery offuctS $5~O00 for all medical paymentS (without deductible, coinsurance or co-payments)
about an injured person's earnings or about his or her history, coffd-ition, by any one person as a result of any one accident irrespective of other medical
prognosis, disabiBty, dates of disabiBty, treatment, and dates and costs of such coverage.
treatment, the insurer may petit'on a court of competent jurisdiction to enter an (c) For purposes of this Section, statewide average premium rates for the "New
order compelling such discovery, which shall be granted where good cause is lm. ura, n~,Pac, kage" ~,hall.,co,ns~,,,t of the sum of the statewide average premium
shown. Notice of such a motion shall be given to all persons having an interest and rates ]o.r rne rasurer ~_or me ]ouowing caverages:
the petition shall be heard as expeditiously as possible. Any order shall specify the (1)bodily injury liability coverage and uninsured motorist coverage with the
time, place, manner, conditions, and scope of the discovery. Discovery may be same Bmits as in the Old Insurance Package,. and
denied or may be permitted only upon conditions where necessary to protect
(2) coverage for required loss benefits pursuant to Section 12003.
against unwarranted annoyance or embarrassment, oppression, or as justice (d) The pmmlum charged, either before or after adoption of this Chapter, for
requires. The prevailing party on such a petition shall be awarded payment of its coverage for property damage liabiBty shall be dis'regarded flor purposes of ihis
reasonable cos? and expenses of the proceeding, including reasonable fees for the Sec,.tion,. despite an~t requirement that such coverage be included in the insurance
appearance oJ attorneys at the proceedings, unless the court determines that the pot~ey ~ssuea.
other party's making of or opposition to the motion was substantially justified. (e) The California Automobile Assigned Bisk Plan shall adopt a rating system
(d) The vict~'m shall be furnished, upon reques~ a copy of all information providing premium reductions from the rates provided by it as of the date this
obtained by the insurer under the provisions of this Section and shall pay a Chapter is adopted comparable to those required by this Chapter for the rattag
reasonable charge, if required by the insurer. ' systems established by or on behalf of individual insurers.
(e) Notice to an insurer of the existence of a claim shall not be unreasonably (f) The Commissioner of Insurance shall have excluMve jurisdiction, subject to
withheM by a victim, judic..'al review, to administer and enforce this Section The Commissioner may
h (f). ~Where an insurer, has requested of a claimant that he/she submit himself/ require insurers to provide appropriate information about their rating systems in
erse~ to an indepenaent medical examination, said claimant must present effect at the time this Chapter is adoptdd and/or at any time within two years
himself/herself for such examination at a reasonable location and within a after it takes effect. If the Commissioner finds, after appropriate hearings, that
reaso~iable time'after said request is made. In the event the claimant refuses to any insurer has failed to comply with this Section, he or she may order such
comply with an insurer's reasonable request for a medical examination, the insurer to adopt rates in compliance with this Section and to provide an
insurer may deny all future claims fqr first-party bencfits for personal injury appropriate remedy ~? any charges in excess of those permitted by this Section.
(including, but not limited to, basic loss benefits) under any poliey of motor 12010. Attorneys Contingeney Fees.
vehicle insurance made by or on behalf of the claimant with respect to tT~e same (a) An attorney shall not contract for or collect a contingeney fee for
accident, representing any accident victim us defined in subdivision (1) of Sec~'on 12001 (or
(~) Exchange of information. Where a third-party liability claim has been legal representative of any accident victim) seeking besic lo~ benefits and/or
maae against an insurer, or where the insurer has reason to believe that such a aamages in connection with any arbitration proceeding or civil uction in excess of
claim w. ill be .made, the insurer, upon request, may obtain all pertinent informa- the f,,o, llowing limits:
tion submitted to any imurer obligated to pay first-party benefits to the claimant (1) Fifteen percent of any basic loss benefits recovered, regardless of amount,.
under any policy of motor vehicle insurance. (2) Thirty-three andone-third percent of the first fifty thousand dollars
12015. Stacking of coverages prohibited.
· [f.?.n ~?red or named insured~ is protected by any type of insurance pursuant ($5ff~j~TJ of.de~mages recover_ed, other than b~'c lo~s ben'efit~,.
{, ? wenry-j~ve percent o[ the next fifty thousand dollars ($50,,000) of demages
to mis tmapter or any type of motor vehicle insurance policy for liability, recovered other than basic loss benefit~.
univ.,re.d, motorist, basic, loss benefits, or any other coverage, the insurance shall (4) Fifteen percent of any amount by which the amount of damages recovered
prowae mat any insured or named insured is protected only to the extent of the othf;) th~n ba~,.'c lo. ss. b~nefi, tS,,exceeds, one hundred thons, a. nd do. liars ($10~,000).
coverage provided on the vehicle involved in the accident,, however, if none of the t ? i nese timisations suau appty regardless of whether the recovery is by
vehicles covered by the policies applicable to the insured or named insuied is settlement, arbitration, or judgment, or whether the person for whom the recovery
involved in the acciden~ coverage is available (_if provided by the policy) only to is made is a responsible adult, an infant or a person of unsound mind.
the extent of coverage on any one of the vehicl& (to be selected by the insured) , (c,), .If p.~o.dic p.a. yments are awarded to tbf. plaintiff a total present value
with applicable coverage. Coverage on any other vehicles shall not be added to or s~, tt oe pta~. .on these paymentS based upon the projedted life expectancy .of the
stacked upon that coverage. The foregoing provisions o_f this Section shall not pt.ain~ff ana ti;is amount shall be included in computing the total award from
apply to the extent that any potiey of insurance expresdij declares that it applies wMcl: attorney's fees are calculated under this Section.
to losses in excess of those cove~ed under other policies of insurance but the (d) For purposes of this Section, "recovered'means the net sum recovered after
coverage provided by such insurance shall not exceed that specified by its terms, deducting any disbursementS or eastS in connection with prosecution or settlerhent
Forpurposes of this Section, the meaning of the term "insurance" is not restricted of the claim. CostS of medical care incurred by the plaintiff and the attorney 's
to12016.that specifiedNo penaltiesin SectiOnfor use12001of(5)'basic loss benefitS. ' office overhead costs or charges are not deductible disbursementS or costs for such
No insurer shall cancel refuse to renew, or increase the rate charged for any purpose.
12020. Severability.
insurance policy solely on account of any prior payment of basic loss benefitS to If any provision of this Chapter or the application thereof to any person or
its insured or applicant. ' cir~ms.tq, nce is_he, ld i~n, valid, thq in. validi~ shall not affect other provis*'ons or
12017. Uninsured and Underinsured Motorist Insurance. applications oJ the vnapter wi;icl; can be given effect without the invalid
In a. ny policy affording insurance required by law to be purchased or offer~ed p, ro,tCn'o,n or application, a.n~. to this .end the provisions of this Chapter are
providing for pa~tment of sums which a person insured under that policy wouM aecmrea severable, provided, however, that invalidity of the provisions of Section
be legally entitled to recover from the owner or operator of an uninsured or 12007 shall render this Chapter inoperative.
underiusured motorized vehicle, the amount which such person would be legally 12021. Effective date·
149
(a) This Chapter shall take effect on July 1, 1989, shall be effective as to (a) Any company licensed to write insurance in this state which believes that
personal injury occurring on or after ]uly 1, 1989, and shall govern policies of a fraudulent claim is being made shall, within 60 days after determination by the
insurance in effect on and after that date. insurer that the claim appears to be a fraudulent claim, send to the Bureau of
(b) Effective on July 1, 1989, any insurance policy insuring a motor vehicle Fraudulent Claims, on a form prescribed by the department, the information
registergd in this State and sufficient to satisfy the financial responsibility requested by the form ~ in such additional information relative to the factual
requirements of the laws of this $iate in effect at the time this Chapter is adopted circumstances of the claim and the parties claiming loss or damages as the
shall be deembd amended to provide the coverages necessary fqr such policy to cr, rr..:r..!sslc, r. zr Commissioner may require. The Bureau of Fraudulent Claims shall
constitute insurance pursuant to this Chapter. The insurer shall determine any review each report and undertake such further investigation as it deems neces~;ary
premium change resulting from such amendmentfqr the remaining portion ofthe and proper to determine the validity of the allegations. Whenever the
policy period and shall refund any amount due to the policyholder within 90 days
after that date. However, if, prior to the expiration of such 90 day period, any ....... Commissioner is satisfied that fraud, deceit, or intentional misrepresenta-
tion of any kind has been committed in the submission of the claim, he or she shall
payment becomes due under any premium payment plan or any named insqred, report any such violations of law to the insurer, to the appropriate licensing age:ney
requests that the policy be altered, renewed, extended, or replaced in a way which
ealls for an increased premium, any amount due to the policyholder as a result of and to the..~ .~district attorney:.:~_~of the county, in,anoowhich such, nn,~nOffenses were committed;
the amendment may be credited against any such premium payment or increasdd as ~r~;':~z~ by t-he v .......... Of $eet4em .... ~ ...... If the
Commissioner is satisfied that fraud, deceit, or intentional misrepresentation has
premium rather than being refunded· - ..... not been committed, he or she shall report such determination 'to the insurer. If
SECTION 5. Section 11622 of the Insurance Code is amenaed to rean as
prosecution by the district attorney concerned is not begun within 60 days of the
follows: receipt of the cc, r:.r..iss!z, ncr': Commissioner's report, the district attorney, :ihall
11622. Bequired Coverage. inform the ecmr...issi~ncr Commissioner and the insurer as to the reasons tot the
' Such plan shall require the issuance of apo!icy affording coverage for required
loss benefits and coverage in the amount of fifteen thousand dollars ($15,000) for lack of prosecution regarding the reported violations·
bodily injury to or death of each person as a result of any one accident and, subject (b) This :c. cSzn Section shall not require an insurer to submit to the bureau the
to said limit as to one person, the amount of thirty thousand dollars ($30,000) for information specified in.subdivision (a) in either of the following:
bodily injury to or death of all persons as a result of any one accident, and the (1) The insurer's initial investigation indicated a potentially fraudulent claim
but which further investigation revealed not to be fraudulent.
amount of five thousand dollars ($5,000) for damag9 to property of others as a (2) The insurer and the claimant have reached an agreement as to the am,aunt
result of any one accident, or in such minimum amounts as are necessary to
provide exemption from the security requirements of Section 16023 of the Vehicle of the claim and the insurer does not have reasonable grounds to believe the claim
Code or for which proof of ability to respond in damages or adequate protection to be fraudulent·
against liability is otherwise required bylaw, but shall not require the issuance of (c) Nothing contained in this ar,Sc!c Article shall relieve an insurer c,f its
existing obligations to also report suspected violations of law to appropriate local
a policy affording coverage in excess of said amounts, law enforcement agencies.
SECTION 6. Section 11624 of the Insurance Code is amended to add a new
subdivision (f) as follows: (d) Any police, sheriffor other law enforcement agency shall furnish all pal?ers,
11624. Bequirements of Plan. documents, reports, complaints, or other facts or evidence to the Bureau of
Fraudulent Claims, when so requested, and shall otherwise assist and cooperate
~ Such plan shall contain: with the bureau.
'('f½ Provisions specifying what modified forms of coverage, if any, shall be 12993. Immunity from Liability for Beporting. . ,
ma~de available pursuant to Section 1£011. No insurer, or the employees or agents of any insurer, shall be subject to eivi~
~or ~ (g) Such other provisions as may be necessary to carry out the purpose liability for libel, slander or any other relevant tort cause of action by virtue of t-be
of this article. · filing of reports, without malice, or furnishing other information, without m~dice,
SECTION 7. Division 3, Article 5 of the Insurance Code is amended as follows: required by this c,r~c!c Article or required by t. he ecr..,:r.~i:s!r,r.c.' Commiss~ioner
under the authority granted in this arSz!z Articte.
Article 5. ~urcr. u Of Fra',;~-~:!cr.~ C!~'r~; Invesh'gation and 12994. Prosecution of Fraudulent Claims.
Prosecution oflnsurance Fraud Nothing contained in this ;rSc!z Article shall preempt the authority of local law
12990. Bureau of Fraudulent Claims. enforcement agencies to investigate and prosecute suspected violations of law nor
· ~ .....a ..~.,~: ........ - ....... of Fraud'dzr. t Clal.-7.g ~/o shall it relieve them of their duty to do so. However, if the district attorney in. ibm
.'P...crz ~ ............. t~be d~, .......... a ...... the Commissioner, pursuant to Section 12992 that he or she chooses not to prosecute
zr..'%rcc t0ae ' ' Of Scct~r,:: ~
There sh'a l b~e a Bureau of Fraudulent Claims which shall fall under the a violation reported to him or her by the Commissioner, then the Commissioner
authority and supervision of ire Commissioner of Insurance. may direct the Bureau of Fraudulent Claims to prosecute such violation.
12991. Investigation of Fraudulent Claims. 12995. Funding of Bureau. ~ _ · .....
The costs of administration and operation ut the Bureau of Fr.aun?.ent ~lam3.s
shall be borne by all of the insurers admitted to transact insurance m th~s state. The
(a) If by its own inquiries or as a result of complaints, the Bureau of Fraudulent
Claims has reason to believe that a person has engaged in, or is engaging in, an act
or~ractiee ~ ;~.!atc: SccEc, r. ~ that violates any criminal statute of this state cc, r:.mS:ir, r. cr Commissioner shall divide such costs among all such comp:rotes,
relating to the presentation or preparation of fraudulent insurance claims, the assessing each such company an identical amount adequate to provide the
cc, w~-r.2;ir, r. cr Commissioner in his or her discretion (1) may make such public or total cost f~ of each fiscal year of the operation of the ~urcz, u Bureau; provided,
private investigations within or outside of this state as he or she deems necessary however, the assessment for each company shall not exceed one thousand dollars
to determine whether any person has violated or is about to violate any provision
of SczSc, r. ~ o~ t.o such criminal statute or to otherwise aid in the enforcement
($1,000) in each fiscal year. All moneys received by the ecr...rz. As:ic, r. zr
ingurzr: Commissioner pursuant to this ;c¢~c,r. Section shall be transmitted to the
of this law, and (2) may publish information con. cern~.ng .any violation of this law. State Treasurer to be deposited in the State Treasury to the credit of the Insurance
(b) For purposes of any investigation under this law, the cc.:7.7...17,g~$7~cr Commissioner's Begulaton) Trust Fund, which shall be created for this pu:~vose.
All v ,,Oaieh~ea~r, ..... a in fee such fund~r' ...... :~' by received ro', the
Commissioner or any officer designated by him or her may administer oaths and ._ mon%s ~_ ............... ~,, fi ~
affirmations, subpoena witnesses, compel their attendance, take evidence, and commissioner frzr.., i.-:;urcr: pursuant to this section are hereby a~ppropriated to_
require t-he production of any books, papers, correspondence, memoranda, the department and are to be exclusively used for the support ut the Bureau of
agreements or other documents or records which the cc, r:~A:~.c,r, cr Commis- Fraudulent Claims. :~e t4~e ¢×tzr. t t-he a~:z:;r..cr.t: agalr.:t ir. surcr: r...adc.
s~oner deems relevant or material to the mqmry; as e ....... by fac 1:
........ e .............. r .....~e ........... o~. ......... ~ ~ by t-be ~
(e) If matter that the e~;;icr, cr Commissioner seeks to obtain by request is ' ' ' '~' ' ^"~ c._.~ ~ ....... , ..........
located outside the state, the person so requested may make it available to the ~?,?.°ff'~'~"f~l~et oi~ the ~urcau Bureau shall be as determined annually in
cz.--~.-Ss;ic,.':cr Commissioner or his or her representative to be examined at the the Budget Act, which may make additional appropriations to the Bureau if the
place where it is located. The ez:r,-r.!~.'~r,r, cr Commissioner may designate maximum assessment permitted by law has already been levied on insurer~.
representatives including officials of the state in which ~ a matter is located, to SECTION 8. Section 12924.5 is added to the Insurance Code as follows:
inspect the matter on his or her behalf, and he or she may respond to similar 12924.5. Consumers' rights to present evidence.
requests from officials of other states. (a) In any proceeding before the commissioner, any person or organization
(d) Except as provided in subdivision (e), the department's papers, do.cu- may present written or oral evidence, subject to such rules and regulations that
ments, reports or evidence relative to the subject of an investigation under this may be established by the commissioner, provided that nothing herein shall create
scc,~r,r. Section shall not be subject to public inspection for so long a period as the a right of any person or organization to intervene in any proceeding.
cc, r:.,-rS;s~c,r, cr Commissioner deems reasonably necessary to complete the inves- (b) Any person or organization, whether a party, intervenor, witness or other
tigation, to protect the person investigated from unwarranted injury, or to ~serve pa~'cipent in any proceeding before the commissioner, shall bear its own costs
the public interest. Furthermore, such papers, documents, reports or eviclence and attorney's fe?_. No state funds or award against any other person or
shall not be subject to subpoena or subpoena duces tecum until opened for public organization shall be used to reimburse the costs or attorney's fees incurred by any
inspection by the cz~-rS;~c,r, cr Commissioner, unless the cc,:r~'r'~ziz, r. cr Commis- party or participant in any such proceeding.
stoner otherwise consents or, after notice to the cc,:r-'r. Ss~c,r. cr Commissioner and SECTION 9. Sections 790.03.1 and 790.03.2 of the Insurance Code are added as
a hearing, the superior court determines that the public interes, t~in .an~, cr. gc, L-:gfollows:
ongoing investigation by the ec::.-r. Sglc. r. cr Commissioner womu not ~e unnec- 790.03.1. Procedures to Resolve Claims under Policies of Liability Insurance.
essarily jeopardized by obeyanee of such a subpoena or a subpoena duces tecum. (a) Any claimant who has submitted a claim to any insurer under any volicy
(e) The Bureau of Fraudulent Claims shall furnish all papers, documents, of liability insurance may, at an~t time after submitting the claim, serve upon the
reports, complaints, or other facts or evidence to any police, sheriff or other law insurer a Demand to Resolve Claim.
enforcement agency, when so requested, and will assist and cooperate with such (b) A Demand to Resolve Claim shall be in writtng, shall state that it is a
law enforcement agencies. Demand to Resolve Claim under Insurance Code Section 790.03.1, and shall set
12992. Reporting of Fraudulent Claims.: forth a specific dollar amount within policy limits which the claimant offers to
150 G88
accept in full settlement of the claim of the claimant against.the person or persons attorney's fees and expert witness fees. The insurer shall have ten days to submit
insured under the poli~ of liability insurance, to the neutral arbitrator and serve on the claimant its response to the request for
(c) If the insurer, within thirty days of receipt of a Demand to Resolve Claim, attorney 'S fees and expert witness fees. The claimant shall be entitled to an award
tenders the amount specified therein to the claimant, the claimant shall have no of reasonable attorney's fees and reasonable expert witness fees incurred after
right to maintain a private civil action for violation of Section 790.03(h) with service of the Demand to Resolve Claim but before the commencement of the
respect to the claim, arbitration hearing only if the amount of the initial award exceeds the highest
(d) If the insurer, within thirty days of receipt of a Demand to Resolve Claim, amount offered by the insurer to the claimant at any time prior to the selection of
reaches a written agreement with the claimant in settlement of the claim, the the neutral arbitrator. The claimant shall be entitled to an award of reasonable
claimant shall have no right to maintain a private civil action for violation of attorney's fees and reasonable expert witness fees incurred after the commence-
Section 790.03 (h) with respect to the claim, ment of the arbitration hearing only if the amount of the initial award exceeds the
(e) If the insurer, within thirty days of receipt of a Demand to Resolve Claim, highest amount offered by the insurer to the claimant at any time prior to the
offers in writing to submit the claim to binding arbitration under Section 790.03.2, commencement of the arbitration hearing. In no case shall the combined amount
the claimant shall have no right to maintain a private civil action for violation of of attorney 's fees and expert witness fees awarded exceed the amount of the initial
Section 790.03(h) with respect to the claim. This subdivision shall apply whether award.
or not the claimant accepts the offer to submit the claim to binding arbitration. (l) Within thirty days qfter the issuance of the initial award, the neutral
(f) The time limits set forth in subdivisions (c), (d) and (e) of this Section arbitrator shell enter a final award, including any amount awarded for attorney 's
shall be increased to ninety days if the Demand to Resolve Claim is served prior fees and expert witness fees.
to sixty days after the date the cldim was fi~st submitted to the insurer. (m) The expenses and fe~_ of the neutral arbitrator, together with other
(g) No claimant may maintain a private civil action for violation of Section expenses incurred or approved by the-neutral arbitrator, not including attorney's
790.03(h) which relates in any way to any claim made under any poli~ of fees or expert witness fees, shall be paid in all eases by the insurer. The claimant's
liability insurance unless that claimant has, at least ninety days prior to tlie referee's fees shall not exceed $250.
commencement of the action, served upon the insurer a Demand to Besolve Claim. (n ) Payment by an insurer of any arbitration award issued hereunder, or ofa
Unless there is a dispute as to whether an insurer received a Demand to Resolve judgment confirming any such award, shall discharge any and all liability to ihe
Claim or a dispute as to whether an insurer offered to submit the claim to binding claimant of the person or persons insured under the policy of insurance under
arbitration, the faet that an insurer received-a Demand to Resolve Claim and the which the claim was made.
manner in which an insurer responded to any Demand to Resolve Claim shall not
be admissible in evidence in any private civil action to prove a violation of Section
(o) The parties may agree in writing on any alternative arbitration procedure
allowable by law including, without limitation, different time requirements,
790.03(h). conducting the proceeding before more than one neutral arbitrator, different
(h ) Nothing in this Section shall be deemed to expand or limit in any way the provisions regarding costs and attorney 's fees, or different procedures for selection
right of any person to maintain a private civil action for violation of Section of a neutral arbitrator or arbitrators.
790.03(h) with respect to any first-part~ claim made under any policy which SECTION 10. Sections 679.70, 679.71 and 790.03 (f) of the Insurance Code are
provides insurance to that person, reenacted as follows:
790.03.2 Procedures for Binding Arbitration of Claims Under Policies of 679.70. Application of chapter,, certain property and liability insurance;
Liability Insurance. exceptions.
(a) An insurer who receives a Demand to Resolve Claim from a claimant under This chapter shall apply to policies of insurance, other than automobile
any poli~ of liability insurance may, within the time allowed by Section 790.03.1, insurance and workmen's compensation insurance, on risks located or resident in
serve on the claimant an offer to submit the claim to binding ar~bitration under this state which are issued and take effect or which are renewed after the effective
this Section.
(b) The claimant shall within thirty days after receipt of such offer to submit date of this chapter and which insure any of the following contingencies:
(a) Loss of or damage to real property which is used predominantly for
the claim to binding arbitration, serve on the insurer a notice either accepting or residential purposes.
re~e. cting the offer to submit the claim to binding arbitration. Failure by the (b) Loss of or damage to personal property in which natural persons resident
ctaimant to respond within the time specified shall be deemed to constitute a in specifically described real property of the kind described in subdivision (a)
rejection of the offer to submit the claim to binding arbitration, have an insurable interest.
(c) No later tIian twenty calendar days after the dat& of service of a notice (e) Legal liability of a natural person or persons for loss of, damage to, or injury
accepting an offer to submit a claim to binding arbitration, each part~ shall select to, persons or property.
a referee and shall serve upon the other party a notice designating the name, 679.71. Failure or refusal to accept application for, issue or cancel insurance
address and telephone number of said referee, based~on marital status, sex, race, color, religion, national origin or ancestrg
(d) Within thirty days after the service of the last notice designating a referee, No admitted insurer, licensed to issue any policy of insurance covered by this
the referees so designated shall meet and confer, in person or by telephone, and ehap. ter, shall fail or refuse to accept an application for, or to issue a policy to an
agree upon the appointment ora neutral arbitrator. Ifthe~fail to agree upon the applicant for, such insurance (unless such insurance is to be issued to the applicant
appointment of a neutral arbitrator within the time sped'fled, any party may by mother insurer under the same management and control), or cancel such
petition a superior court to designate an odd-numbered list bfneutral arbitrators, insur~ance, under conditions less favorable to the insured than in other comparable
The para'es shall then either agree on a neutral arbitrator or shall select a neutral eases, except for reasons applicable alike to persons of every marital status, sex,
arbitrator from the list by the claimant first striking a name, the insurer then race, color, religion, national origin, or ancestry; nor shall sex, race, color, religion,
striking a name, and proceeding to strike names alternately until only one name national origin, or ancestry of itself constitute a condition or risk for which a higher
remains. That person shall be the neutral arbitrator. The referees shall not rate, premium, or charge may be required of the insured for such insurance.
participate in the arbitration proceeding after selection of the neutral arbitrator 790.03. Prohibited acts. .
except to select another neutral arbitrator in the event the arbitrator selected The following are hereby defined as unfair methods of competition and unfair
cannot serve for any reason, and deceptive acts or practices in the business of insurance.
(e) The neutral arbitrator so selected shall proceed to arln'trate the claim .....
Unless the parties agree in writing otherwise, the neutral arbitrator shall be (f) Making or permitting any unfair discrimination between individuals of the
informed o_f the applicable policy limits but shall not be i?~formed of settlement same class and equal expectation of life in the rates charged for any contract of life
offers and demands, including the amount set forth in the Demaud to Resolve insurance or of life annuity or in the dividends or otherbenefits payable thereon,
Claim, until the initial award. The arbitration hearing shall commence within or in any other of the terms and conditions of such contract.
ninet!t days of the selection of the neutral arbitrator and the taking of evidence This subdivision shall be interpreted, for any contract of ordinary life insurance
shall be concluded no later than thirty calendar days after the date of commence- or individual life annuity applied for and issued on or after January 1, 1981, to
ment, regardless of the number of actual hearing days held. require differentials based upon the sex of the individual insured or annuitant in
(f) When an insurer makes an offer to arbitrate under Section 790.03.£(a) and the fates or dividends or benefits, or any combination thereof. This requirement
the off~ is accepted by the claimant, the insurer shall be deemed to have waived is satisfied ff such differentials are substantially supported by valid pertinent data
the right to assert a [ack ~of coverage in the arbitration and as a ba~'s for not segregated by sex, including, but not necessarily limited to, mortality data
paying any part or allof the final arbitration award. Nothing in this subitivision segregated by sex.
shall be deemed, to impair or prejudice an insurer's right to seek a determination However, for any contract of ordinary life insurance or individual life annuity
in any court oJ competent jurisdiction of its coverage obligations relatice to its app. lled for and issued on or after January 1,1981, but before the compliance date,
insured, in lieu of such differentials based on data segregated by sex, rates or dividends or
benefits, or any combination thereof, for ordinary life insurance or individual life
annuity on a female life may be calculated as follows: (a) according to an age not
less than three years nor more than six years younger than the actual.age of the
female insured or female annuitant, in the case of a contract of ordinary life
(g) The arbitration proceeding including any discovery pertaining thereto,
shall be conducted in accordanbe with and be governed by Sections 1280 to 1288.2
of the Code of Civil Procedure except as specified in this Section.
. (h) Upon request of either side, a record shall be made of the arbitration
hearing, insurance with a face value greater than five thousand dollars ($5,000) or a
(i) The neutral arbitrator shall issue an initial award in writing within thirty contract of individual life annuity; and (b) according to an age not more than six
days a/?r the conclusion of the taking of evidence. The amount of the initial years yotmger than the actual age of the female insured, in the case of a contract
award (exclusive of costs, expert witness fees and attorney's fees) sha-ll not exceed of~ordi~.arylife .insurance with a face value of five thousand dollars ($5,000) or less
the limit of the policy of insurance applicable to the claim. "t~omplianee ~late" as used in this paragraph shall mean the date or dates
0') The neutral arbitrator shall retain jurisdiction for thirt~ days after the e?ablished as the operative date or dates by future amendments to this code
issuance of the initial award to receive and determine a request for an award of .directing and authorizing life insurers to use a mortality table containing mortality
attorney's fees and expert witness fees. ~ata se~esated by sex for the calculation of adjusted premiums and present values
(k) Wiihin ten days .after the issuance of an initial award, the claimant may tot nontorteiture benefits and valuation reserves as specified in Sections 10163.5
submit to the neutral arbitrator and serve on the insurer a request for an award of and 10489.2 or successor sections. '
G88 151
Notwithstanding the provisions of this subdivision, sex based differentials in insured than in other comparable cases, except for reasons applicable alike to
rates or dividends or benefits, or any combination thereof, shall not be required for persons of every race, language, color, religion, national origin, ancestry, or the
(1) any contract of life insurance or life annuity issued pursuant to arrangements same geographic area; nor shall race, language, color, religion, national ori,,~n,
which may be considered terms, conditions, or privileges of employment as such ancestry; or location within a geographic area of itself constitute a condition or risk
terms are used in Title VII of the Civil Rights Act of 1964, as amended, and (2) tax for which a higher rate, premium, or charge may be required of the insured for
sheltered annt~ties for employees of public schools or of tax exempt organizations such insurance.
described in Section 501(e) (3) of the Internal Revenue Code. As used in this section "geographic area" means a portion of this state of not less
SECTION 11. Section 40000.26 of the Vehicle Code is added as follows: than 20 square miles defined by description in the rating manual of an insure~: or
4000t2.26. Misdemeanors in the rating manual of a rating bureau of which the insurer is a member or
A violation of the following provision is a misdemeanor, and notan infraction: subscriber. In order that geographic areas used for rating purposes may re£tect
Section 16050 (concerning a second or subsequent conviction of an offense relating homogeneity of loss experience, a record of loss experience for such geographic
to proof of financial responsibility by every driver or employer involved in an area shall include the breakdown of actual loss experience statistics by zip c.ode
accidentJ, area (as designated by the United S~atc States Postal Service) within each
SECTION 12. Section 16050 of the Vehicle Code is amended as follows: geographic area for family owned private passenger motor vehicles and light-
16050. Establishing Proof of Financial Besponsibility. , weight commercial motor vehicles, under ly~-ton load capacity, used for local
(a) In order to establish proof of financial responsibility every ariver or service or retail delivery, normally within a 50-mile radius of garaging, and which
employer involved in an accident and required to report such accident by Section are not part of a fleet of five or more motor vehicles under one ownership. A
16000 shall establish to the satisfaction of the department that the provisions of this record of loss experience for such geographic area, including such statistical data
article are applicable to his responsibilities arising out of the accident, by zip code area, shall be submitted annually to the commissioner for examina~:ion
(b) A violation of this section is an infraction. A second or subsequent byeachinsurer. Aninsurermaysatisfyitsobligationtoreportstatisticaldataunder
conviction of a violation of this section is a misdemeanor, this subparagraph by providing its loss experience data to a rating or advi~,;ory
SECTION13. Section 1852 of the Insurance Code is amended as follows: organization for submission to the commissioner. This data shall be made available
1852. Standards in making and using rates, to the public by the commissioner annually after examination; however, it shall be
The following standards shall apply to the making and use of rates pertaining to released in aggregate form by zip code in order that no individual insurer's loss
all classes of insurance to which the provisions of this chapter are applicable: experience for any specific geographic area be revealed. Differentiation in rates
(a) Excessive, inadequate, or unfairly discriminatory rates. Rates shall not be between geographical areas shall not constitute unfair discrimination.
excessive or inadequate, as herein defined, nor shall they be unfairly discrimina- All information reported to the department pursuant to this subdivision shall be
tory. confidential.
No rate shall be held to be excessive unless (1) such rate is unreasonably high As used in this section, "language" means the inability to speak, read, write, or
for the insurance provided and (2) a reasonable degree of competition does not comprehend the English language.
ex~st in the area with respect to the classification to which such rate is applicable. (b) No admitted insurer, licensed to issue and issuing motor vehicle liability
No rate shall be held to be inadequate unless (1) such rate is unreasonably low insurance policies as defined in Section 16450 of the Vehicle Code, shall fail or
for the insurance provided and (2) the continued use of such rate endangers the refuse to accept an application for such insurance, refuse to issue such ins. utah. ce
solvency of the insurer using the same, or unless (3) such rate is unreasonably low to an applicant therefor, or cancel such insurance solely for the reason that the
for the insurance provided and the use of such rate by the insurer using same has, applicant for such insurance or any insured is employedin a specific occupation.
or ff continued will have, the effect of destroying competition or creating a Nothing in this section shall prohibit an insurer from:
monopoly. (1) Considering the occupation of theapplicant or insured as a condition or risk
(b) Loss experience. Consideration shall be given, to the extent applicable, to for which a higher rate or discounted rate may be required or offered for cove~'age
past and prospective loss experience within and outside this State, to confia~ation, in the course and scope of his or her occupation.
and catastrophe hazards, to a reasonable margin for underwriting profit and (2) Charging a deviated rate to any classification of risks involvin{~ a specific
contingencies, to past and prospective expenses .both .c. zu~;d;;:~dc count~w,i, de occupation, or grouping thereof, if the rate meets the requirements otChapter 9
and those specially applicable to this State, and to all other factors, incluctmg (commencing with Section 1850) of Part 2 of Division 1.a~.d is base~u, pon actuarial
judgment factors, deemed relevant within and outside this State; and in the case data which demonstrates a significant actual historical differential between past
of fire insurance rates, consideration may be given to the experience of the fire
losses or expenses attributable to the specific occupation, or grouping thereof, and
insurance business during the most recent five-year period for which such the past losses or expenses attributable to other classification of risks. For purl:,oses
experience is available, of compilingsueh actuarial data for a specific occupation or grouping thereof, a
Consideration may also be given in the making and use of rates to dividends, person shallbe deemed employed in the occupation in which that data is compiled
savings or unabsorbed premium deposits allowed or returned by insurers to their fi: (A) the majority of his or her employment during the previous year was i~ the
policyholders, members or subscribers, occupation, or (B) the majority of his or her aggregate earnings for the immediate
(c) Expense provisions. The systems of expense provisions in- preceding three-year period were derived from the occupation, or (C) the person
eluded in the rates for use by any insurer or group of insurers may differ from is a member in good standing of a union which is an aut~horized collective
those of other insurers or groups of insurers to reflect the operating methods of bargaining agent for persons engaged in the o.ccupatio.n..
any such insurer or group with respect to any kind of insurance, or with respect Nothing in this section shall be construed to include in the definition ot
to any subdivision or combination thereof. "occupation" active duty service in the Armed Forces of the United States, any
status or activity which does not result in remuneration for work done or ser,~ices
(d) Risk classification. Risks may be grouped by classifications for the
establishment of rates and minimum premiums. Classification rates may be performed, or self-employment in a business operated out of an, applican?'or
modified to produce rates for individual risks in accordance with rating plans insured's place of residence or persons engaged in the renting, leasing, se~fing,
which establish standards for measuring variations in hazards or expense provi- repossessing, rebuilding, wrecking or salvaging of motor vehicles.
sions, or both. Such standards may measure any difference among risks that have (c) Nothing in this section shall limit or restrict the ability of an insurer to
refuse to accept an application for or refuse to issue or cancel such insurano~ for
a probable effect upon losses or expenses. Classifications or modifications of
classifications of risks may be established based upon size, expense, management, the reason that it is a commercial vehicle or based upon the consideration of a
individual experience, location or dispersion of hazard, or any other reasonable vehicle's size, weight, design or intended use.
considerations. Such classifications andmodifieations shall apply to all risks under (d) It is the intent of the Legislature that actuarial data by occupation m~y be
the same or substantially the same circumstances or conditions, examined for credibility by the commissioner on the same basis as any other
(e) Enforcement. The commissioner shall have exclusive jurisdiction to eh- automobile insurance data which he or she is empowered to examine.'
force this section, ~ubject to judicial review. (e) The provisions of this section shall be known and may be cited a,s the
SECTION 14. Sectibn 1850.01 is added to the Insurance Code as follows: "Rosenthal-Robbins Auto Insurance Nondiscrimination' Law."
1850.01. Ratesto be established by competition. SECTION 17. Section 1853.10 of the Insurance Code is added as follows:
(a) No public official shall have or be granted the power to establish, fix, 1853.10. Prohibition .of anti-competitive behavior.
determine, set or require approval prior to effectiveness of any rate level for (a) Consistent with the provisions of the lnsurance Code, generally, and of this
insurance (other than workers' compensation insurance or insurance issued Chapter 9, specifically:
pursuant to an assigned risk plan or other residual market mechanism). (1) No insurer shall monopolize or attempt to monbpolize, or combine or
SECTION 15. Section 10140 of the Insurance Code is reenacted as follows: conspire with any other insurer or with a rating or advisory organization to
10140. Practices based on race, color, etc. proscribed, monopolize, in any territory, any class of insurance as defined in Sections 100
No admitted insurer, licensed to issue life or disability insurance, shall fail or through 121 of Chapter I of Part I of Division 1 of the Insurance Code.
refuse to accept an application for such insurance, to issue such insurance to an (2) No insurer shall agree with any other insurer or with a rating or adcisory
applicant therefor, or issue or cancel such insurance, under conditions less organization to adhere to any rate.
favorable to the insured than in other comparable cases, except for reasons (3) No insurer shall make any agreement with any other insurer or rati:qg or
applicable alike to persons of every race, color, religion, national origin, or advisory organization to refqse to provide any class of insurance as defined in
ancestry; nor shall race, color, religion, national brigin, or ancestry ot itself Sections 100 through 121 of-Chapter 1 of Part I of Division 1 of the Insurance ~ffode.
constitute a condition or risk for which a higher rate, premium, or charge may be (4) No insurer or rating or advisory organization shall enter into an agreement
required of the insured for such insurance, to commit any act of boycott, coercion or intimidation.
SECTION 16. Section 11628 of the Insurance Code is reenacted as follows: (5) No insurer shall enter into an agreement with any other insurer or rating
11628. Rosenthal-llobbins Auto Insurance Nondiscrimination Law. or advisory organization to withhold any class of insurance as defined in Sections
(a) No admitted insurer, licensed to issue and issuing motor vehicle liability 100 through 121 of Chapter 1 of Part 1 of Division l of the Insurance Code.
policies as defined in Section 16450 of the Vehicle Code, shall fail or refuse to (6) No rating or advisory organization shall precludean, y insurerfrom.~aking
accept an application for such insurance, to issue such insurance to an applicant its rates independently of such rating organization or charging rates eti./)"erent
therefor, or issue or cancel such insurance under conditions less favorable to the from the rates made by the rating organization.
152 ~88
(b) (1) Any rate made or action taken in violation of subdivision (a) may be {~ar (5) "Credit life, health; and accident insurance" means insurance on the
disapproved by the commissioner pursuant to the applicable procedures pre- life and health of a borrower from a bank issued to secure the repayment of the
scribed in Section 1857.2. Nothing in this section shall be construed to apply to or amount borrowed.
prohibit any rate made or such other actions as may be authorized or permitted {'Pr (6) "Control" means the possession, by any means, of the power to direct
under this Code in general or this Chapter 9 in particular. Without limiting the or cause the direction of the management or activities of a licensed insurance
g. enerality of. the pr .efeding sentence, the prohibitions of Section 1853.10 shall not agent or broker·
oe construed to appty to or prohiln't joint activity by or among: (i) two or more (c) The provisions of this section may be amended by the Legislature by
insurers having a common ownership or control or operots'ng in this State under Statute.
common ownership or controL. (ii) joint underurriting, joint reinsuran~ or SECTION 21. Section 750 of the Insurance Cede is reenacted as follows:
pooling arrangements authorized or permitted by the Insurance Code or the 750. Rebate of premium.
commissioner including but not limited to, those established to provide property An insurer, insurance agent, broker, or solicitor, personally or by any other
insurance, automobile insurance on an assigned risk basig, child care liability party, shall not offer or pay, directly or indirectly, as an inducement to insurance
insurance or such similar arrangements as may now or hereafter be established, on any subject-matter in this State, any rebate of the whole or part of the premium
(tii)joint underwriting joint reinsurance, or pooling arrangements pertaining to payable on an insurance contract, or of the agent's or broker's commission
tdhes~e.ava, ilability of insurance or the ability 9f an insured or insureds to obtain thereon, and such rebate is an unlawful rebate.
rea co~. rageg amounts of insurance or limits of liability; (iv) insurers with SECTION 22. Section 750.1 of the Insurance Code is amended as follows:
~, .?.t t~o, the. apport?,n.rn~t of ca~.alty insura .nfe as authorized bp Section 1853.8 750.1. Unlawful rebates, profits and commissions,, legislative findings, decla-
oj m? tmapre~, or ~v/ msum. m aha rats'ng or advisory organizations exchanging rations and intent
anat. yzing or otherwise developing information and experience data as provided Lcg!;!a,",~-c ............
in this Chapter g of the Insurance U, dde. The people hereby e-a~ find and ~ .... declare that the
(2) As the exclusive methods for enforcing this Section, the Commissioner may continued regulation of the business practices of insurers and their producers is in
!nits'ate action~ under Section 1857.2 or a person injured in his business or property the interest of the citizens of the state and that the control and limitations of
oy reason oJ anything forbidden in subdiv~'on (a) of this Section may file a unlawful rebates, profits, and commissions is an essential component of that
regulation which is necessary to effectuate an adequate and complete system and
procedurescomplaint andprescribedrequestina Sectionhearing1858with the Commissioner in accordance with the regulation of insurer and producer business' practices.
SECTION 18. Section 12001.6 of the Insurance Code is added as follows: The ~ ....... people .... find that the statutes controlling unlawful rebates,
12901.6. Prohibition of conflicts of interest profits, and commissions continue to provide critical protection to insureds in this
N. eSther the comm_ issioner nor any deputy or employee of the department shall state from the numerous consequences that would occur in the absence of such
within one year a.#er his or her tenure in office or termination of employmen~ regulation, including company insolvencies, unfair discrimination between insu-
.~, r~ent, or counsel advise or assist i.n representing any insurer or licensee before reds with identical risks creating subsidies from small purchasers of insurance in
rne aepartment in connection with any particular matter involving specific favor of large purchasers of insurance, decreased quality of services to insurance
pea'es (0 that was actually pending under his or her 9fficial responsibility consumers, increased concentration of insurance distribution and sales meeha-
within a period of one year prior to the termination _of such responsibility or (ii) nisms, and misrepresentation and unethical sales practices such as improper
in which he or she pam~'pated personally or substantially as an officer or replacement or twisting to the detriment of the poblie.
employee. It is the intent of the ~ people in ~ reenacting this section to
SECTION 19. Section 12921.6 of the Insurance Code is added as follows: cica. dy set. forth the !z~.:!.a,~;'c _intent supporting the enactment, continuing
12921.6. Administrative interpretations, vitality, ana importance of the unlawful rebates, profits, and commissions sections
ot this code.
For the guidan, ce of insurers and others obligated to comply with this code and
other laws regulating the business of insurance in this Statg the commissioner SECTION 23. Section 751 of the Insurance Code is reenacted as follows:
may issue written administrative interpretations of any provision of this code or 751. Specification of consideration in policy or application.
any other law regulating the business of insurance in this State. No person shall An insurer, or an insurance agent, broker, or solicitor, personally or otherwi'se,
be liable for any action taken in good faith conformity with and in reliance on shall not offer or pay, directly or indirectly, as an inducement to enter into an
any such administrative interpretation. An insurer whose policy has been written insurance contract, ,an), valuable consideration which is not clearly specified,
and thepmt?ium determined in good faith conformity with and in reliance on promised or provided tot in the policy, or application for the insurance, and any
any suchaaministrative interpretation shall not be liable to provide different such consideration not appearing in the policy is an unlawful rebate. .
SECTION 24. Section 752 of the Insurance Code is reenacted as follows:
coverage during the term of such policy even if the administra#ve interpretation
re!ieq, u.~. n.s. hel. l .be determ....ined to ~ incorrect. Any person aggrieved by any such 752. Acceptance of rebate misdemeanor.
aam~msfra~ve ~.n?,w, retf, tion may oOtain judicial review thereof in such manner Any person nameu as the insured in any policy or named as the principal, or
as rn,ar~o~ prowaea oy taw. obligee, in any surety policy or the agent or representative of any such person
SE~ ~ sON 20. Section 1643 of the Insurance Code is amended as follows: who, directly or indirectly, knowingly accepts or recoives any unlawful rebate is
1643. Bank, holding company, subsidiary, affiliate and officers and employ- guilty of a misdemeanor.
ecs; prohibition against licensing, exception. SECTION 25. Section 754 of the Insuranco Code is reenacted as follows:
~.(a) No bank, or bank holding company, subsidiary, or affiliate thereof, or any 754. Payments to insurance brokers.
~om,e.er or employee of a bank, bank hol.dingeompany, subsidiary, or affiliate, may Payments of commissions or fees by insurers or their agents to insurance
~e ncensea as an insurance agent or broker or act as an agent or broker for brokers, when otherwise lawful under this cede, are expressly authorized.
insurance, in tl~s.' state, or control a licensed insurance agent or'broker, except that SECTION 26. Section 755 of the Insuranco Code is reenacted as follows:
a ,b. ank or a bank hol. oding company subsidiary, or affiliate of a bank, may be issued 755. Spli~'ng commissions.
a ucense to act as a life and disability agent limited to the transaction of credit life The pa .ying or allowing of any commission or other valuable consideration on
!nsurance business in this State to other than an admitted insurer or a licensed
and disability insurance, or an agent limited to the transaction of insuranco which
is limited solely to assuring repayment of the outstanding balance due on a specific ~nsuranee agent, broker or solicitor is an unlawful rebate.
extension of credit by a hank or bank holding company or its subsidiary in the SECTION 27. Section 755.2 of the Insurance Code is reenacted as follows:
event of the involuntary unemployment of the debtor, or both. A commercial bank 755.2. Receipt of continuing commissions on policy.
may be licensed to sell insurance or act as an insuranco broker as provided in If at the time of the solicitation and issuance of a policy of life or disability
,Se,eft. on 1208 of the F, iq. ,ancial .Cede.. This .section shall not apply to any bank or bank
no~mng company which, under the authorization of the Federal Reserve Board,
insurance, or'ora surety bond which by its terms continues until canceled, a person
may lawfully receive commissions thereon, such person, or in the event of his
had prior to January 1, 1976, a subsidiary or affiliate licensed to sell insurance death, his estate or heirs may continue to receive commissions thereon during the
~e3copt that subsequent authorization to expand such activities shall be subject to continuance in force or renewal of such policy or bond without being licensod
thi,'s, s, ee, tio,n), o.r to a~y bank holding company owning a state-chartered bank under the provisions of Chapter 5, Part 2, Division 1 of this code, provided:
.wmen nan,_p.nor to January 1, 1976, a subsidiary or affiliate licensed to sell (a) Such recipient does not transact insurance in connection with such policy
~nsurance. This soetion shall not apply to any person authorized or licensed to or bond while not so licensed; and
make loans pursuant to Division 7 (commencing with Section 18000), Division 9 (b) The payment is made pursuant to a contract entered into, before such
(e%,.m~.e. nei~..g ,with Seetio.n 22000), Division 10 (commencing with Section 24000), solicitation and issuance, between the insurer paying or allowing the commission
or L~w~on l~ {commenemgwith Section 26000) of the Financial Cede. and such person.
(bi lcor the purposes of this section, the following definitions shall apply: SECTION 28. Section 755.5 of the Insurance Cede is reenacted as follows:
{~r (1) "Bank" means any institution in this state defined in Section 102 of the
755.5. Be~, '~t of commissions by agents, solicitors, and insurers.
Financial Code except that such term does not include a title insurance company It is unlawnn for an insuranco agent who is not also licensed as an insurance
authorized to transact a trust business under the provisions of Article 4 (eom- broker to receive commissions derived from insurance olaced with an insurer
meneing with Section 12390) of Chapter 1 of Part 6 of Division 2 or a trust which has not appointed him to act as its agent in the transaction of such
eom. pany controlled by or under cemmon control with a title insurance company, insurance.
{-b)- (2) "Bank holding company" means the same as the definition of that term It is unlawful for an insurance solicitor to receive commissions on insuranco
set forth in Se.etion 2 of the federal Bank Holding Company Act of 1956, as from any source other than the employer for whom he is licensed excepting on life
amended, but limited to holding companies which control a bank authorized to or disability insurance transaetedby him under individual licenses as life or
accept deposits in this state.
, disability agent issued to him pursuant to this code.
· {~, (,3) "Sub. si, diary~'m,eans,any, c,orl,~o, ration, association, or partnership, owned It is unlawful for any person to pay to an insurance agent or solicitor any
.m wno~e or part t}y a oan~ or t~arm holding company.
{-d°r (4) "Affiliate" means any corporation, association, or partnership con- commissions which he can not lawfully receive.
Except as provided in Section 763 it is unlawful for an insurer to receive for its
nected through the ownership of a 10-percent or greater interest by a common own use commissions on insurance placed with another insurer.
parent. SECTION 20. Section 755.6 of the Insurance Code is reenacted as follows:
G88 153
755.6. Insurer participating in assigned risk plan; payment of commission for section does not apply to an individual licensee who: (1) is licensed during all of
additional coverages, such calendar year as a solicitor, or individually as an agent or broker; (2) during
Notwithstanding the provisions of Section 755.5, an insurer participating in any such calendar year conducts an individual business, not being named to transact on
Assigned Risk Plan, as provided f6r in Article 4 (commencing with Section 11620), any organization license nor owning any interest in any corporation or partnership
Chapter 1, Part 3, Division 2 of the Insurance Code, may pay to a licensed transacting an insurance agency or brokerage business; (3) has been continuously
insurance agent, and such agent may receive, a commission or consideration on licensed in some manner as an active agent, broker or solicitor for at least 25 yeasts;
any automobile or liability coverages written in addition to any commission, or and (4) is at least 65 years of age at the beginning of the calendar year.
consideration required under such plan if such agent has been designated by the Presumptions. Whenever an officer or director of a corporation acts as agent,
applicant for insurance as producer of record for the coverages required under broker, or solicitor in the transaction of insurance covering the corporation, he
such plan. shall be conclusively presumed to have received the full commission on such
SECTION 30. Section 755.7 of the Insurance Code is reenacted as follows: contract while an employee .of the corporation. Whenever the remuneration
755.7. Advising persons concerning insurance for consideration; allowing services of an employee is decreased by the employer or is made unreasonably
credit for service; misdemeanor, small in amount but the employee is permitted, as an insurance agent, broker, or
Any person, including but not limited to any person licensed, certificated under solicitor, to transact personal or controlled insurance, it shall be conclusiw.~ly
this code or exempted under this code from regulation, who for consideration presumed that such employee receives the full amount of commission on such
advises, or agrees to advise, any person concerning insurance, insurance policies, . personal or controlled insurance. .
insurance needs or insurance programs of any sort and who agrees to, or .does, Year defined; suspension, revocation or denial of license. "Year" as used in this
allow credit against such consideration for such service for any portion ot any section means the calendar year. Suspension, revocation or denial of license
insurance commission which may accrue, directly or indirectly, to suchperson violation of this section may be ordered at any time within five years after the
who so advises or agrees to advise, is guilty of making an unlawful rebate and guilty close of the year in which the violation occurred.
of a misdemeanor. ' SECTION 36. Section 760.5 of the Insurance Code is reenacted as follows:
SECTION 31. Section 756 of the Insurance Code is reenacted as follows: 760.5. Personal or controlled life insurance.
756. Misrepresentation of pay roll to procure lower premium. Definition. As used in this section "personal or controlled insurance" me.'ms
When the premium on a policy insuring an employer is based upon the amount insurance covering a life agent, or
or segregation of the employer's pay roll, and the employer, personally or (a) His spouse,~his employer, his eml~loyer's spouse, or any group of employ~es ·
knowingly through his employee, procures a lower premium by ~;q~::~y willfully under a group policy issued to his employer.
misrepresenting the amount or segregation, such misrepresentation is an unlawful (b) Any person related to him, his s~ouse, his employer or his employer's
spouse within the second degree by. blooa or marriage. ~
(c) If his employer is a corporation, any person directly or indirectly owning; or
rebate as to the employer. -
Liability to state; penalty. In addition to any penalty provided by law for
unlawful rebates, the employer in such case is liable to the State in an amount ten controlling a majority of the voting stock or controlling interest in such corpora-
times the difference between the lower premium paid and the premium properly tion.
payable. The commissioner shall collect the amount so payable and may brinsa (d) If his en/ployer is a partnership or association, any person owning any
civil action in his name as commissioner to enforce collection unless the interest in such partnership or association.
misrepresentation is made to and lower premium procured from the St~ate (e) If the agent is a corporation, any person directly or indirectly ownin$; or
Compensation Insurance Fund. In the latter case the liability to the State unaer controlling a majority of the voting stock or controlling inte.r, es.t in the agent.
this section shall be enforced in a civil action in the name of the State Unlawful rebate. If commissions on personal or controlled insurance trans-
Compensation Insurance Fund and any amount so collected shall become a part acted by a life agent under his license as a life agent received in one year exo~ed
of that fund. the commissions received in that year on other insurance transacted by s~ach
SECTION 32. Section 757 of the Insurance Code is reenacted as follows: licensee under his license as life agent, the receipt of commissions upon personal
757. Insurer's acceptance of false pay roll statement, or controlled insurance in excess of those on such other insurance is an unlawful
rebate.
When a statement of the amount or segregation of a pay roll is materially false,
and an insurer, through a person employed by it in a managerial capacity, accepts Provided that during and after the sixth calendar year following the ini.tial
the statement as the basis for the premium on a policy, the acceptance is an licensing of such life agent in any manner as a life agent, disability agent or life and~
unlawful rebate ff the accepting employee knows otthe falsity. 'disability agent, whether continuously licensed or not, if commissions on personal
SECTION 33. Section 758 of the Insurance Code is reenacted as follows: or controlled insurance transacted by him under any or all such licenses received
758. Insurer's duty of diligence, in any such calendar year exceed 33ya percent of t.h? co~mmissio~ns received~!n th?
Every insurer shall exercise reasonable diligence in securing the observance of same calendar year on other insurance transactea t~y ~im unaer any or al~ SUCh
this article by its agents, licenses, the receipt of commission~ up.on personal or contro?ed~ ~nsu~ranc~.~in
SECTION 34. Section 759 of.the Insurance Code is reenacted as follows: excess of 33~ percent of those on sufh .other in.s. urance is ~ u~awun re~o,ate..e .o~r
759. Appointment of agent for rebate, the purposes of this paragraph, if the license be a joint rrm license: lne s~xtn
It is unlawful for any insurer to appoint an agent for the purpose of enabling calendar year as respects the firm shall be the first calendar year beginning five
such agent, or the employer or person requesting the appointment of the agent, years or more after the initial licensing of the firm or any ?redecessor thereof as
to obtain insurance at a cost less than that specified in the policy, or at a cost less a joint firm licensee with any individual; the firm may be charged with a violation
than that specified in the application therefor, of this section separately based upon all joint firm licenses it may _have, held during
SECTION 35. Section 760 of the Insurance Code is reenacted as follows: the calendar year; and an individual named on one or more joint firm licenses may
760. Personal or controlled insurance, be charged with a violation of this section separately based upon all life licenses,
Definitions. As used in this section "personal or controlled insurance" means individual and joint firm, he may have held during the calendar year.
insurance covering an insurance agent, broker, or solicitor, or Inapplicability to certain individual licensees. Provided, further, that this
· (a) His spouse, his employer or his employer's spouse, section does not apply to an individual licensee who'. (1) is licensed-during all of
(b) Any person related to him or the persons mentioned in subdivision (a) such calendar year under one or more kinds of individual life licenses; (2) during
within the second degree by blood or marriage. . ..... all of such calendar year conducts an individual business, not being named in any
(c) If his employer is a corporation, any person directlyorinuirec~yownmgor joint firm license nor owning any interest in a corporation or partnership
controlling a majority of the voting stock or controlling interest in such corpora- transacting business under any kind of life license; (3) has been continu¢,usly
tion. licensed in some manner as an active agent under some kind of life license fi)r at
(d) If his employer is a partnership or association, any person owning any least 25 years; and (4) is at least 65 years of age at the beginning of the calendar
interest in such partnership or association, year.
(e) If the agent or broker is a corporation, any person directly or indirectly Year defined; suspension, revocation or denial of license. "Year"as used in this
owning or controlling a majority of the voting stock or co~ntr~olling.~interest~.in tthlesection means the calendar year. Suspension, revocation or denial of license for
agent or broker and any corporation which is also similarly directly or indirect y violation of this section may be ordered at any time within five years after the
controlled by the person who directly or indirectly controls the agent or broker, close of the year in which the violation occurred.
(f) If the agent or broker is a corporation, any corporation making consolidated SECTION 37. Section 761 of the Insurance Code is reenacted as follows:
returns for United States income tax purposes with any corporation described in
761. Making or receiving unlawful rebate; misdemeanor.
subdivision (e). Any insure/, insurance agent, broker, solicitor, or life agent ~md any officer or
Unlawful rebate. If premiums on personal or controlled insurance transacted employee of an insurer, insuranc, e ag~ent, b?ker, or life agent that makes or
by an insurance agent, broker, or solicitor payable in one year exceed the receives an unlawful rebate is guilty o! a misaemeanor.
premiums on other insurance transacted by such license_e payable in the same SECTION 38. Section 763 of the Insurance Code is reenacted as follows:
year, the receipt of commissions upon the .exces. s is ~an unlaw~fu,! rebate.. .._~ 763. Acts not unlawful rebates.
Provided that during and after the sixth ealenclar year toilowing the initim The following acts are not unlawful rebates:
licensing of such agent, broker, or solicitor, in any manner as an agent, broker or (a) Dividenc~s on participating policies. The return by an insurer issuing
solicitor, whether continuously licensed or not, ff premiums on personal or policies on a participating plan, or any portion of the premium as a dividend after
controlled insurance transacted by him payable in any one such calend, ar year the expiration of the term covered by such policy.
oxoeed 33V~ nercent of the other ~remiums transacted by himpayable in the same (b) Commissions. The payment of commission by any insurer, or insmance
~l~ndar i~a~ the receipt of con~aissions upon the excess over such 33Va percent agent, broker or solicitor, to another insurer, or insurance agent, broker or
Y ' solicitor, upon insurance lawfully transacted in that capacity.
is an unlawful rebate. For the ~ purpose of this para,ralph, if the agent or
broker be an organization the sixth calendar year shallbe tne nrst calendar year (c) Marine discounts. The allowance by any marine insurer, or marine.
beginning five years or more after the initial licensing of the organization, or any insurance agent, broker, or solicitor to any insured, of such usual discount as is
predecessor thereof, as an agent or broker, sanctioned by custom among marine insurers as being additional to the agent's or
Inapplicability to certain individual licensees. Provided further, that this broker's commission.
154 G88
(d) Commissions to insured payee. The paying by an insurer to another 1850.2. Advisory ~rganization defined.
insurer, or to an insurance agent, broker, or solicitor, of a commission in respect to In this chapter "advisory organization" means every person, other than an
a policy under which the payee is insured, or the receiving by such payee of such . admitted insurer, whether located within or outside this State, who prepares
commission.
policy .forms or makes underwriting rules incident to but not including the making
(e) Bonuses on nonparticipating life policies. The paying by an insurer of of rates, rating plans or rating systems, or which collects and furnishes to admitted
bonuses to policyholders on nonparticipating life insurance or otherwise abating insurers or rating organizations'loss or expense statistics or other statistical
their premiums, in whole or in part, out of surplus accumulated from nonpartiei- information and data and acts in an advisory, as distinguished from a rate making,
paring insurance, capacity. No duly authorized attorney at law acting in the usual course of his
(f) Dividends on participating life policies. The return as a dividend by a life profession shall be deemed to be an advisory organization.
insurer of any portion of the premium on policies issued on a participating plan at SECTION 47. Section 1850.3 of the Insurance Code is reenacted as follows:
any time. 1850.3. Member and subscriber defined.
(g) Adjustments for direct payment of industrial life premiums. The return, Unless otherwise apparent from the context, in this chapter:
by an insurer transacting industrial insurance on a weekly payment plan, to (a) "Member" means an insurer who participates in or is entitled to participate
policyholders who have made premium payments for a period of at least one year in the management of a rating, advisory or other organization.
directly to the insurer at/ts home or district office, of a percentage of the premium (b) "Subscriber" means an insurer which is furnished at its request (1) with
which the insurer would have paid for the weekly, collection of such premiums, rates and rating manuals by a rating organization of which it is not a member, or
(h) Existing life policies. The paying by any life insurer, or the receiving by (2) with advisory services by an advisory organization of which is is not a member.
life insurance policyholders of special compensations, or the allowing and reeeiv- SECTION 48. Section 1853 of the Insurance Code is reenacted as follows:
ing of credits already agreed upon in life insurance contracts now in force. 1853. Concerted action of insurers.
(i) Insurer's group life plan for own employees. The payment by an insurer of Subject to and in compliance with the provisions of this chapter authorizing
any portion of life insurance premiums payable by its employees pursuant to a life insurers to be members or subscribers of rating or advisory organizations or to
insurance program under which 75 pe~ ccnt percent or more of its employees are
engage in joint underwriting or joint reinsurance, two or more insurers may act in
required to carry life insurance on their lives so long as they remain in the concert with each other andwith others with respect to any matters nertaining to
employment of insurer, the. making o.f rates or rating systems, the preparation or making'of insurance
(j) Cosureties. The payment or allowance of a fee or commission by one policy or bond forms, underwriting rules, surveys, inspections and investigations,
surety insurer to another surety insurer in respect to a risk on which both are the furnishing of loss or expense statistics or other information and data, or
cosureties, carrying on of research. '
SECTION 39. Section 763.5 of the Insurance Code is reenacted as follows: SECTION 49. Section 1853.5 of the Insurance Code is reenacted as follows:
763.5. Sale of agent's or broker's business. 1853.5. Insurers having common ownership or managemeng, concerted action.
The sale of the good will, business, list of policyholders or similar assets of an
· With respect to any matters pertaining to the making of rates or rating systems,
agent _or broker .in consideration of commissions or portions thereof to be the preparation or mal~n, g of insurance policy or bond forms, underwriting rules,
thereatter earned by the use of such assets and payments of such consideration are surveys, inspections and investigations, the furnishing of loss or expense statistics
not unlawful rebates if the purchaser is duly licensed to transact insurance and the or other information and data, or carrying on of research, two or more admitted
receipt of the commissions would not constitute a violation of Section 760 ff the
insurers having a common ownership or operating in this State under common
person receiving them were licensed as an insurance agent, management or control, are hereby authorized to act in concert between or
SECTION 40. Section 764 of the Insurance Code is reenacted as follows: among themselves the same as ff they constituted a single insurer, and to the
764. Privilege against self-incrimination, extent that such matters relate to co-surety bonds, two or more admitted insurers
Any person may be compelled to testify or produce evidence at the trial or executing such bonds are hereby authorized to act in concert between or among
hearing on a charge of violating a provision of this article, even though such themselves the same as ff they constituted a single insurer.
testimony .or evidence may incriminate him. A prosecution shall not be brought or SECTION 50. Section 1853.6 of the Insurance Code is reenacted as follows:
maii,~,tained .against such per_son for any act concerning which he thus tesrilles or 1853.6. Agreements to adhere to rates.
proauees eviaence, except tbr perjury committed in so testifying. Members and subscribers of rating or advisory organizations may use the rates,
SECTION 41. Section 765 of the Insurance Code is reenacted as follows: rating systems, underwriting rules or policy or bond forms of such organizations,
765. Suspension of certificate of authority, either consistently or intermittently, but, except as provided in Sections 1853.5,
If an insurer knowingly violates any provisions of this article, or knowingly 1853.8, and Article 5, shall not agree with each other or rating organizations or
permits any officer, agent, or employee so to do, the commissioner, after a hearing others to adhere thereto. The fact that two or more admitted insurers, whether or
in accordance with the procedure provided in Section 704, may suspend the not members or subscribers of a rating or advisory organization, use, either
insurer's certificate of authority to do the class of insurance in which the violation
consistently or intermittently, the rates or rating systems made or adopted by a
of this article occurred, rating organization, or the underwriting rules or policy or bond forms prepared by
SECTION 42. Section 766 of the Insuranco Code is reenacted as follows: a. rating or advisory organization, shall not be sufficient in itself to support a finding
766. Suspension or revocation of license, that an agreement to so adhere exists, and may be used only for the purpose of
If an insurance agent, broker, or solicitor knowingly and wilfully violates any of supplementing or explaining direct evidence of the existence of any such
the provisions of this article, the commissioner, after a hearing in accordance with agreement.
the procedure provided in Article 13 of Chapter 5 of this part may suspend or SECTION 51. Section 1853.7 of the Insurance Code is reenacted as follows:
revoke the violator's license. 1853.7. Exchange of information and experience data.
SECTION 43. Section 767 of the Insurance Code is reenacted as follows: Licensed rating organizations and admitted insurers are authorized to exchange
767. Payment of commission to agent or broker licensed in Mexico. information and experience data with rating organizations and insurers in this and
Notwithstanding any l~rovision in this article to the contrary, it shall not be other states and may consult with them with respect to rate-making and the
,unl,awf~ for ~y lic. ensea insurance broker to pay a commission to an agent or application of rating systems.
oroKer ficensed under the laws of Mexico when such agent or broker in Mexico SECTION 52. Secrion 1854 of the Insurance Code is reenacted as follows:
refers to the insurance broker licensed in this state a resident of Mexico who
1854. Bequirement of license; application,, fee.
wishes to obtain a policy of automobile liability insurance to be effective in this No rating organization shall conduct its operations in this state without first
state from an insurer licensed in this state, and such broker negotiates and effects filing with the commissioner a written appliearion for and securing a license to act
such a policy of insurance for such resident of Mexico. ~ a rating organization. Any rating organization may make application for and
SECTION 44. Section 1850 of the Insurance Code is reenacted as follows: obtain a license as a rating organization flit shall meet the requirements for license
1850. Purpose of chapter, set' forth in this chapter. Every such rating organization shall file with its
The purpose of this chapter is to promote the public welfare by regulating application (a) a copy of its constitution, its articles of incorporation, agreement or
insurance rates as herein provided to the end that. they shall not be excessive, ~so. ciarion;, ~,cl of its ~byl. a.ws, .rules and regulations governing the conduct of its
inadequate or unfairly discriminatory, to authorize the existence and operation of ousmess, an amy certified by the custodian of the originals thereof, (b) a list of its
flu .alffied rating organizations and advisory organizations and require that speci- members and subscribers, (c) the name and address of a resident of this state upon
n.ed rating services of such rating organizations be generally available to all .whom notices or orders of the commissioner or process affecting such rating
actmitted insurers, and to authorize cooperation between insurers in rate making organization may be served, and (d) a statement of its qualifications as a rating
and other related matters, organization.
It is the express intent of this chapter to permit and encourage competition The fee for filing an applicarion for license as a rating organization is one
.between. in~rers on a sound finaneialbasis and nothing in this chapter is intended hun .dred seven.ty-seven dollars ($177) lawful money of the United States, payable
to give the Commissioner power to fix and determine a rate level by classification in aavance to the commissioner.
or otherwise. SECTION 53. Section 1854.1 of the Insurance Code is reenacted as follows:
SECTION 45. Section 1850.1 of the Insurance Code is reenacted as follows:
1854.1. Bequ~'tes for obtaining and retaining license. ·
1850.1. Bating organization defined. .To obtain .and retain a license, a rating organization shall provide sarisfaetory
In this chapter "rating organization" means every person, other than an evi~lenee to the commissioner that it will:
admitted insurer, whether located within or outside this State, who has as his (a) Permit any admitted insurer to become a member of or a subscriber to such
object or purpose the making of rates, rating plans or rating systems. Two or more rating organization,at a reasonable cost and without diseriminarion, or withdraw
admitted insurers which act in eoncort for the purpose of making rates, rating therefrom.
plans or rating systems, and which do not operate within the specific authoriza- (b) Neither have nor adopt any rule or exact any agreement, the effect of
tions contained in Seerions 1853.5, 1853.7, 1853.8, and Article 5 shall be deemed to which would be to require anymember or subscriber as a condition to member-
be a rating organization. No single insurer shall be deemed to be a raring ship or subseribership, to adhere to its rates, rating plans, raring systems,
organization, unaerwriting rules, or policy or bond forms.
SECTION 46. Section 1650.2 of the Insurance Code is reenacted as follows: (e) Neither adopt any rule nor exact any agreement the effect of which would
G88 155
be to prohibit or regulate the payment of dividends, savings or unabsorbed that it is authorized to engage in or carry out with respect to California workers'
premium deposits allowed or returned by insurers to their F~cy ~c,!~acr: compensation insurance generally under the provisions of Article 3 (commencing
poli~holders, members or subscribers, with Section 11750) of Chapter 3 of Part 3 of Division 2 other than the making of
(d) Neither practice nor sanction any plan or act of boycott, coercion or rates, rating plans and rating systems.
intimidation. SECTION 59. Section 1857.5 of the Insurance Code is reenacted as follo~,s:
(e) Neither enter into nor sanction any contract or act by which any person is 1857.5. Rules and statistical plans; promulgation; compilations.
restrained from lawfully engaging in the insurance business. (a) The commissioner may promulgate reasonable rules and statistical plans,
(f) Notify the commissioner promptly of every change in its constitution, its reasonably adapted to each of the rating systems in use within the state, which
articles of incorporation, agreement 'or association, and of its by-laws, rules and may be modified from time to time and which shall be used thereafter by each
regulations governing the conduct of its business; its list of members and insurer in the recording and reporting of its loss and countrywide expense
subscribers; and the name and address of the resident of this State designated by experience, in order that the experience of all insurers may be made available at
it upon whom notices or orders of the commissioner or process affecting such least annually in such form and detail as may be necessary to aid him in
organization may be served, determining whether rating systems comply with the standards set forth in this~
(g) Comply with the provisions of Section 1857. chapter. Such rules and plans may also provide for the recording and reportin.g
SECTION 54. Section 1854.2 of the Insurance Code is reenacted as follows: expense experience items which are specially applicable to this state ~and are not
1854.2. Investigation of applican~, requirements for issuance of license; limited susceptible of determination by a prurating or' countrywide expert, se exper, i.enc'~.. In
license; license period, promulgating such rules and plans, the commissioner may give due consader~tion
The commissioner shall examine each application for license to act as a fa.ting to the rating systems in use and, in order that such rules and plans may be as
organization and the documents filed therewith and may make such further uniform as ispraeticable among the several states, to the.rules an.d t.o.the fon.n o,f
investigation of the applicant, its affairs and its proposed plan of business, as he the plans nsedfor such rating systems in other states. No ~.nsurer. shall be requarea
deems desirable, to record or report its loss experience on a classification basis that is inconsistent
with the rating system in use by it. The commissioner may designate one or more
The commissioner shall issue the license applied for within 60 days of its filing
with him if from such examination and investigation he is satisfied that: rating organizations or advisory organizations to assist him in gathering such
(a) The business reputation of the applicant and its officers is good. experience and making compilations thereof, and such. c. omp. ilations shall be made
(b) The facilities o~ the applicant are adequate to enable it to furnish the available, subject to reasonable rules promulgated by the commissione~, to
services it proposes to furnish, insurers and rating organizations. .
(e) The applicant and its proposed plan of operation conform to the require- (b) Reasonable rules and plans may be promulgated by the conumss~oner ~or
ments of this chapter, the interchange of data necessary for the application of rating plans.
Otherwise, but only after hearing upon notice, the cemmissioner shall in writing (c) In order to further uniform administration or rate regulatory laws, the
deny the application and notify the applicant of his decision and his reasons commissioner and every insurer and rating organizatio, n m.ay exchange in?or.ma-
therefor, tion and experience data with insurance supervisory officials, insurers and ranng
The commissioner may grant an application in p?.t only and iss?.e a license to organizations in other states and may consult with them with respect to
act as a rating organization for one or more .of the el.asses ~ot msurane.e?r, ratemaking and the application of rating systems.
subdivisions thereof or class of risk or a part or combination thereot as are specmeu SECTION 60. Section 1857.7 of the Insurance Code is reenacted as follows:
in the application if the applicant qualifies for only a portion of the classes applied
1857.7. Products liabili~ insurers; transmission of information.
for. (a) Any insurer issuing a policy of products liability insur~ce in t,his.sta,!e.,s.h,.a, ll
Licenses issued pursuant to this section shall remain in effect until revoked as transmit the following information, based on its nationwide products daoility
provided in this chapter, insurance writings, to the department each year in the annual report o:[ the
SECTION 55. Section 1854.25 of the Insurance Code is reenacted as follows: insurer:
1854.25. Annual fee. .... (1) Premiums written.
Notwithstanding the provision of Section 1854.2,. caen rat]n~, organaz,anon (2) Premiums earned.
possessing a license of indefinite term pursuant to such section snau owe and pa.y (3) Unearned premiums.
to the commissioner an annual fee of one hundred seventy-seven dollars ($177) m (4) The dollar amount of claims paid.
lawful money of the United States in advance on account of such license until its (5) The number of outstanding claims.
final termination. Such fee shall be for periods commencing ~a July 1,.1.9~4, an~d on (6) Net loss reserves for outstanding claims excluding claims incurred but not
each July 1st thereafter and ending on June 30,1965, and each June 30th thereatter, reported.
and shall be due and payable on March 1, 1964, and on each March 1st thereafter (7) Net loss reserves for claims incurred but not reported.
and shall be delinquent on April 1, 1964, and each April 1st thereat?. (8) Losses incurred as a percentage of premiums earned.
SECTION 56. Section 1854.3 of the Insurance Code is reenacted as follows: (9) Net investment gain or loss and other income or gain or loss allocated to
· products liability lines.
1854.3. Membership eligibility rules.
Subject to the approval of the commissioner licensed rating organizations may (10) Net income before federal and foreign income taxes.
make reasonable rules governing eligibility for membership. (11) Expenses incurred including loss adjustment expense, commission and
SECTION 57. Section 1854.4 of the Insurance Code is reenacted as follows: brokerage expense, other acquisition expense and general expense.
(b) T~be reports provided pursuant to subdivision (a) shall be available for
1854.4. Insurers with common ownership or management' conditions of public inspection and shall be retained on file by the department for five year~s.
membership.
If two or more insurers having a common ownership or operatin~g, in this Sta? (e) The reports required by subdivision (a) shall only contain information tot
under common management are admitted for the classes or types ol insurance ~or the year for which the reports are being filed.
which a rating organization is licensed to make rates, the rating organizati.o? .ma~ (d) Any information provided by any insurer to the department pertain:ing to
require as a condition to membership or subscribership of one or more mat an a specific claim or a products liability insurance policy shall be classified as
such insurers shall become members or subscribers, confidential and shall not be revealed by the department.
SECTION 56. Section 1854.5 o£ the Insurance Code is reenacted as follows: - SECTION 61. Section 1857.9 of the Insurance Code is reenacted as folbws:
1854.5. Workers' compensation insurance ratin~ organizations; exemption 1857.9. Report,. contents; designating classes .of insurance generally unavail-
from licensing or registration requirements of this chapter; authority, ablg unaffordable, or for which there have tieen unusually great premium
A workers' compensation insurance rating organization licensed pursuant to the increases; information on classes of ins.ur.a, nce; excluded commercial litlbility
provisions of Article 3 (commencing with Section 11750) of Chapter 3 of Part 3 of insurance; fi'ling reports; emergenc~ re~utat~ons.
Division 2 which does not make rates, rating plans or rating systems for insurance. (a) Every insurer doing business in this state, except as provided ~ su~oaws~on
covering the liability of employers for compensation or damages under the United (g), shall report on a calendar year basis for each class of insurance designated in
States Longshoremen's andHarbor Workers' Compensation Act (33 U.S.C. 901, et tl~e prior calendar year by the commissioner pursuant to. subdivis.io.n (.b). ~ad for
seq.) shall not be required to be licensed as a rating organization or registered as each class listed in subdivision (c), both for policies issued or issued for delivery in
an advisory organization pursuant to the provisions of this chapter ~d shall h.ave California, and for policies issued or issued for delivery in the United States and
authority under its license as a workers' compensation insurance rating orgamza- territories:
tion to: (1) The number of policies written, the direc, t pre~miums, written, t.he ~rec!
(a) Collect and tabulate loss and expense experience statistics and other vremiums earned, the direct losses paid, the direct losses mcurr.ed, the ,alrect~
information and data relating to insurance covering employers agar. st th. cfr losses unpaid (not including losses i.ncurred, but ?o.t reporte~) the numoe,r ot
liability for compensation under the United States Longshoremen's and Harbor outstanding claims at year end and the numl~er ot claims pain in the preceding
Workers' Compensation Act. year, the allocated loss adjustment expense, and the percentage of allocated loss
(b) Furnish or exchange such information and experience data to or with rating adjustment expense attributable to defense attorney expenses.
organizations, advisory organizations and insurers in this and other..~states. ,. (2) Whether policies are written on a claim made or o.ccurrence basis, and
(c) Adopt and enforce compliance by its insurer memoers uatn .reasonan~e whether there has been a change in the preceding 12 months.
rules and statistical plans to be used'in the reeo. r.din$ and re. por,tip, guy insurer (3) For each loss reserve for each class, whether the reserve is discour,ted in
members of their California longshoremen's and harbor workers msurance.~oss anticipation of future investment earnings.
and expense experience in order that such experience of all ef its insurer members (4) The cemmissioner shall waive the requirements of paragraph (1) for any
shall be available in such form and detail as will be of aid to the commissioner in information that has been provided to the Insuran.ce Servi.ces O~ce by th.e
the enforcement of, and to its insurer members in complying with, the provisions insurer, if the Insurance Services Office provides the reformation to the commas-
of this chapter, sinner on or before the date on which the insurer is required to file the statement.
(d) Engage in the same activities and carry out the same functions with respect (b) No later than October 1 of each year the commissioner shall desiguat~ those
to insurance covering the liability of employers for compensation or damages classes of insurance, as defined by the Insurance Service Office, that are ge~aerally
under the United States Longshoremen's and Harbor Workers' Compensation Act unavailable or unaffordable in California, or for which there have been un~sually
156 G88
great premium increases. The factors the commissioner shall consider in making 11628.3. Operators over 5~. driver improvement course graduates,, reduction in
this determination shall include, but are not limited to, the following: premium.
(1) Consumer complaints, la) Based on the actuarial and loss experience data available to each insurer,
(2) Rate complaints, intruding the driving records of mature driver improvement course graduates, as
(3) Surveillance by the department, recorded by the Department of Motor Vehicles, every admitted insurer shall
(4) Market conduct, provide for an appropriate percentage of reduction in premium rates for motor
vehicle liability insurance for principal operators who are 55 years of age or older
(c) In addition to the classes designated by the commissioner pursuant to and who produce proof of successful completion of the mature driver improve-
subdivision (b) the insurer shall include the information required by subdivision ment course provided for and approved by the Department of Motor Vehicles
(a) for those classes of insurance, as defined by the Insurance Services Office, pursuant to Section 1675 of the Vehicle Code.
covering liability insurance for municipalities, products liability insurance, liability (b) The insured shall enroll in and successfully complete the course described
insurance for any business or nonprofit enterprise required to carry liability in subdivision (a) once every three years in order to continue to be eligible for an
appropriate percentage of reduced premium.
insurance by state law, news publishers' liability insurance, and professional errors (e) The ?ercentage of premium reduction required by subdivision (a) shall be
and omissions (malpractice) liability insurance for doctors and for lawyers, reassessed ~)y the insurer upon renewal of the insured's policy. The insured's
Collection of the data described in this section shall be terminated upon a joint eligibility for any percentage of premium reduction shall be effective for a
resolution of the Legislature specifying such termination of collection. Insurers three-year periodfrom the date of successful completion of the course described
shall not be required to report under this section information required to be
in subdivision (a), except that the insurer may discontinue the reduced premium
reported under Sections 1857.7, 1864, 11555.2, and 12958. rate if the insured is in any case:
(d) The insurer shall also report for both California and for the United States (1) Involved in an accident for which the insured is at fault, as determined by
and its territories for the calendar year: the insurer.
(1) Each class of commercial liability insurance, as defined by the Insurance (2) Convicted ora violation of Division 11 (commencing with Section 21000) of
Services Office, that is specifically excluded from any reinsurance treaty for the Vehicle Code, except Chapter 9 (commencing with Section 22500) of that
reinsurance ceded. ~ division, or of a traffic related offense involving alcohol or narcotics.
(2) Each class of commeicial liability insurance, as defined by the Insurance (d) The percentage of premium rate reduction required by subdivision (a)
Services Office, that is specifically excluded from any reinsurance treaty for does not apply in the event the insured enrolls in, and successfully completes, an
reinsurance assumed.
approved course pursuant to a court order provided for in Section 42005 of the
(e) The department shall retain the information reported pursuant to this Vehicle Code. Nothing in this subdivision precludes an insured from also enrolling
section for a period of no less than five years, in a driver improvement course.
(f) Insurers that are members of the same insurance group may aggregate the SECTION 64. Section 11628.4 of the Insurance Code is added as follows:
information required by this section in a single report. 11628.4. Good driver discounts.
(g) The reports required by this section shall not be applicable to any insurer Based on the actuarial and loss experience data available to each insurer, every
that has been established for less than three years, admitted insurer may provide for an appropriate percentage of reduction in
(h) The reports required by this section shall be filed on a form provided by the premium rates for motor vehicle liability insurance for good drivers who have not
commissioner no later than May 1 of the calendar year following the year for been involved in any accident in the last three years for which the insured was at
which the information is reported, fault, as determined by the insurer, and who have not been convicted within the
(i) The department shall adopt regulations implementing this section as lust threeyearsofa violation of Division 11 (commencing with Section 21000)of
emergency regulations in accordance with Chapter 3.5 (commencing with Section the Vehicle Code, except Chapter 9 (commencing with Section 22500) of that
11340) of Division 3 of Title 2 of the Government Code, except that for the division, or of a traffic related offense involving alcohol or narcotics.
purposes of Chapter 3.5 (commencing with Section 11340) of Division 3 of Title 2 SECTION 65. Section 12900 of the Insurance Code is reenacted as follows:
of the Government Code, any regulations adopted under this section shall be 12900. Appointment,. term.
deemed to be necessary for the immediate preservation of the public peace, The commissioner shall be appointed by the Governor, with the consent of the
health and safety, or general welfare. These regulations shall remain in effect for Senate and shall hold office for a term of four years, coextensive with the term of
180 days. The regulations may require insurers to report the information required office of the Governor.
by subdivision (d) by categories other than those used by the Insurance Services SECTION66. Severability.
Office.
Except as provided in Insurance Code Section 12020, if any provision enacted,
~j) The information provided pursuant to subdivision (a) shall be confidential reenacted or amended by this initiative or the application thereof to any person or
ananot revealed by the department, except that the commissioner may publish an circumstance is hem invalid, the invalidity shall not affect any other provisions
analysis of the data in aggregate form or in a manner which does not disclose enacted, reenacted or amended by this initiative or the application thereof which
confidential information about identified insurers or insureds, can be given effect without the invalid provision or application and, to this end
SECTION 62. Sections 1860.1 and 1860.2 of the Insurance Code are reenacted except as provided in Insurance Code Section 12020, the p'~ovisions enaci~ll
as follows: reenacted or amended by this initiative are deemed severable.
1860.1. Applicability of other laws. SECTION 67. Inconsistency with Other Initiatives.
No act done, action taken or agreement made pursuant to the authority The provisions of this initiative constitute an integrated program of insurance
conferred by this chapter shall constitute a violation of or grounds for prosecution reform and are intended to occupy the fieM of insurance reform in the election in
or civil proceedings under any other law of this State heretofore or hereafter which they are adopted. If this initiative receives a higher number of votes than
enacted which does not specifically refer to insurance, another initiative statute adopted at the same election as this initiative, such other
1860.2. Applicability of other laws. initiative statute shall not have any force or effect to the extent that its provisions
The administration and enforcement of this chapter shall be governed solely by sp. e~fically relate to the business of insurance or the regulation of that business by
the provisions of this chapter. Except as provided in this chapter, no other law this State.
relatin~ to insurance and no other provisions in this code heretofore or hereafter SECTION 68. Amendment.
enactea shall apply to or be construed as supplementing or modifying the Except us,?rovided in section 2O of this initiative, the provisions of this initiative
provisions of this chapter unless such other law or other provisions expressly so statute shall not be amended by the legislature except by another statute passed in
provides and specifically refers to the sections of this chapter which it intends to concurring, or by another statute that becomes '~ff~ctive only when approved by
supplement or modify, each house by roll call entered in the Journal two-thirds of the membership
SECTION 63. Section 11628.3 of the Insurance Code is reenacted as follows: the electorate.
Proposition 105: Text of Proposed Law s4soz Any advertisement authorized by a committee shall include a statement
Continued from page 107 that each of the following, where applicable, is a major funding source..
(a) Any industry which is both the largest industry contributor to the
84502. "Committee" means any committee, as defined in Section 82013 of the committee and whose combined contn'butions to the committee are five hundred
Government Code, which has made expenditures of fifty thousand dollars
thousand, dollars ($500,000) or more, or are2qfty thousand dollars ($50,,000) or
($50,000) or more, in support of or in opposition to, an initiative, more aha constitute 25 percent or more of all contributions.
84503. "Advertisement" means any general or public advertisement which is (b) A person whose contributions to the committee are one hundred thousand
authorized and paid for by a committee for the purpose of supporting or opposing dollars ($100, 080) or more and who is the largest contributor.
an initiative. "Advertisement" does not include a communication from an (c) Corporations us a group when their combined contributions to the commit.
organization to its members, tee are one hundred thousand dollars ($100,005) or more and constitute 50 percent
84504. "Industry" means those individuals and persons who derive economic or more of all contributions, and unions as a group when their combined
benefit from the manufacture, sma or distribution of a like or similar product, contributions to the committee are one hundred thousand dollars ($108,000) or
commodity, or service, including b'~t not limited to professional services, more, and constitute 50 percent or'more of all contributions.
84505. "Person" means any individual, business, and any other organization (d) Out-of-state contributors as a group, when their combined contributions to
the committee are one hundred thousand dollars ($100,000) or more, and
or group of persons acting in concert.
84506. "Contributions "means the cumulative contributions ora committee for constitute 50% or more of all contributions.
the period beginning with January l o£ the year prior to the year-during which the 84508. If there are more than two major funding sources, the committee is onl~l
initiative is to be voted upon and ending with the closing date for the campaign required to disclose the first two applicable funding sources, in the order they are
finance disclosure report whose filing deadline precedes the dissemination to the listed in in Section 8450Z
public of an advertisement by seven days or more. A committee may optionally 84509. Any disclosure statement required by this chapter shall be printed
compute its contributions using only items required to be individually itemized on clearly and legibly in a conspicuous manner, or, if the communication is
State campeign finance disclosure reports, broadcast, the information shall be spoken.
G88 157
84510. If disclosure of two funding sources is required by Section 84507, the information is only accurate when the prospectus was written, that the buyer may
committee is only required to disclose one funding source on any advertisement contact the Secretary of State for updated information, and shall give the
which is: Secretary of State's address and phone number.
(a) an electronic broadcast advem'sement of less than 25 seconds, or 12264. All corporations shall, prior to selling stock in California, file a cop~' of
(b) a newspaper, magazine, or other public print media advertisement which the notice required by Section 12262 with the Secretary of State.
is less than 25 square inches. 12265. Changes in status for any of the categories listbd in Section 12262 shall
84511. A committee may file an amended campaign finance disclosure report be reported within 30 days to the Secretary of State.
with the Secretary of State at any time, and may then -change some or all of its 12266. The Secretary of State sh. all adopt regulations to implement this section,
advertisements to rdflect the changed disclosure information, including regulations governing the form in which the disclosures required by this
am'de shall be made and the mann. er in which the Secretary of State shall make
84512. This chapter shall only apply to advertisements the contents of which available the information acquirecl pursuant to this article.
are more than 50 percent devoted to one initiattve.
84513. The Fair Political Practices Commission (the Commission) shall issue 12267. The remedies for violations of this Article are as provided in Govern-
ment Code Section 12269. '
regulations to implement this A~'cle.
84514. The sole remedy for violation of this Article is that any person who SECTION 7. Section 12269 is added to the Government Code, to read:
violates this A rticle is liable in a civil action brought by the Commission, or by any 12269. The sole remedies for violations of the following provisions of this .Act
person, for a fine of three times the cost of the advertisemen~ ineluding placement shall be fines often thousand dollars ($10,O00. O0) for each advertisement, contract
costs, or prospectus which violates this Act. The provisions are: Article 10 (commencing
SECTION 6. Article 6 (commencing with Section 12261) is added to Chapter with Section 66799) of Chapter 3of Title 7.3 of the Government Code; Sections
3 of' Part 2 of Division 3 of Title 2 of the Government Code, to read: 10195.1-10195.8 of the Insurance Code; Chapter 3.95 (commen~.'ng with Section
1599.85) of Division 2 of the Health and Safety Code; and Article 6 (co. mmeming
Article 6. Anti-Apartheid Disclosure with Section 12261) of Chapter 3 of Part 2 of Division 3 of Title 2 of the
12261. (a) "Commonly owned corporation."A subsidiary corporation is a Government Code. For purposes of this Ac~ multiple copies of the same
"commonly owned corporation" in its relation to any other corporation which is advertisemeng contractor prospectus shall count as one violation. Any person r,~ay
owned by the same parent corporation, bring an action in. Superior Court to impose any fine pursuant to this Act. Fines
(b) "Corporation selling stocks" means any corporation or financial institution shall be deposited to the General Fund of the State.
SECTION 8. If any provision of this Act or the application thereof is ~:eld
selling stocks or securities which is required by law to issue a prospectus or similar invalid, that invalidit!t shall not affect other prov~'ons or applications of the Act
informational statement to the buyer.
(c) "Parent corporation" means a corporation which has power either directly which can be given eff~_ t without the invalid provision or application, and to .this
or indirectly or through another corporation or series of corporations to elect a end the provisions df this Act are severable.
majority of the directors of another corporation. SECTION g. Nothing in this Act shall alter or diminish any legal obligai¥on
(d) "Subsidiary corporation"means a corporation which is subject to a pare. nt otherwise required in common law or by statute or regulation. Fines imp~,sed
corporation which has power either directly or indirectly or through anotl~er under this Act shall be in addition to any penalties or sanctions otherwise
corporation or series of other corporations to elect a majority of its directors, pregL-n'bed b~t law. The disclosures required by this Act shall be without prejudice
to the enactment of statutes or adoption of regulations to provide for additic,nal
12262. All corporations selling stocks in California must disclose on the
prospectus, for each of the following categories, whether or not the following are disclosures.
SECTION 10. To further its purposes, this initiative may be amended by
doing business in South Africa or with any person or group located in South statute, passed in eachhouse by a two-thirds vote.
Africa:
(a) The corporation. SECTION 11. This Act shall take effect upon adoption by the people, but the
(b) One or more of the corporation's parent corporations or subsidiary substantive provisions shall not become operative until ]anuary 1 of the second
· corporations, year following passage of this Act. The administrative agencies shall adopt the
(c) One or more of the corpOration's commonly owned corporations, regulations specified by ibis Act as soon as is reasonably possible, but in no event
12263. All disclosures pursuant to Section 12262 shall indicate that the later than the operative date of this Act.
158
Political Party Statements of Purpose
Democratic Party
After eight years of prosperity for the few and uncertainty for the potential.
many--all paid for by a staggering national debt which threatens the · A strong economy where American jobs are no longer exported to
future of our children, Americans are seeking a new vision, a new foreign countries, where American workers can earn the wages
direction, necessary to support .their families, where no one is.among (he
The California Democratic Party offers a program of growth and homeless.
stability, peace and environmental safety, justice and equality. Our 1988 · A society where the health care for our citizens, and especially our
children and our elderly, is an obligation we fully discharge.
program presents candidates and a platform to rebuild and revitalize · Balancing strong laws to stop criminals and care for victims while
our country. As a citizen of the United States, you are part of this vision, insuring privacy and individual rights.
As a voting citizen, you can help make it happen. · Improve~l international relations and world peace.
We support: For more information, please write or call the California Democratic
· Quality education for all. Party, 5711 W. Slauson, Suite 210, Culver City, CA 90230, (213)
· Equality of opportunity regardless of race, age, sex, or wealth, so 649-2944.
that each individual and each family may reach the limits of their PETER D. KELLY, State Chair
Republican Party
For the l~ast eight years, Republican principles and policies have been spending, rather than the energies of the American people, to solve our
creating joos, stimulating economic growth, and bringing prosperity to problems. Republicans support -- and liberals oppose -- a balanced
America. They have swept away the "malaise" of the last decade, budget amendment and a line-item veto.
replacing it with hope, purpose, and confidence. What are those Republicans believe in a strong defense to preserve freedom and to
principles?
achieve peace through strength. We reject liberal isolationism and
Republicans believe in individual rights and in the duty of all citizens "blame America first" pessimism.
to assume the responsibilities of self-government. Republicans believe We believe in the rights of crime victims as well as those of
that a government big enough to give us everything we need is big defendants, in just punishment for heinous crimes, and in judges who
enough to take everything we have.
Republicans believe that American free enterprise and individual rule, not according to their personal politics, but according to the law.
· initiative have given greater prosperity-for more people more fairly and The first Republican president, Abraham Lincoln, established ours as
more widely distributed than has any, other economic system at any the party of equal rights, justice, and opportunity for all regardless of
time, anywhere. Republicans believe that to promise to deliver people race, creed, sex, or national origin. The Republican message of hope,
from want by destroying the very source of our prosperity--free opportunity, family values, and individual rights is a positive, open,
enterprise--through crushing tax increases and bloated bureaucracy is inclusive message for anyone who loves freedom, believes in individual
hypocritical and immoral, responsibility, and desires a government the people control.
Republicans believe in sound management of taxpayers' dollars. The
huge federal deficit was created by liberals trying to use government ROBERT W. NAYLOR, State Chair
American Independent Party
America faces a number of crucial issues to which the major parties industry and protect the living standard of our working men
refuse to address themselves in spite of increasingly insistent demands and women;
by the American people. The American Independent Party presents the The restriction of immigration to protect the jobs of American
following solutions to these critical issues, which we deem to be the most workers;
important concerns in this critical and dangerous time in American The restorationofthe"AmericaFirst"traditionofnon-involvement
history, in foreign wars;
Only the American Independent Party recognizes the imperative Revitalization of the family farm in America;
need for these alternatives to the continued surrender to profit from Protection of the right of law-abiding citizens to keep and bear
private control of our currency, high interest rates, and exorbitant and arms.
artificial national debt. We invite you to register with the American Independent Party and
We believe in: help keep America First.
The repeal of the federal income tax on individuals; For further information call (415) 355-3037.
The enactment of tariff laws which will rejuvenate American NICHOLAS W. KUDROVZEFF, State Chairman
Libertarian Party
The goal of the Libertarian Party is liberty. The principles which told what not to do. More and more, the role of people once considered
guide the Party are the same principles which sparked the American public servants has changed to public masters.
Revolution: that people have the rights to life, liberty, and property, and Presiding over this, without a dime's worth of difference between
that government must never violate these rights, them, have been the Democrats and Republicans. Not only are they
Instead, government has mushroomed in size, and its policies have incapable of making, significant change, but they don't want to, since
been disastrous. Regulation, taxation, and government spending have they have become the willing partners of special interests of all kinds
soared ever higher for 50 years. The government has pursued a foreign who seek favor in the halls of city, state, and federal government.
policy of global intervention, supporting foreign rulers with American Because of its principled stands, the Libertarian Party is now the third
lives and money. Our personal freedoms have been constantly eroded, largest political party in America, and growing daily. For a free
At no other time in American history has the average citizen been so information packet, call 1-800-637-1776. .
taxed, regulated, registered, licensed, numbered, told what to do, and TED BROWN, State Chairman
Peace & Freedom Party
Born 20 years ago, out of the struggles for civil rights and against the · social ownership and democratic management of industry and
war in Vietnam, Peace & Freedom Party today has expanded those natural resources
ideals to include: · restore and protect clean air~ water, land and ecosystems
· end the arms race, both nuclear and conventional · free, high-quality comprehensive health care for all people; free
· with~lraw U.S. troops and weapons from other countries birth control upon request, including abortion; no forced
· conversion from a military to a peace-oriented economy sterilizations
· socially useful jobs at union pay levels for all
· guaranteed dignified income for those who cannot work · massive development of free public transportation
· full education and employment rights for the disabled · decent, secure housing affordable for all people
· defend and extend liberties guaranteed in the Bill of Rights, and
· end discrimination basedon race, sex, sexual preference, ag~ or · democratic elections through proportional representation.
disability For more information, call (408) 248-5225 or write to P.O. Box 2325,
· full rights of citizenship for undocumented workers Aptos, CA 95001.
· equal pay for equal work and for Work- of comparable worth
· a 30-hour work week at 40 hours' pay MAUREEN SMITH, State Chair
G88 ~ 78226 ~ 159
Secretary of State
BULK RATE
1230 J STREET U.S.
POSTAGE
SACRAMENTO, CA 95814 PAID
Secretary of
State
L
Important Notice to Voters
Information regarding any measures that might be adopted by the
Legislature on or after August 1, 1988, will be included in
a supplemental ballot pamphlet that will be mailed to you or
will be printed in newspapers throughout California. If a supple-
mental pamphlet is printed, you can also obtain one from your
county elections office or by calling 1-800-345-VOTE.
Compiled by .the Secretary of State
Analyses by the Legislative Analyst
In an effort to reduce election costs, the State Legislature has authorized the Secretary of
State and counties having this capability to mail only one ballot pamphlet to addresses
where more than one voter with the same surname resides. If you wish additional copies,
you may obtain them by calling or writing to your county clerk or registrar of voters.