CalChamber Takes Positions on Upcoming Initiatives

2016ElectionThe California Chamber of Commerce Board of Directors recently took positions on the following initiatives proposed for the November 2016 ballot.

Drug Pricing

Oppose: California Drug Price Relief Act

If approved by voters, the California Drug Price Relief Act would prohibit the state and all programs where any state entity is the ultimate payer, from agreeing to pay more for a prescription drug than the lowest price paid by the U.S. Department of Veterans Affairs (USDVA). (8/11/16 update: The measure will appear as Proposition 61 on the November 2016 ballot.)

The CalChamber Board voted to oppose this measure because it will increase what most Californians must pay for health care premiums and out-of-pocket health care costs by shifting the cost of prescription drugs from government purchasers to private payers, including employers.

The initiative ignores why the USDVA is able to negotiate lower drug prices and instead uses the discounts to establish an artificial market cap for one group of purchasers. The approach will simply shift costs to other payers in the system, the Board said.

Status: The initiative is eligible for the November ballot.

The initiative is sponsored by Michael Weinstein, president of the AIDS Healthcare Foundation.

Minimum Wage/Sick Leave

Oppose: Minimum Wage. Increases and Future Adjustments. Additional Paid Sick Leave Mandate

The CalChamber Board voted to oppose two proposed initiatives that would increase the minimum wage. In opposing the measures, the Board pointed out that increasing the minimum wage will add to the cumulative costs already experienced by California employers, including high personal income taxes, high sales tax rates, medical costs, workers’ compensation costs, litigation costs, energy costs, and water costs/restrictions.

• One of the measures proposes to increase the minimum wage by $1 a year starting on January 1, 2017, until the minimum wage reaches $15 an hour in 2021.

Starting in 2022, the minimum wage will adjust each year according to the Consumer Price Index (CPI), or a successor index, rounded to the nearest cent. Each increase would take effect on the following January 1.

According to the CalChamber Board, placing the minimum wage on auto-pilot by tying it to inflation creates a significant risk of the minimum wage going up even when the economy is in a recession. Even though the economy may be experiencing high inflation, revenues could be down for both private and public sector employers, creating significant cost pressures.

In Governor Edmund G. Brown Jr.’s proposed 2016–17 budget, he indicated that a $15 minimum wage would have a major impact on the state. According to the budget, the General Fund “would face major increased costs, estimated at more than $4 billion annually by 2021. Based on current projections, such a change would return the state budget to annual deficits—even assuming a continued economic expansion.”

Status: The measure is pending signature verification by the Secretary of State. A random sample on March 1 projected supporters would have just 79% of the required number of signatures.

The initiative is sponsored by the State Council of Service Employees (SEIU)-United Healthcare Workers.

• The second minimum wage proposal calls for increasing the minimum wage at a rate that depends on the size of the employer and adding more paid sick days for employees, which is an especially significant burden on small employers.

The initiative also specifically includes In-Home Supportive Services employees under the paid sick leave mandate.

In opposing the measure, the Board noted that in addition to concerns over cumulative costs, employers still are struggling with implementing the current paid sick leave mandate adopted with AB 1522 (2014). The Board also expressed concerns over increasing state costs under the measure.

Status: Proponents have until July 5 to submit no fewer than 365,880 signatures to place the measure on the November ballot. The initiative has reached the 25% signature threshold.

The initiative is sponsored by the California State Council of Service Employees.

Legislature Transparency

Support: California Legislature Transparency Act

The initiative aims to ensure legislative proceedings are conducted fairly and openly, and enable the public to observe and share what is happening in the Legislature so citizens may more fully participate in the political process. (8/11/16 update: The initiative will appear as Proposition 54 on the November 2016 ballot.)

The measure makes the following changes to legislative rules and responsibilities:

• Requires the Legislature to ensure audiovisual recording of all public proceedings are publicly accessible on the Internet within 24 hours and archived for at least 20 years thereafter.

• Requires the cost of complying with the initiative to be funded within the Legislature’s existing budget.

• Allows the recording of public proceedings to be used for any legitimate purpose.

• Prohibits the Legislature from voting on a bill until it has been published online in its final form for at least 72 hours. This prohibition includes exceptions for emergencies, such as natural disasters.

The CalChamber Board supports the California Legislature Transparency Act because requiring the Legislature to post each bill online, in its final form, for at least 72 hours before voting on it would give the legislators time to review the legislation, hear from their constituents, and be held accountable for the laws they pass.

In addition, requiring the Legislature to post online a complete video record of every legislative meeting that is supposed to be open to the public would allow citizens to watch legislative proceedings and keep informed.

By ensuring the video records would be kept online, freely available for public viewing, for at least 20 years, the act will provide a valuable resource for the public, the press, and the academic community.

Status: Supporters have gathered 25% of the 585,407 signatures required for an initiative constitutional amendment. The deadline for submitting signatures is June 13. The initiative is sponsored by Charles T. Munger Jr.