THIS WEEK IN
Prepared by Norwood & Associates
Garamendi Running
for Governor - Again
Insurance Commissioner John Garamendi announced his candidacy for governor in a hastily assembled press conference yesterday. This attempt marks the third try for Mr. Garamendi. After serving as the state's first elected Insurance Commissioner, Mr. Garamendi took a shot at the post but lost the Democratic primary to Treasurer Kathleen Brown, the daughter and sister of former governors. Mr. Garamendi then marked time in the Clinton administration for a few years before returning to California and winning back the Insurance Commissioner's office - only to run for governor after holding the post a mere seven months.
The press conference was held in the park surrounding the Capitol. The audience consisted of eleven news crews, a gaggle of curious tourists, Department of Insurance employees, and a few insurance lobbyists. A Garamendi for Governor banner formed the backdrop, but looked like it had been recycled from a previous campaign. Mr. Garamendi's campaign manager had trouble finding enough people to hold up the banner, at one point even asking some lobbyists if they'd pitch in to help.
Mr. Garamendi's stump speech sounded remarkably similar to the campaign themes used by embattled Governor Gray Davis in 1998. Then Lieutenant Governor Davis argued he would be the best choice for governor because of his vast political experience, including holding every statewide office over the years. Mr. Garamendi is similarly positioning himself as the establishment, or "insider" candidate.
He pointed to the Capitol dome
during his announcement and proudly stated he'd spent 16 years in that
building. He also said he was the only
candidate who had been tested in so many political offices. He rattled off all
the committees he'd chaired during that time, cited all the bills of great
import he'd authored, and claimed credit for passing balanced state budgets as
part of a budget conference committee.
He even cited his experience in the
Mr. Garamendi did not refer to Governor Davis or the recall in his announcement. Instead he made oblique references such as "I cannot stand idly by while our government falls apart." Reporters, however, wouldn't let the Commissioner skate on the issue of whether or not he supported the recall. They noted the only other prominent Democrat running, Lieutenant Governor Cruz Bustamante, emphatically said he was opposed to the recall, but was only running to provide an insurance policy for Democrats in the event Governor Davis is recalled. Reporters repeatedly asked Mr. Garamendi if he supported the recall, and he refused to answer the question. When asked if he would vote to recall Governor Davis, Mr. Garamendi again said he would not answer that question.
In contrast, Mr. Bustamante said he wanted voters to vote "NO" on whether Governor Davis should be recalled, but then vote for him as the replacement candidate in the event Davis is recalled. Mr. Garamendi's reticence to answer the question was apparently to keep up the façade that the Democratic Party was unified in its opposition to the recall, and that Democratic candidates on the ballot were only there in case the Governor was recalled.
Democrats May
Rally Behind Bustamante
With private polls showing Governor Davis' "viability" plummeting, two prominent Democrats broke ranks with their party leadership and jumped onto the ballot. Lieutenant Governor Cruz Bustamante and Insurance Commissioner John Garamendi are now running for Governor. Mr. Bustamante still opposes the recall and is campaigning against it. Mr. Garamendi, on the other hand, said, "we are where we are" and is out stumping for governor.
With party unity shattered, Senate Democrats and the California Democratic Congressional delegation are now debating whether they should get behind an alternative candidate as an insurance policy in case Governor Davis is toast. Its rumored the party may actually endorse Lieutenant Governor Cruz Bustamante.
Bustamante brings several advantages to the table. He most likely will enjoy wide support among Latinos angered over the Governor's soft kill of Proposition 187 regarding public services for undocumented immigrants and his veto of a bill allowing drivers' licenses for undocumented immigrants. Mr. Bustamante was a vocal critic of the Governor's handling of these issues.
More importantly, Mr. Bustamante has the ability to raise significant funds from Indian gambling interests for what will be an expensive six-week campaign. Mr. Bustamante's campaign manager also represents the Indian gambling industry. Mr. Bustamante said he hoped to raise $10 - $15 million for the campaign. Some reports indicate several tribes are considering as much as $10 million in contributions through independent expenditure committees that are not subject to contribution limits. Governor Davis angered the gambling interests when he suggested earlier in the year they should pay a larger portion of their $5 billion in gambling winnings to close the budget deficit. That particular trial balloon never got off the ground.
For his part, Mr. Garamendi said he would have no problem raising funds for the campaign. He again refused to take money from the insurance industry. Mr. Garamendi, however, does not have a large donor base. A large portion of his contributions are from law firms. That, combined with his high name identification, was enough to carry the day in the insurance commissioner's race, but may not cut it for governor's race. In addition, he may not get much help from big labor, which has come out supporting Governor Davis. In the end, it remains doubtful Mr. Garamendi will be able to match Mr. Bustamante in fundraising and is considered the weaker of the two candidates.
A Superior Court judge this week ruled the State Fund could continue with a lawsuit that would define the extent of the Insurance Commissioner's regulatory authority over the State Fund. The Court, however, refused to grant a preliminary injunction stopping the Commissioner from exercising control over the State Fund.
Legislation enacted last year, AB 1985 (Calderon), extends risk based capital standards to the State Fund that are applicable to other insurers. If an insurer does not meet the RBC standards, the Insurance Commissioner can exert further regulatory control. State Fund argues it is financially sound and healthy even if it may not meet the RBC standards for a short period of time. They also argue that RBC standards do not apply to them, despite AB 1985, because they are an entity created by the State Constitution and other statutes.
The State Fund argument was apparently bolstered with the passage of the state budget. The budget bill essentially reduced the General Fund by shifting $18 million for the Uninsured Employers Program to the State Fund. Similarly, it also shifted $12 million for the Subsequent Injuries Program to the State Fund. It seems that if State Fund is really an insurer subject to the Insurance Commissioner's control, these budget shifts by the Legislature would be illegal. However, if the budget shifts are appropriate, then State Fund is just like any other constitutionally created entity subject to control by the Legislature. The workers' compensation insurance conference committee is reportedly considering repealing the application of RBC standards to the State Fund, which might finally resolve the issue.
Grassroots Effort
Begins as Workers' Compensation Reforms Debated
All legislation to reform
Committee Forms to
Consider Universal Health Insurance Coverage
The effort
to provide universal health insurance or some sort of subsidized care to all
workers' is gaining traction in
A conference committee has been appointed to consider the various health insurance bills. The conference committee will meet after August 18 and the Senate and Assembly will vote on the conference report before September 12 - right in the heat of the recall campaign. The bills to be considered are:
· SB 2 (Speier & Burton): Dubbed "pay or play", this bill would require employers to provide health insurance coverage for their employees or contribute to a state fund that would provide coverage to uninsured workers.
· AB 1527 (Frommer): Similar to SB 2's "pay or play" requirements, but exempts small employers with 50 or fewer employees.
· AB 1528 (Cohn): Requires employers to pay 80 percent of the health care costs for their employees and dependents.
The Members of the Conference Committee are:
· Senator John Burton, D-San Francisco
· Senator Jackie Speier, D-Hillsborough
·
Senator Sam Aanestad,
·
Assembly Member Dario Frommer, D-
· Assembly Member Rebecca Cohn, D-Saratoga
· Assembly Member Bob Pacheco, R-Walnut
* * *
© Copyright 2003 by Norwood & Associates