Businesses Contemplate Options to Fight SB 2

By Loretta Macktal, Executive Assistant to the Vice President, Government Relations

Capitol Update, Sept. 26, 2003 Share this on FacebookTweet thisEmail this to a friend

Widespread opposition to a new employer funded mandate on healthcare may prompt action to stop SB 2 (John Burton, D-San Francisco) from becoming law. Urging a veto by Governor Davis is the obvious first effort, but if that fails and he signs the bill, the options include legal challenges against the bill and/or a referendum of the bill to the voters. Here's a snapshot of what could be done:

A challenge in federal court would be based on conflicts with ERISA, a federal law governing employee benefit plans that may preempt California legislation in this area. A second suit in state court could allege violation of Proposition 13 requirements for a 2/3 vote on any new taxes. The proponents of SB 2 believe the “pay” option in the "play or pay" structure of SB 2 is a “fee” under California law and thus required only the majority vote it received from the legislature. Legal challenges could cost many thousands of dollars.

A more time-sensitive choice is a referendum. All or part of the bill could be referred. A limitation of this option is that new “taxes” can't be the subject of a referendum. Supporters of SB 2 will have a hard time arguing that the “pay” option is a really a tax and therefore not subject to a referendum without conflicting with their position that Proposition 13 voting requirements have not been violated.

It's important to make a referendum decision soon because about 600,000 signatures (to be safe) need to be gathered within 90 days after the bill is signed. Because of timeline limitations, the earliest SB 2 could realistically be on the ballot would be November 2004. A campaign of this magnitude, with labor in opposition to the referendum, would require $10 to 15 million, and the contributions would be reportable. Prior to undertaking this effort, public opinion research and polling would need to be done to test messages and ensure a good shot at success.

For more information on how you can help get SB 2 vetoed and other plans to challenge SB 2, contact Dorothy Rothrock at 498-3319.

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