News Column

Labor, Business to Test Democratic Supermajorities

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After Democrats captured two-thirds majorities in both houses of the Legislature in last fall's election, observers speculated on what the real-world implications might be.

Since the state constitution requires a two-thirds vote to pass tax increases, most of that speculation focused on taxes.

But there will be no attempt to muster a two-thirds vote for a general tax increase this year. Bills that sought to raise taxes on oil, cigarettes, sugary drinks and commercial property have already been killed in committees.

This week, facing a Friday deadline to move bills out of their house of origin, lawmakers will meet in all-day sessions every day, deciding the fate of hundreds of bills.

Will there be a bill requiring a two-thirds majority that will pass with only Democratic votes?

If there is, it could be a bill that organized labor has made a top priority -- one targeting a company that unions revile. Art Pulaski, executive secretary-treasurer of the California Labor Federation, calls it a bill to close "the Wal-Mart loophole" in federal health care reform.

The measure, Assembly Bill 880, would require large companies -- those with more than 500 employees -- to reimburse the state if any of their low-wage workers make so little that they seek and qualify for Medi-Cal coverage. A fee would be imposed for each worker who goes on Medi-Cal.

The bill was approved Friday by the Assembly Appropriations Committee on a party-line vote. Because it would require the payment of fees, it would need a two-thirds majority vote for passage on the Assembly floor.

Labor groups see the bill as a test for the Democratic members they helped elect. Business groups, led by the California Retailers Association, are pulling out all the stops to prevent a two-thirds majority from coalescing around the bill.

"It's hand-to-hand combat right now," said Bill Dombrowski, president and CEO of the association. "Labor has made it their No. 1 issue."

Kenneth Burt, political director of the California Federation of Teachers, said he considers AB 880 to be a test of the Democrats' supermajority.

"It is a test whether politicians who ask for our help at election time share our values," he said. "Conservatives thought we'd test the two-thirds majority on taxes, but this bill is so much bigger."

Supporters believe the bill is necessary to ensure that large employers of low-wage workers meet their obligations under federal health care reform. The Affordable Care Act requires that employers with 50 or more full-time workers pay a $2,000 penalty for each worker if at least one receives government subsidies to purchase a health policy through the state health insurance purchasing exchange.

But the federal law imposes no penalties on employers of any size that have part-time workers who make less than 133 percent of poverty wages ($15,282 for an individual) and receive no employer-provided health benefits but turn to taxpayer-funded Medi-Cal for health insurance.

Pulaski calls the bill "the taxpayer protection act" because it would prevent large employers from "shifting their costs onto taxpayers." The federal law, he argues, places responsibilities on individuals, the government and employers. He believes some large companies, including Wal-Mart, will not uphold their end of the bargain.

Dombowski said there are 1,100 to 1,200 businesses in California with more than 500 workers, he but acknowledged many would not be affected by the bill because they provide employee health insurance benefits.

Retailers, he said, by necessity have a high percentage of part-time workers and therefore would be singled out by the California-only penalty that AB 880 proposes.

"We have to do our staffing based on customer traffic," he said. "We need the flexibility of part-time work just to make our business model work."

He estimates the penalties would amount to a tax of $6,000 to $15,000 for each worker enrolled in Medi-Cal.

"It's chilling," he said. "I don't know how you would handle that."

As for Wal-Mart, Dombrowski said, "They provide minimum health care plans according to their business plan, just like any other retailer."

Dombrowski said retail work provides important entry-level jobs, often in low-income communities.

A fact sheet distributed by his organization says the bill "penalizes and discourages companies that provide jobs to people who are entering the workforce, coming off welfare assistance programs or unemployed."

As this week's vote approaches, both sides are enlisting allies.

The coalition against the bill includes every major employer group, including the California Chamber of Commerce, California Grocers Association, California Restaurant Association, Lodging Industry Association, Western Growers Association and California Trucking Association.

Last week, the liberal online political organization Courage Campaign joined the battle in support of the bill. On Friday, it sent an email blast to members with the subject line, "Seriously, Wal-Mart?"

The email urges members to contact their Assembly representative and ask that they vote for AB 880.

"Companies like Wal-Mart and Darden Restaurants, which owns Olive Garden and Red Lobster, are already cutting hours and eliminating benefits so they can make taxpayers pick up the cost of health care for their employees," it says.

Officials of the restaurant chain last year said they were considering hiring more workers part-time instead of full-time as a tactic for dealing with the Affordable Care Act. They have since backed away from that position and said no current full-time workers will have their hours reduced.

In addition to asking for Democrats' support, labor is trying to put the heat on moderate Republicans. The Labor Federation has printed a political mailer directed to voters in the district of Assemblyman Brian Nestande, a Republican who hopes to challenge freshman Democratic Congressman Raul Ruiz in a highly competitive Palm Springs area district next fall.

Nestande voted against the bill as a member of the Health Committee.

"Brian Nestande wants you to pay" Wal-Mart's health care costs, the mailer says, urging recipients to tell him "to close the Wal-Mart loophole."

Dombrowski said the labor backers use only slogans like that to argue for the bill.

"We don't deal in sound bites like the unions," he said. "We deal with facts."

He said the proposal comes at a time when retailers and other businesses are doing their best to help usher in federal health care reform.

"We are trying to implement the ACA," he said.

Because of a series of special elections that began after two sitting state senators were elected to the U.S. House of Representatives last fall, the size of the Democrats' majorities in the Legislature has fluctuated this year.

At the moment, there are just 53 Democrats in the Assembly, one short of a two-thirds majority in the 80-member body. But Lorena Gonzalez, of San Diego, who won a special election last week, will be sworn in Tuesday, restoring the supermajority.

Rob Lapsley, president of the California Business Roundtable, said it is still unknown what the effects of the supermajority will be, but believes most of the true tests will come next year. AB 880 could be an early indicator.

"Everyone is still trying to figure out how the dynamics of the supermajorities will work," he said. "This will be a fair test."

Steve Boilard, director of the Center for California Studies at CSU Sacramento, said the media and others likely have made too much of the supermajority status.

"There is much variation of policy preferences and values within the two parties -- not just between the two parties," he said.

In addition, he noted that Gov. Jerry Brown could always veto a two-thirds majority bill passed by the Legislature. Brown has taken no public position on AB 880.

"For me, the bottom line is that gaining a two-thirds supermajority is important symbolically, but it doesn't trump the larger issues of diverse perspectives within the party and differing agendas between the Legislature and the governor," he said.

Dombrowski noted that the Democratic leadership in the Legislature has sought to downplay the significance of the supermajorities by taking actions such as killing all the bills last week that proposed general tax increases.

"They say they want to be moderate," he said, "but we will find out."


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