Election Analysis and 2013 California Issues

The coming 2013-14 legislative session will present several new opportunities and a few new challenges.  It is first worth considering as background the new term limits, as well as a few propositions on the November ballot that could change some of the political dynamics going forward.

Proposition 24 (2012): Change in Term Limits

Proposition 24 was passed by the voters in June of this year. This proposition reduces the term of a legislator to 12 years, but allows the legislator to serve the 12 years in one house. Therefore, the incoming class of Assembly Members can now serve their entire term, 12 years, in the Assembly. This law does not apply to incumbents, therefore will not affect the incoming Senators, all of whom are incumbents. Incumbent legislators can serve up to 14 years, but only serve 6 years in the Assembly and 8 years in the Senate.

The supporters of Proposition 24 argued that there was not enough time in each house for a legislator to feel secure enough, or gain enough experience, to make balanced policy decisions.  The additional time in a single house will hopefully allow a member to understand an issue and provide more expertise in policy making, without have to worry about running for the Senate to keep their elected position. The hope is that this will allow them to gain leadership experience to make difficult, but critical decisions for California. Combined with the stated goal of Prop 14 (top-two runoff) to moderate legislative candidates, many policy makers are hopeful that the legislature will become a more moderate, business friendly environment.

It is worth noting that it is likely this incoming class of freshman legislators will elect one of their own as the next Speaker and he/she could hold that position for the next ten years.

November 2012 Election results

PASSED: Proposition 30: Governor Brown’s Proposed Revenue Enhancements (Tax increase)

Governor Brown already planned for the passage of Prop 30 in the budget signed over the summer. Trigger cuts could have gone into effect if the Proposition was not passed. Specifically the proposition will:

  • Increases personal income tax on annual earnings over $250,000 for seven years.
  • Increases sales and use tax by ¼ cent for four years.
  • Allocates temporary tax revenues 89% to K–12 schools and 11% to community colleges.
  • Bars use of funds for administrative costs, but provides local school governing boards’ discretion to decide, in open meetings and subject to annual audit, how funds are to be spent.
  • Guarantees funding for public safety services realigned from state to local governments.

FAILED: Proposition 32: Paycheck Protection, Campaign Finance Reform

While Proposition 32 was defeated, it is important to know the effects should it have passed.  It is likely we will see other campaign reform measures on future ballots. Prop 32 would have:

  • Ban both corporate and union contributions to state and local candidates
  • Ban contributions by government contractors to the politicians who control contracts awarded to them
  • Ban automatic deductions by corporations, unions, and government of employees’ wages to be used for politics.

If proposition like this one were to pass, independent expenditures and party affiliated campaigns will play a key role in elections.  Companies like Hospira will need to contribute and participate in these campaigns, as appropriate.

Composition of the 2013-14 Legislature

The new legislative session will begin December 3rd. Please attached calendar for relevant dates.  While the new session technically begins, it is likely the legislators will not be back in town until January, unless the Governor calls a specials session (see below) and the legislative leadership calls the members back in December.

For the first time since 1933, the Senate democrats captured a 2/3rds majority in the Senate. This would allow them to pass a tax or override a veto. However, there are a few, moderate democrats that have enabled the business community to hold back bills detrimental to the business climate in California.  While these moderate democrats may be able to hold back taxes, the increased number of democrats will make it difficult for business to prevent the passage of harmful legislation. In past years, the moderate dems have kept bad bills from getting to 21 votes, often holding at 19 or 20.  This will not be an easy task for the business community now that there are at least 26-28 dems.  Much of their support for candidates in the coming year will be focused on moderate democrats.

That said, two members of the Senate won their election for Congress. This will leave 2 seats vacant in January, therefore the dems will start with 26. In addition a republican seat was vacated in the Fall, leaving that seat vacant until the election in mid-January.

The Assembly is also at the brink of 2/3rds. They are currently leading in the election results in 54 races, giving them the 2/3rds. In one of the seats, there is only a 218 vote difference between the candidates with several thousand provisional ballots left to could. It will be a few days before the outcome is determined.

Changes in committee chairs. The new legislative session will bring a new set of chairs to key Assembly committees, some have already been named. Many of the chairs are likely to remain the same for the Senate. However, the Senate Business and Professions Committee chair will change if the current chair, Senator Curren Price is elected to the LA City Council in June. Sen. Ed Hernandez will remain the chair of Senate Health for as long as he can hold that position.

Assembly Health: Dr. Richard Pan has been appointed chair for the incoming session. He was a physician at UC Davis. He has said he plans to focus more of the policy decision making and committee analysis on well researched studies and information. We will need to make sure he understands the important role district hospitals play as a safety net service, along with designated public hospitals.

Assembly Business and Professions: Assembly Member Richard Gordon has been named chair of Business and Professions. He will be new to the committee.

Official Committee Membership. While the Speaker and Pro Tem have named a few of the chairs, they usually do not name the committee members until late in February. The exception this year may be Health and Business and Professions Committee. It is likely a special session will be called that will focus on health care. Therefore, these committees may be named early in January to hear the related health legislation.

General Legislative Issues

Budget. The passage of Prop 30 and Prop 39 gives a little breathing room to the policymakers in the coming year. However the LAO still anticipates a deficit of a few billion dollars. This could put health related reimbursements at risk.

Health care reform/special session:  In order to transition the Medicaid population to the exchange in time for the 2014 start date of the ACA, there will be a health care special session dedicated for legislation that is needed to enable the implementation of the ACA.  It will likely be called in December and business will be conducted in the 1st quarter of the year.  Special sessions are used to expedite the implementation date of a piece of legislation. Unless the legislation has an urgency clause, which requires a 2/3rds vote, if it is passed in the special session it will be effective 91 days after the close of the special session.

While the focus of the session will be the ACA, it is likely many other health related pieces of legislation will be introduced during the special session and the regular session.

Workforce.  With the implementation of the ACA, it is anticipated that access to care will be an issue. This will be the reasoning for several pieces of legislation that will fund workforce programs AND scope expansion. For example, I have already heard that the pharmacists want to provide more care, such as vaccinations.

Hospital Fee. The CHA Board is continuing to move forward with legislation to extend the hospital fee. It is anticipated the feds lower their match. This could create additional contributing hospitals and offset the balance, as well as jeopardize the grant to district hospitals.

2012 ELECTION RESULTS