News Intelligence Analysis
Original published at Arnold Schwartzenegger's official web site.
Arnold's Original Published Plans for California in a PDF File
This is a huge PDF file with 7,679 kb.
Editor's note: The language of Mr. Schwarzenegger's agenda is often misleading, making it appear as though the suggested policies benefit workers, immigrants, and educators, when in fact the policies benefit business interests and the same utilities that defrauded Californians. Portions of Mr. Schwarzenegger's agenda below are colored to draw attention to certain passages that may appear innocuous and even beneficent, but which in reality, the reader may have reason to question as quite the opposite.
ARNOLD'S AGENDA TO BRING CALIFORNIA BACK
The historic election has come about because there is a tremendous disconnect between the people of California and the leaders of California. We the people are doing our job, working hard, raising our families, and paying taxes.
But the politicians are not doing their job. We can do better than that. After all we are California. Always at the forefront of innovation; our farm products feed the world and our technology is second to none.
I am running for governor to lead a movement for change and give California back its future. I stand for fiscally responsible government, rebuilding Californias economic engine, putting the needs of children first, and reforming our political system, so that the public interest comes before special interest.
I want to be the peoples governor. I will work honestly, without fear or favor, to do what is right for all Californians.
- Arnold Schwarzenegger
Restoring California's Competitiveness
Meeting the Needs of California Students
Solving California's Energy Crisis
Action Plan for California's Environment
Solving The Immigration Impasse
The People's Reform Plan
Workers' Compensation Reform
Fixing the Runaway Workers' Compensation System
Restoring California's Economic Competitiveness
California is headed in the wrong direction. Businesses are leaving the state and taking jobs with them. To stop the flow of jobs from California, Arnold plans to unchain business from over taxation and over regulation. Bringing businesses back to California will provide the jobs people need so we can pay for good schools, safer streets and a cleaner environment.
Full Policy: A Failure of Leadership Has Undermined California's Competitiveness
The Gray Davis government has squandered California's position as the leader of the nation's economy. Instead of leading the nation in job creation, business development and economic strength, California now leads in all of the wrong categories: taxes, energy prices, workers' compensation costs, and red tape. The cost of doing business in California is now 32% higher than the national average.
Under Gray Davis, the economic climate has grown so hostile to businesses, employees and working families that without immediate action, more businesses and more jobs are likely to flee the state. Leading corporate executives in a 2002 poll conducted by International Development Associated said that California has the worst business climate of any state in the country.
The message is clear: After four years of Gray Davis politics California has slipped from its position as a leader in the national - and global - economy. This constitutes a failure of leadership of mammoth proportions. Look at the facts:
In a recent California Business Roundtable survey, 51% of businesses surveyed had been offered incentives to relocate to other states and 20% of businesses said they were planning to move or expand out of state.
More than 1.2 million able-bodied Californians cannot find a job currently.
As a result of high costs that are putting the state's economy at risk, Californians are fleeing the state in record numbers. Last year Californians leaving the state exceeded new arrivals by over 108,000.
Arnold's Five Point Plan for Economic Recovery
1. Develop a fair and competitive tax structure that encourages growth and job creation:
California's tax system -- the second most onerous for businesses in the nation - is driving dollars and jobs out of the state. With the exception of property taxes, which are controlled by Proposition 13, just about every tax Sacramento levies ranks among the highest in the nation. The state's 8.8% corporate tax rate is the highest in the West and the top marginal individual rate of 9.3% is among the nation's highest. These excessive taxes have created such a hostile climate for employers that businesses and working families are increasingly likely to go elsewhere.
And under Gray Davis, it just keeps getting worse. Vehicle license fees were increased by $4 billion this year, and Sacramento leaders (including Cruz Bustamante) are now discussing further tax increases - including a repeal of sections of Prop 13 that would raise property taxes by $3 billion.
It is time to stop shaking down California businesses and working families, and restore California's reputation as a good place to do business.
As Governor, I will:
Repeal the Car Tax: In 2003, the vehicle license fee increase cost California residents and businesses more than $4 billion. Car owners in the state have seen their vehicle license fee increase by 300% from last year. The car tax is regressive and hurts all Californians.
Oppose the $3 billion split roll property tax increase proposed by Cruz Bustamante: Lt. Governor Bustamante wants to roll back existing Constitutional protections so that he can collect $3 billion more from property owners. According to a 1992 Governor's Office of Planning and Research study, a similar split roll property tax would have reduced the number of jobs in California by nearly 75,000 jobs and reduced personal income by $11.4 billion. That's exactly the wrong direction to take California's economy.
Stop the 60% Unemployment Insurance Hike on Businesses: California has the easiest eligibility requirements in the country, along with the largest Unemployment Insurance system in the nation. As a result of letting the UI system go unchecked, the cost of insurance for California businesses will increase by 60% in January 2004 - an action that will be directly responsible for killing more jobs in the state. If elected, I will eliminate this hike by taking action to reduce unnecessary costs in this program:
Eliminate the waste, fraud and abuse that is costing honest hard working Californians more than $250 million per year.
Rationalize eligibility requirements to ensure that those who draw on UI have contributed to UI.
Review benefits to make sure that they are in line with the state's needs.
2. Solve California's Energy Cost Crisis:
Government mismanagement has contributed to an energy cost crisis in California, putting the state at a competitive disadvantage and placing a severe drag on our economy. Businesses in California now face energy rates nearly twice as high as businesses face in other Western states. California residents face rates that are 61 percent higher. These high energy rates are an unacceptable burden for people who live and do business in California. And current bureaucratic rules are strangling efforts to prepare California's energy infrastructure to meet the needs of the future.
As Governor, I will:
Implement a 6 Point Energy Plan to reform the current regulatory framework in order to encourage private sector investment and protect ratepayers.
Create a uniform energy strategy to stimulate private investment and align the 13 state energy agencies to support that strategy
Reform the wholesale power market
Assure adequate and diverse fuel for power generation
Encourage cost effective conservation by increasing demand response to changing electricity markets
Enact electricity reserves requirements for power generators
Explore ways to lower the cost of Gray Davis' overpriced power purchase agreements
3. End the Litigation Lottery:
California's runaway litigation system has become a trial lawyer's paradise - encouraging frivolous lawsuits and outrageous settlements that are bleeding money from businesses while driving the cost of virtually everything higher for average consumers.
On Gray Davis's watch, a staggering 1.5 million civil lawsuits are filed every year -- or one lawsuit for every 20 Californians. Frivolous lawsuits cost every man, woman and child in California approximately $1,200 per year in added costs for goods and services.
As Governor, I will:
Reform Section 17200 of the Business and Professional Code.
BPC section 17200, the Unfair Competition Law, allows individual lawyers to sue companies on the behalf of the public for illegal or deceptive business practices. This law is valuable as consumer protection, but lawyers have abused it to extort settlement money from businesses, who pass the cost onto consumers.
As Governor, I will reform the Unfair Competition Law to:
Preserve the power of state, county, and city attorneys to bring lawsuits on behalf of the public
Require that lawyers and plaintiffs represent the public interest, not their private pocketbooks
Require public notice of settlements
Require settlements to be approved by the court
Reform the Employment Litigation System.
I believe in worker protections that keep the playing field level against unscrupulous employers. But lawyers have managed to stretch these laws far beyond the original mandate, leading to an exceedingly hostile climate for businesses. We all agree that the victim of an unjust firing is entitled to back pay and interest, but today's system takes that concept to absurd lengths, with so-called "front pay" damages that force employers to pay plaintiffs future wages for no work. That is unfair and offensive to hard-working Californians. Similarly, while federal law rightfully punishes employers for age discrimination, California's standard is far more lawyer-friendly, with a legal standard based not on "harm," but on whether a younger worker was retained when he was fired.
As Governor, I will:
Propose legislation to limit payment of "front pay" as damages for wrongful termination suits
Propose legislation to require age discrimination plaintiffs to show adverse impact from the employment decision
4. Fix the Runaway Workers' Compensation System.
California's Workers' Compensation system is producing skyrocketing costs for employers and job losses for employees. This year alone Californians are expected to incur $29 billion in cost for workers' compensation, up from just $9.5 billion in 1995. In many cases insurance premiums are 200-250% higher than they were in 1999, and 2-3 times greater than the current national average. And the legislature has done little to address this need. Their solution addresses less than half of the state's $11 billion Workers' Compensation crisis. A comprehensive Workers' Compensation reform package will rein in costly premiums and unnecessary costs, so that more dollars can go towardexpediting benefits to injured works, while retaining and creating new jobs in California.
As Governor, I will:
Work with the legislature to:
Implement objective and enforceable utilization guidelines and establish well defined networks of providers.
Eliminate excessive permanent disability payouts by adopting American Medical Association guidelines for impairment ratings.
Reduce unnecessary litigation and judicial involvement by adopting an effective Independent Medical Review process.
Initiate a comprehensive review of the State Compensation Insurance Fund to assess its current financial condition and take action as necessary.
Appoint a new team to the Division of Workers' Compensation and make cost containment job one.
5. Cut bureaucratic red tape and regulations. In a recent California Business Roundtable survey, 54% of respondents indicated that government was the biggest problem facing California businesses today. Among the top issues cited was the cost of workers' compensation and government regulation/over-regulation. California's costs for workers' compensation and regulations are the highest in the nation.
As Governor, I will:
Review all regulations enacted under Gray Davis to determine if they are consistent with the enacting legislation AND minimize the economic impact to the regulated communities. To start with, I will work with the Building Standards Commission to adopt a sensible "PEX" Plastic Pipe code to reduce the cost of building in California as recommended in the Uniform Plumbing Code. Californians pay as much as $53 million more in building costs as a result of prohibitions on the use of plastic pipes in buildings.
Meeting the Needs of California's Students
We must protect and nurture our children and give them a fair opportunity to succeed. Arnold believes that a strong and prosperous future lies with the children of California. As governor, Arnold will continue to promote opportunities for young people and will work tirelessly to strengthen our educational system.
California is a world-class state and our children deserve world-class schools. But with California's students falling near the bottom on national measurements of learning, too many of our schools are not meeting that standard.
On Gray Davis' watch, our education system has become a one-size-fits-all Sacramento scheme of education regulations, and our children are suffering the consequences. Government bureaucracy and special interest politics are blocking efforts to give children the education they need and deserve by tying up resources, creating cumbersome procedures, and inhibiting innovation and improvement.
In communities across the state, teachers, principals and school boards are doing their best to make their schools better. But Sacramento has been their worst enemy. Today, California's communities must navigate a bureaucratic maze of 90 different state categorical programs, complex funding formulas and special interest politics. The sad result is that local leaders can't take the common sense steps they know would make their schools better. Meanwhile, our children continue to fall further behind their peers across the nation.
I strongly support Proposition 98 and I will protect California's commitment to education funding. And by empowering local communities to make decisions, we can spend that money better.
As Governor, I will:
Make sure California's schools have the tools they need to serve California's students. We will start by:
Letting Schools Make Decisions and Take Responsibility
Investing in High-Quality Teachers
Meeting Special Needs
Building More Schools, More Efficiently
Where We Are
California is a state of firsts, and it is unacceptable that our students rank near the bottom on national achievement measures. Here are the facts:
California's 4th and 8th graders rank near the bottom in reading and mathematics on the National Assessment of Educational Progress (NAEP) tests, known as the "Nation's Report Card." More than 75 percent of 4th and 8th graders in California are not proficient in reading and writing.
Half of California students are not proficient in reading and mathematics when compared to students across the country in norm-referenced testing (Stanford 9 and the California Achievement Test).
On the California Standards Test, the test linked specifically to California academic standards, more than 60 percent of students score below "proficient" - the minimal goal for all California students.
California has an unacceptable achievement gap between white and minority students and between economically disadvantaged students and their more affluent peers. Minority and disadvantaged youth are falling between 20 and 30 points behind their peers, depending on the measurement.
Scores were so poor on the California High School Exit Exam (CHSEE) that the State Board of Education voted to postpone enforcement until 2006. Scores for English-language learners and special education students were worse even than the average.
California is also facing a growing public health epidemic: Obesity among our children, and an increase in the number of children and adolescents developing Type 2 diabetes.
Letting Schools Make Decisions and Take Responsibility
In communities across the state, teachers, principals and local leaders are doing their best to make their schools better. But Sacramento has been their worst enemy in this effort. Today, local school boards must navigate a bureaucratic maze of 90 different state categorical programs, complex funding formulas and special interest politics. This is an outrage.
The sad result is that local leaders can't take the common sense steps they know would make their schools better. Meanwhile, our children continue to fall further behind their peers across the nation.
Where educators can break free of some of the state-controlled regulation and bureaucracy, for example in charter schools, the story has been different. Charter schools with high populations of low-income students are improving student achievement at a faster rate than in traditional public schools.
We must roll back the laws and regulations and cut the bureaucracy that tie the hands of school leaders and limit student achievement.
Spend Money on Students, Not Education Bureaucracy
The California State Education Code is huge and growing. The code is approaching 2,000 pages, and has grown by 25 percent since 1998.
We need to stop hiring people to work in the central office and start investing in the men and women who work with our children - classroom teachers and principals.
Too small a part of every California education dollar gets spent on the teachers and students in our classrooms. Money spent in the bureaucratic maze and for the consultants who get paid to navigate it is not money well spent.
Consolidate Categorical Programs
In 1993, there were 40 categorical programs in the state education budget. In 2003, that number has more than doubled, to More than 90. In 1988-1989, categorical made up 22% of the state education budget; in 2001-2002, it was 31%. The sheer number and complexity of these programs is keeping money and resources from being used efficiently in the local communities where they are needed. Earlier this year, California Department of Education officials admitted they have no idea where the money goes or how the well the programs work.
To create more flexibility and send more of our education funding into classrooms, we need to consolidate the more than 90 categorical state programs into a few flexible grants that help educators meet their specific needs - not special interest concerns. Needs like: well-trained teachers, quality instructional materials, clear performance evaluation, meeting special needs, engaging parents and communities, and adequate learning facilities.
For example, the Legislative Analyst has proposed consolidating 19 categorical programs, totaling $1.8 billion into a single grant to provide services for underperforming students, such as English-language learners and students "at high-risk of dropping out." Programs including remedial summer school and dropout prevention programs would be included in this new grant to schools.
The state categorical programs comprise $12 billion in politician-designed formulas. The result is uneven support of our school districts and spending on numerous state-designated programs, rather than local needs.
Roll Back State Laws and Regulations that Limit Innovation and Create Waste
I will work to repeal prescriptive state laws and rescind the burdensome state regulations that serve special interests and waste education dollars on non-instructional uses.
SB 1419 demonstrates what's wrong with the top-heavy approach to education under Gray Davis, and I will call for its repeal. Passed in 2002, the bill restricts the ability of school and community college districts to contract out for non-educational services like transportation, maintenance, and landscaping.
The Los Angeles Unified School District estimates that it could save $25 million annually by using competitive bidding. And they are not alone. Many districts are spending 10 to 40 percent more than they need to for non-instructional services. I will repeal SB 1419 and free up between $100 and $300 million so our local leaders can invest in teachers and students.
Empower School Principals to Improve Their Schools
California needs to embrace innovative ideas to empower school principals, particularly in schools that need improvement. There are dozens of examples around the country of dynamic principals turning around low-performing schools. Empowering school leaders works for public charter schools and we need to offer that opportunity to all of California's public schools.
I will work to give principals authority for hiring qualified staff, managing their school's money, choosing instructional strategies and materials that work, and setting class schedules.
Solving California's Energy Crisis
Government mismanagement has contributed to an energy cost crisis in California, putting the state at a competitive disadvantage, while placing a severe drag on our economy. Businesses in California now face energy rates nearly twice as high as businesses in other Western states. California residents face rates that are 61 percent higher. These high energy rates are an unacceptable burden for people who live and do business in California. And the current bureaucratic rules are making the crisis worse, instead of better.
The Current Lack of a Clear Energy Policy Is Making the Crisis Worse
Sacramento is still debating between moving between a command and control regulatory structure and a limited regulatory framework. The current lack of a clear policy and regulatory guidance is contributing to the crisis. California cannot attract investments and build the needed energy capacity under the current regulatory framework because potential investors do not know whether they will be allowed to sell electricity in a viable market. Without immediate action, Californians will face energy shortages as soon as 2006, while paying a widening price gap compared to other western states.
The Gray Davis Program: $20 Billion in Added Costs - and No Relief for Energy Consumers
Gray Davis' answer has been to add more bureaucracies and more regulatory confusion. His program has saddled the state with new debt that will cost Californians $2 billion per year in extra energy costs for the next ten years -- while doing nothing to make power more reliable and affordable in the state.
Power Costs (cents/kWh)
Source: US Energy Information Agency, Electric Power Monthly
Cal Rates US Average Western States Average Residential 12.1 8.5 7.5 Commercial 13.3 8.0 6.6 Industrial 8.7 4.9 4.8
Source: California Energy Commission (January 28, 2003 Report) (CEC)
Year Normal Weather Planning Reserves Hot Weather Planning Reserves 2003 22% 16% 2004 16.7% 10.3% 2005 16.3% 9.9% 2006 14.2% 7.9% 2007 12.1% 5.9% 2008 10.2% 4.2%
A Brief History:
California energy consumption has grown over the decades due to rapid economic and population growth. Until the 1970s, California power costs were in line with those of other Western states. However, cost overruns on nuclear plants and mandatory requirements to purchase expensive power caused the state's power rates to mushroom. In response to this, Sacramento looked for a solution in market driven reforms. In 1996, lawmakers passed AB 1890. Passed with unanimous and bipartisan support, AB 1890 focused on deregulating wholesale electricity while maintaining strict control of retail prices. There were significant flaws in the original legislation and subsequent policy responses that led to the energy crisis:
PUC regulation put utilities at risk. These regulations included restrictions against long-term power contracts, a flawed wholesale market, and a lack of reserve requirements.
Deregulated wholesale prices and regulated retail prices forced utilities to operate at significant losses when wholesale prices surged. This caused PG&E's bankruptcy and pushed Southern California Edison to the verge of bankruptcy.
Slow and poor policy response exacerbated financial degradation of utilities - delay in raising rates and discouragement of long-term contracts
What We Need to Do:
Create a uniform state energy strategy to stimulate private investment and align the state's 13 energy bureaucracies to support that strategy.
Policy makers need to take action to cut the risk of future power supply shortages. The state needs an energy policy that links wholesale and retail markets and rationalizes and clarifies the role of state agencies. States like California that project regulatory uncertainty heighten risk for investors and threaten further delays in new power infrastructure investment. A rational and consistent power policy will ultimately result in lower costs and greater reliability for Californians.
As Governor, I will:
Issue a clear energy strategy that focuses on attracting new investments in California. Align the state's 13 energy agencies with the overall state strategy and make certain that they issue clear and consistent guidance to the regulated communities. Also evaluate the California Power Authority to determine if its purpose can be reformed to support a sustainable energy policy.
Affirm the commitment to private power by dismantling the California Power Authority (CPA) and transferring to other agencies those functions (if any) determined to support a sustainable energy policy. Its current mission to build and operate publicly owned power plants is in direct competition with private industry and serves only to divert private investment in electricity generation and transmission away from the state.
Pass legislation that expedites prudency rulings on utility power purchase agreements (PPA) and limits the CPUC's ability to review such contracts after the fact.
Create a working wholesale power market based on the lessons learned from other states and the FERC standard market design. California is one of several states that adopted electricity restructuring. However, only California's restructuring caused severe price hikes and energy shortages. It is time to learn from other successful restructurings enacted by Texas, the New England states, and the Mid-Atlantic states of Pennsylvania, New Jersey and Maryland. In addition, California should also look to the standard market design created by FERC.
As Governor, I will:
Restructure the wholesale market. Merge the functions of the CAISO and former PX (transmission operations, generation dispatch, and wholesale trading) into a single entity.
Make sure there are adequate power reserves to prevent market manipulation.
Make markets work.
Consumers that want stable prices must bear the costs of power reserves, and businesses that don't bear these costs must pay full floating market rate for power.
Assure adequate and diverse fuel for power generation.
Currently, 43% of the state's generating capacity is derived from natural gas. An additional 13% is derived from hydropower, 13% coal, and 16% nuclear. Renewable wind, biomass, and geothermal provide the remaining 16%. Because of our dependency on natural gas fired generators, California needs to increase its investments in transmission to ensure adequate access to natural gas. But in the long-run, power price stability will require diversification away from gas to assure a portfolio of alternative fuel sources for the state.
Liquefied Natural Gas (LNG) provides an opportunity to assure a reliable supply of natural gas. LNG is cryogenically cooled natural gas, turned into a liquid, that is easier to ship. This is a proven technology that will create more natural gas capacity. Current LNG proposed projects for construction in Baja California will facilitate imports from Bolivia, Alaska, and other sources.
As Governor, I will:
Encourage investments in natural gas transmission.
Explore building facilities for safely importing liquefied natural gas.
Encourage cost-effective conservation by increasing demand response to changing electricity markets. One of Governor Davis's great errors was his delay in permitting retail prices of electricity to move with wholesale costs. This failure prevented conservation of power during peak hours. These actions cost the state billions of dollars. No market can function without proper prices. Commercial, industrial, and government consumers should be given the right to opt out of these reserve charges if they allow the state to remotely turn off their power when supply is tight. These specific consumers must use hourly meters that permit remote dispatch. This interruptible load can be included as reserve power.
As Governor, I will:
Link retail prices to wholesale costs for large commercial and industrial users.
Implement real-time pricing for the largest customers. This will not only protect California against shortages, it will also help reduce the cost of doing business for energy-intensive industries, such as manufacturing.
Enact electricity reserves requirements for power generators. Electricity markets are extremely volatile. Electricity reserves provide the critical buffer needed to prevent blackouts and electricity price spikes. In the old regulated model, it was easy for a regulator to demand minimum generation reserves, and it was painless for the regulated utility could provide these reserves. However, in a competitive world, it is less obvious that the market will assure adequate reserves because there is no requirement or incentive to build excess capacity. California must coordinate reserve policy with the other member states and provinces of the Western Electricity Coordinating Council (WECC) to assure reserve adequacy across the entire region. Failure to assure adequate reserves increases the risk of a repeat of the California Energy Crisis.
As Governor, I will:
Require the utilities to meet minimum reserve requirements and impose penalties for those that fail to meet these requirements. The cost of these reserve requirements will be funded through distribution charges. These reserves will assure that our power needs are met even during peak hours and seasons. This will not only encourage more private sector investment, but it will also protect Californians against a return to the chaos of 2001.
Address the burden of overpriced legacy power purchase agreements on the citizens of California. Unfortunately, the new Governor will inherit $43 billion of overpriced electricity power purchase agreements (PPAs). In total these contracts will require a payment of about $4 billion a year for the next 10 years and smaller amounts beyond that time. The prices in these contracts are about twice what one would expect to be the wholesale price of electricity over that time. Therefore these contracts will cost ratepayers about $2 billion a year more for electricity than what would have been the case without the contracts.
As Governor, I will:
Explore options for renegotiating or otherwise reducing the cost of the $43 billion of overpriced electricity power purchase agreements that Gray Davis signed.
Action Plan for California's Environment
California's economic future depends significantly on the quality of our environment. We face serious environmental challenges, which have profound impact on public health and the economy. "Jobs vs. the environment" is a false choice. Overwhelming evidence demonstrates that clean air and water result in a more productive workforce, and a healthier economy, which will contribute to a balanced state budget. Moreover, it is children who suffer disproportionate impacts of environmental toxins. Studies show that children who live near freeways, for example, suffer significantly higher asthma rates and learning disabilities. This administration will protect and restore California's air, water and landscapes so that all the people of California can enjoy the natural beauty that is California.
Full Policy: The Schwarzenegger Administration will protect and restore California's air, water, and landscapes with the following initiatives:
1. Cut Air Pollution Statewide by Up to 50% -- and Restore Independence From Foreign Oil.
Breathing clean and healthy air is a right of all Californians, especially our children, whose health suffers disproportionately when our air is polluted. The future health of California's environment and economy depend on our taking action now.
As Governor I will:
Invest in Hydrogen Highways. Several leading auto manufacturers have stated that they can have tens of thousands of competitively priced hydrogen fuel cell cars on the road by the end of this decade if the fueling infrastructure were is available. I will create a public-private partnership to ensure that before 2010, California has a network of stations in place to allow motorists a real choice of cleaner fuels to put in their tank.
These "Hydrogen Highways" will ensure the availability of hydrogen fueling stations every 20 miles on California's major interstate highways. I will challenge businesses to match the government's investment in these new fueling stations.
Fight for federal dollars for hydrogen fuel development. The federal government plans to spend more than one billion dollars over the next five years to support hydrogen fuel development. I will fight to make sure that a substantial portion of this money is invested in California, and I will seek the maximum benefit from any federal tax incentives.
Expedite clean fuel transportation. Expedite private efforts to build and mass market competitively priced cleaner fuel cars, buses, trucks and generators in California before 2010. I will direct all appropriate state agencies to accelerate use of the cleanest vehicles commercially available to meet the state's transportation needs. I will also encourage municipal, county and federal government agencies in California to do the same.
I will direct the California Energy Commission and California Environmental Protection Agency to ensure that California's fuel marketplace offers producers and consumers a real choice of fuels that are more plentiful, cost-effective and at the same time reduce harmful pollutants and greenhouse gasses. Fuel choices should include compressed natural gas (CNG), liquefied natural gas (LNG), ethanol, hydrogen, electric, low-sulfur and non-petroleum diesel blends.
Get gross-polluting vehicles off the road now. Less than 10 percent of vehicles currently operating on California's roads are contributing contribute close to 50 percent of the California's mobile source air pollution. I will insist on strong enforcement of new federal and state requirements for significant reductions in particulate matter and other emissions from diesel-fueled trucks and buses. I will look to expand innovative market-based mechanisms such as "scrappage" systems so that California can obtain the maximum reduction in tons of emitted pollutants at the lowest possible cost to the state. Under my Administration, the state will lead by example - identifying and permanently retiring those heavily used vehicles that do the greatest harm to our air quality.
Protect California's air quality standards for industrial facilities
I will direct the Air Resources Board to examine the impact of the federal decision to exempt new sources of industrial air pollution from "new source review". Encouraging new investment in California's industrial facilities should result in greater protection of workers and families in adjacent neighborhoods.
Relieve Traffic Congestion
I will seek to implement innovative, market-based and means of reducing congestion on California's highways - including congestion pricing, eliminating congestion-causing toll booths when they can easily be replaced by technology, and similar measures.
2. Protect California's Rivers, Bays, and Coastline
California is identified for its beaches and magnificent coastline more than any other single feature. Tourism contributes $75 billion to California's economy, and employs over 1 million Californians. As Governor, I will protect California's coastline by fighting for a permanent ban on all oil drilling in coastal waters and will urge the federal government to purchase the remaining offshore oil leases as it has in Florida.
Reduce Ocean Pollution. I will take action to protect our coasts from sewage and storm water pollution. I will direct state agencies to incorporate pollution-free coastal development techniques, accelerate the repair of leaking sewer systems, and fully implement existing water quality programs, such as municipal storm water permit programs and Total Maximum Daily Load programs. California must handle and treat its sewage under the requirements of the Clean Water Act to protect our oceans and beaches and the people who use them.
Protect Drinking Water. 22 million Californians rely on the San Francisco Bay Delta for the quality of their drinking water. Sacramento's lack of leadership in supporting state and federal cooperation on Delta water management (CAL-FED) has resulted in Congress not funding the CAL-FED program. As Governor, I will urge the Congress to fully restore CAL-FED funding immediately. With proper leadership and resources, CAL-FED can implement the most effective ways of making the best use of our water supplies and encouraging economic growth in California. This will include increased conservation efforts among both urban and agricultural users, and the use of market-based mechanisms to create environmental gains in streams for fish and economic gains for farmers, municipal and industrial users.
Our streams, rivers, lakes, and bays can be better protected through the use of watershed management. As Governor, I will direct Cal/EPA and the Resources Agency to completely overhaul their recent "California Watershed Management MOU" from a bureaucratic do-nothing document to an action plan that will clean up California's most endangered watersheds now. Emphasis will be placed on practical strategies to finance these initiatives using state or private revolving loan funds and seeking California's fair share of federal funding, and making sure that existing permitting fees are targeted toward resource management so that they benefit the environment--not bureaucrats.
Protect the Integrity of our Coasts. I will protect the integrity of the California Coastal Commission, which for decades has served to protect our valuable coastal resources. I will not allow the type of political interference in Coastal Commission decisions that has characterized the current Davis Administration, where special favors were granted in return for campaign contributions, even while the Administration was pledging to protect the coast.
Keep Tahoe Blue. Lake Tahoe is one of California's most precious assets. Since 1970, population in the Tahoe Basin has more than doubled, but our environmental protections have not kept pace. The Environmental Improvement Plan for Lake Tahoe implemented in 1998 by California, Nevada, federal agencies, local governments, Indian tribes and community groups to improve Lake Tahoe's clarity has not been updated for five years. As Governor, I will take action to update the plan to accelerate improvement of Tahoe's waters, trails and wildlife, in order to "Keep Tahoe Blue."
3. Solve California's Electrical Energy Crisis.
An unreliable energy system discourages businesses from locating or even remaining in California, resulting in lost jobs and state revenues, I will take action to prevent brownouts or blackouts, such as those experienced during the Davis Administration in California and this year on the East Coast. Almost one third of California's entire in-state generation base is over 40 years old. I will immediately lay the groundwork to expand the state's power supplies, with special emphasis on clean, renewable sources, through the following steps:
Promote Solar and Renewables. Increase California's use of solar power in cooperation with developers, the Building Industry Association, labor, community organizations, and bi-partisan state legislators to provide incentives for new homes built in California to include solar photovoltaics (PV). The goal of this program would be that, starting in 2005, 50% of new homes would include solar PV. As Governor I will also support the extension of tax credits for businesses and commercial establishments which install on-grid solar photovoltaic and other renewable generation systems.
Increase the Reliability of the Grid. I will work to improve the reliability of the electric grid serving the western United States to prevent the type of blackouts which plagued the eastern United States and Canada during the summer of 2003. I will call for a summit to bring together the state's utilities, contractors, and California Independent System Operator (CAISO) with the Federal government and other states and regional energy interests to strengthen the grid reliability. Investments should be consistent with the CAISO's annual transmission plan and should evaluate demand, transmission, and generation alternatives.
Save Energy Through Green Buildings
A host of case studies demonstrate that retrofitting commercial buildings with energy-saving lighting and other technologies is repaid in five years or less based on electricity savings. Incentives will be established, including a Green Building Bank, using private financing and targeted public loan guarantees, to swiftly retrofit as many buildings as possible, reducing the need for new power plants, saving money for businesses and taxpayers alike, and preserving air quality. The Green Building Bank will also help finance the addition of solar PV on large flat rooftops, repaid over time by the value of the new energy generated.
Increase Renewable Energy. As Governor, I will fully endorse California's Renewable Portfolio Standard (RPS), which requires that 20% of the state's total power supplies be generated from renewable sources by 2017. My Administration will also direct the California Energy Commission to define incentives and implement strategies that will target achievement of the 20% standard a full seven years early - - by 2010 - - and set the state on course to derive 33% of its power from renewable sources by 2020.
4. Protect and Restore California's Parks and Open Spaces
Many California families vacation within driving distance, often camping at state parks and beaches. State parks, beaches and trails also generate significant economic activity and tax revenue as a result of fees and other spending in adjacent areas. There is general agreement that park maintenance has been allowed to deteriorate. Improve Our Parks, With Special Emphasis on Access for Seniors and the Disabled.
I will order the Resources Agency to develop a comprehensive facility assessment and improvement plan for state parks, beaches, and coastal access, with emphasis placed on investments that enhance local economies and access for California's seniors and the disabled.
Much of the initial investment for these improvements can come from already approved bond measures, but plans will also be developed to find additional ways to support this important initiative through careful public and private investment.
Protect the Sierra Nevada. A decade of hard work by a broad variety of stakeholders resulted in the Sierra Nevada Framework, a policy document that has been widely hailed as a model of forest ecosystem resource protection. As Governor, I will direct all relevant state agencies to comply fully with the Framework and call on the federal government to honor its pledge to abide by the policies set forth in this unprecedented compact.
The Sierra Nevada Mountain Range is one of the state's crown jewels. Yet, unlike many of California's other natural treasures, it has no conservancy. As Governor I will propose establishment of a Sierra Nevada Mountains Conservancy.
5. Restore Our Urban Environments.
There is currently no effective, widely used mechanism for identifying vacant or underutilized sites in urban areas to evaluate their potential for infill redevelopment. The result is fiscally unsustainable sprawl, traffic congestion on commuter roadways, air pollution, pressure to consume scarce infrastructure resources, and loss of valuable open space. Working with local officials, my Administration will develop an Infill Incentives Package to help local governments deal with the jobs/housing imbalance throughout the State and to spur smarter development by providing a mechanism for planners to identify and evaluate redevelopment of blighted and underutilized sites, allowing cities to accommodate mixed use, compact development and urban infill growth while curtailing urban sprawl.
Address Brownfield Sites. In addition, my Administration will direct appropriate agencies to draft a plan to rapidly complete the cleanup of brownfield sites, especially the thousands of locations with leaking underground petroleum storage tanks, enabling these sites to be developed for productive commercial uses.
Improve Mass Transit. In many locales, strategic improvements or additions to bus, light rail, and subway lines can result in much greater use of existing mass transit, reducing highway congestion and air pollution. As Governor, I will ask the federal government to restore to California its fair share of gasoline tax money generated in the state, along with other federal funds, to assist with critical mass transit improvements.
Focus on Children's Health. Children suffer disproportionate impacts of dirty air, water, and dilapidated urban parks. Cal/EPA and the state Parks Department will be directed to submit an inventory of projects that will immediately improve air quality along freeways adjacent to residential areas, improve aging plumbing in inner-city neighborhoods (that now cause contamination of drinking water for families), and improve parks in neighborhoods with less than two acres of parks per 1,000 residents. Agencies managing recently approved water and park bond funds will be directed to give priorities to these projects. Special emphasis will be placed on projects that measurably reduce childhood asthma by improving both indoor and outdoor air quality.
6. Protect California's Environment Through Tough Enforcement of Existing Laws
Strict law enforcement is vital to assure environmental protection, prevent polluters from achieving unfair competitive advantage against complying competitors, send a message of public values, and establish conditions conducive to creativity and participation in voluntary initiatives.
My Administration will focus on keeping underlying statutes and regulations simple; simple rules are easiest to follow and comply with; unnecessarily complex rules are hard to comply with, hard to enforce, and encourage evasion. Particular attention will be given to better use of information technologies with strict, clear and rapid penalties for intentional or negligent misstatements or omissions
Government should be held accountable for environmental protection to the same extent as private parties and should be held to the same enforcement standards. To greatest possible extent, environmental enforcement settlements should be used to provide direct environmental improvement through supervised projects, rather than having all penalties go to government treasuries.
Solving the Immigration Impasse
Immigration has been the engine of California's economic prosperity and the richness of our culture. Almost 9 million Californians were born in a foreign country and nearly 40% of all households in our state speak a second language in addition to English. We have a proud tradition of being one of the most ethnically diverse places in the world.
But it is important to ensure that new immigrants enter California the right way, so that they can get on a path toward fully participating, and contributing, to the California economy. And we should make sure that we do so without undermining important national security protections.
There are approximately 8 million undocumented immigrants in the United States; 2.5 million reside in California. The costs of providing social services to these individuals and incarcerating illegal immigrants is staggering - easily exceeding $3 billion a year.
Clearly, the federal government must do a much better job of enforcing the security of our borders, especially in the aftermath of 9/11. Washington must also provide more money to border states like California which ultimately shoulder the burden and the costs associated with illegal immigration. And Washington should pursue a responsible immigration policy that offers undocumented immigrants a path to permanent legal status.
As someone who came to the United States thirty-five years ago looking for opportunity, I understand the challenges immigrants face and I will work hard to elevate the debate on this important issue.
Fair Reimbursement for Illegal Immigration Costs
Immigration is a national responsibility and California should not be left to shoulder the massive burden of providing public services to illegal immigrants.
Last year, California only received $220 million to offset the costs of keeping illegal immigrants in jail. This is insufficient, and as governor of California, I will work with Congress, President Bush, and the Governors of other border states to correct this situation.
As Governor I will:
Organize a coalition of states most impacted by immigration to lobby Congress. This coalition will include Texas, New York, New Mexico, Arizona, Florida, Illinois, in addition to California. Together, we represent 183 electoral votes. If we speak with a unified voice, Republicans and Democrats in Washington will listen.
Seek reimbursement from Washington for health care and education costs associated with illegal immigration.
Putting Immigrants on a Path toward Citizenship.
It is important to ensure that new immigrants enter California the right way, so that they can get on a path toward fully participating, and contributing, to the California economy. And we should make sure that we do so without undermining important national security protections.
As Governor, I will:
Aggressively lobby Washington to set a more responsible policy for addressing the undocumented immigrants currently in the United States.
Deportation is not an option. We need to find a way to legitimize these individuals and get them on a path toward legal residency status in the United States.
Let me be clear: I do not support an amnesty program. The last time we tried that in the late 80s it didn't work, and there's little reason to think it would work now.
I am encouraged by the approach laid out by Senator McCain to provide a clear path for legitimizing undocumented immigrants who currently live their lives in the shadows. McCain's bill S 1461 - The Border Security and Immigration Act of 2003
A new H-4A visa for immigrants seeking temporary employment with important protections to ensure that immigrant workers are not exploited and that Californians are not displaced by unscrupulous employers;
A new H-4B visa for undocumented immigrants who entered the country before August 2003, have held a job since that time, and do not have a criminal record.
The opportunity for holders of these new visas to gain legal permanent residency status.
" Senator McCain's plan contains the key principles that should guide any proposal to solve the immigration impasse:
U.S. Employer Benefits: A market driven employment process and an easy, effective means to confirm employment eligibility;
U.S. Worker Protections: Initial availability of jobs only to U.S. workers and periodic review to ensure that U.S. workers are not displaced;
Foreign Worker Protections: Applicability of all U.S. labor standards and portability so that workers may change jobs without jeopardizing their immigration status.
Punish Immigrant Smugglers and Human Traffickers
Human traffickers and smugglers exploit and endanger immigrants as they violate our criminal and immigration laws. As Governor, I will crack down hard on those who engage in illegal human smuggling:
Traffickers and smugglers should be prosecuted as organized crime syndicates. If their schemes result in death of immigrants, they should be eligible for the death penalty.
The federal Trafficking Victims Protection Act of 2001 establishes a special visa, the T-visa, for immigrants who assist in investigations. As governor, I will order state law enforcement officials to work with their federal counterparts to prioritize and process applications for T-visas expeditiously.
Promote English and Advance Citizenship
Immigrants who are not proficient in English pay a price: they earn 17% less than immigrants of similar backgrounds, experience, and education who are proficient in English.
Likewise, when English is the primary language taught in schools, immigrant children show marked improvement. In June 1998, California's voters gave a 61% landslide to public policy entrepreneur Ron Unz's Proposition 227 outlawing bilingual education. By the end of the following school year, immigrant 2nd graders in those California schools that were already in compliance with Prop. 227 were reading at the 35th percentile, compared to the 19th percentile for those in schools that were still bilingual.
As Californians bounded in diversity, we share a common language and culture regardless of our backgrounds.
As Governor, I will:
Work to improve education for all Californians and especially to help new immigrants learn English so they could participate and prosper as Californians.
Restore meaning to citizenship, so that all Americans, new and old, share the same commitment to tolerance, equality, and compassion.
Work with the federal government to provide expedited consideration of citizenship applications to immigrants whocomplete advanced civic education and English immersion programs.
SB 60 - Driver's Licenses for Illegal Immigrants
I am an immigrant. I waited for ten years to get my American citizenship. And I know first-hand how immigrants who come to this country and obey the laws have struggled to achieve their dreams.
But we should not invite fraud or undermine law enforcement. Attorney General Bill Lockyer, the California Sheriff's Association, and the federal government have all expressed security concerns over this measure, and in a time of heightened national security, we should not undermine our nation's immigration laws.
Unfortunately, Governor Davis decided to put his political interests above the people's interest. He signed SB 60 into law even though he vetoed similar legislation before, citing security concerns. But SB 60 actually contains fewer protections than the bill Davis vetoed a year ago.
Under SB 60, there is simply no way to verify that a drivers' license applicant is actually who he says he is or whether he is a criminal or fugitive from justice.
As Governor I will:
Work to repeal SB 60 as quickly as possible
The People's Reform Plan
Arnold believes Sacramento is too often controlled by special interest groups and the people's business is ignored. Arnold believes this form of government is not true to the ideals of this nation and that it is not fair to the people of California.
California's Elected Leaders Have Squandered the Public Trust
There is a wide gulf dividing the people and their elected leaders. I want to bring the government back to the people.
California's patchwork of sunshine laws have many gaps and are sprinkled with exceptions - and the people are in the dark about how special interest money is driving spending decisions in Sacramento.
At the end of this year's legislative session, nearly 400 bills were amended in the last week of the session, including dozens that were "gutted and amended," where the entire measure was replaced by a new proposal. According to the Sacramento Bee, legislators openly admit that they hold up legislation for strategic reasons until the last minute, when "legislative policy committees often schedule meetings on a moment's notice, sometimes late at night, with little chance for public input."
Special interests and candidates are brazenly flouting campaign financing laws. The Fair Political Practices Commission is alleging over 300 campaign disclosure violations from gambling interests, for example.
Our system of checks and balances is in tatters. A partisan reapportionment process has resulted in districts that protect incumbents from competition. Without competition, politicians are insulated from voters and cater instead to special interests.
The budget season is also the fundraising season. California legislators collected $18 million during the first six months of 2003. This June, when the state faced a $38.2 billion state budget deficit, lawmakers held at least 66 fund-raising events -- as many as 10 fundraisers a day.
WHAT WE NEED TO DO
1. Open the Government Up to Sunshine
Californians should have a constitutional right to open government.
The records of government are currently regulated by, among others, the California Public Records Act, the Legislative Open Records Act, the Bagley-Keene Open Meeting Act, and the Ralph M. Brown Act. These are essential laws to protect the public's right to know what their government is up to. But they are full of exceptions that leave the public in the dark.
I endorse State Constitutional Amendment (SCA) 1, sponsored by the California First Amendment Coalition and the California Newspaper Publishers Association and supported by prominent groups such as the League of Women Voters and Common Cause. SCA 1 would make access to government documents and open meetings a civil right.
I have one change to SCA 1 - I would eliminate the special protection from public scrutiny of proceedings, records, and deliberations of "the Legislature, the Members of the Legislature, and its employees, committees, and caucuses." There is no reason why the Legislature should be shielded from the antiseptic of sunshine.
As Governor, I will:
Propose a constitutional amendment to guarantee Californians a constitutional right to information concerning the conduct of the people's business, including the Executive branch and the Legislature
Not sign any bill that has not received a full and public hearing in policy committees of both houses of the Legislature
2. Ban Fundraising During the Budget Process
It is no coincidence that the budget season is also the political fundraising season. It is inherently suspect for politicians to be taking money from lobbyists while they are spending the people's money. This system also creates little incentive for Sacramento to pass a budget in a timely manner. That is why 28 other states have passed fundraising blackout periods.
As Governor, I will:
Propose a ban on all fundraising by the legislature and the Governor from the day I propose a budget until I sign a budget certified by the State Controller to be in balance, with a 90-day exception before elections
3. Disclose All Campaign Contributions Immediately and Close Campaign Financing and Lobbying Loopholes.
Campaigns take contributions year round, and influence peddling happens everyday. But currently campaigns only have to disclose contributions over $1,000 within 24 hours during the 90-day period before an election. Every nickel should be reported immediately, with the donor clearly identified - not shielded from scrutiny by a phony committee name.
Californians have spoken numerous times, and the message is clear. Money should not unduly influence politics. Campaign financing should be transparent and subject to clear limits. And influence peddling should stop. Unfortunately, Sacramento has found loopholes to evade the people's will and avoid the restrictions on campaign financing and lobbying. Campaigns can use old accounts or independent expenditure committees to evade campaign financing limits imposed by Proposition 34.
Willful violation of campaign financing laws is a form of public corruption and should be a felony punishable by one year in prison. Currently, violations are misdemeanors subject only to fines.
As Governor, I will:
Propose legislation to require disclosure within 24 hours of all campaign contributions, of whatever amount and whenever they are made, using simple electronic systems that reduce current burdens to treasurers
Propose legislation to punish willful and knowing violations of the campaign finance laws as a felony. Examples:
(1) intentional and knowing coordination between an independent expenditure committee and a candidate committee to evade contribution limits,
(2) intentional and knowing money laundering to hide the true source of a contribution.
Reporting violations and other minor violations should not be felonies.
Propose a prohibition on the use of information from campaign contribution reports to solicit contributions, for commercial purposes, or to harass contributors who give to a politician's opponents.
4. Ensure Fair Redistricting and Competitive Elections
The purpose of the reapportionment process is to ensure that every voter is represented. This should be done in a fair manner so no political party has an advantage. Electoral districts should be drawn for the benefit of the voters, not politicians. Politicians should not control the pen to draw districts that shield themselves against competition. Reapportionment instead should be entrusted to an independent panel to ensure fairness.
As Governor, I will:
Propose a constitutional amendment to have three retired appellate judges selected by lottery to serve as Special Masters for reapportioning electoral districts for the state. The reapportionment plan becomes law when adopted by the Special Masters
Oppose any attempt to weaken existing state term limits law, as passed by the voters in 1990.
Fixing the Runaway Workers' Compensation System
Index to Find Referenced Quotes
"I will take steps to help injured workers..."
"The only people who are sure to benefit...are the unscrupulous..."
"Excessive utilization of medical care"
"Over-utilization of medical services"
"California workers have too great an incidence of 'partial permanent disability'"
"California insurers are suffering huge losses, and some have even gone out of business."
California is losing jobs and businesses as a result of runaway workers' compensation costs. As of the 1999 policy year (the latest year for which there is accurate data), California sustained over $80 million in workers' compensation costs for every 100,000 workers, compared to a national average of $35 million, $27 million in Arizona, $57 million in Nevada, $38 million in Colorado and $40 million in Oregon .
Runaway Workers' Compensation Costs are Driving Jobs out of California. Insurers and employers who self-insure in California are being hit hard by runaway costs. Medical costs in California increased over 120% from 1997 to 2002. California insurers are suffering huge losses, and some have even gone out of business. Self-insured employers are facing $9 billion in projected workers' compensation costs in 2003, and they are hurting. For example, Costco recently reported that 70% of its workers' compensation costs are incurred in California, even though only 33% of its employees work here. Also Safeway says that its typical workers' compensation claim is four times higher in California than it is in Arizona and seven times higher than those filed in Texas. Its typical workers' compensation claim in California last year cost $52,000 compared to $7,000 in Texas.
The crisis is even worse than it appears. Market competition for workers' compensation coverage has suffered due to under-pricing by the State Compensation Insurance Fund (SCIF), which now provides 50% of workers' compensation insurance coverage. The end result is likely to be higher prices and worse efficiency as private insurers are driven out of the market.
Despite the high costs, injured workers are not getting the care they need. A recent survey by the California Division of Workers' Compensation found that more than nearly 25% of respondents were dissatisfied with the medical care provided for their work injury.
The only people who are sure to benefit from this costly broken system are the unscrupulous medical providers, lawyers and un-entitled claimants who have learned to game the system at the expense of California's employees and employers. In the end, workers' families lose, especially the millions whose jobs may be in jeopardy due to the rising cost burden on employers.
Unfortunately, legislation recently passed by the Legislature will not solve the problem. Among other deficiencies, the legislation doesn't even address the single largest cost problem, that of permanent partial disability determination. And by the Davis administration's own admission, the legislation will produce savings far short of the amount needed just to bring California down to the national average, much less the even-lower costs in most neighboring states. We must do better.
I will take steps to help injured workers get the care they need, while ending the incentives and loopholes that encourage unscrupulous lawyers and providers to game the system. My work will continue until California's workers' compensation costs have been reduced to at least the national average.
The Workers' Compensation Crisis: By the Numbers
Costs continue to skyrocket.
Total costs of the California workers' compensation system more than doubled from $9.5 billion in 1995 to approximately $25 billion in 2002.
In 2003, California employers are expected to pay out approximately $29 billion in self-insurance costs or premiums, in many cases 200-250% greater than what they paid in 1999.
On average, California's workers' compensation costs are 2-3 times the national average for similar risks.
California's Position is Startlingly Uncompetitive Compared to Other States:
WC per $100 of Payroll California Arizona Oregon Nevada Restaurants $7.40 $1.73 $2.92 $2.88 Machine Shops $9.00 $2.63 $4.78 $6.12 Clerical $1.45 $ .24 $ .29 $ .53 Retail Stores $8.00 $1.35 $1.95 $2.88
The Current System Invites Fraud and Abuse
The California's workers' compensation system encourages runaway costs:
Excessive utilization of medical care. Incurred costs for medical claims in California run 75% higher than average - but California's unit costs are generally lower than the typical state.
Over-utilization of medical services, not higher prices, is driving the workers' compensation medical cost crisis. The median number of medical visits per claim in California is more than 70% greater than other states, including:
49% more visits to physicians 105% more visits to chiropractors " Implement Independent Review. Give injured workers access to Independent Medical Review (IMR) panels staffed by experienced and inde 39% more visits to physical therapists
Meanwhile, over-utilization of medical services unnecessarily extends the duration and cost of temporary disability claims for lost wages.
Excessive indemnity (i.e., wage loss) costs. California sees a far greater frequency of partial permanent disability claims than other states. For the 1999 policy year, California reported 1,221 claims for permanent partial disability per 100,000 workers, versus a national average of only 434 and much lower frequency in each of Arizona (282), Nevada (701), Colorado (556) and Oregon (710). And even though total workers' compensation claims actually declined in 2000, permanent disability claims rose 40% in the year alone, resulting in over $500 million of additional costs.
A System Tailor-Made for Abuse. California's highly subjective system for determining disability ratings means that similar claims often result in wildly different outcomes - particularly compared with other states. To make matters worse, the system is set up to encourage lawyers to make their own physician referrals, which invites unnecessary treatments and expansive ratings. In abusive cases, the treating physician - who may be over-prescribing treatment - can largely determine the disability rating. In other words, the doctor controls the checkbook that pays for his own services. In that environment, major permanent disability claims have more than doubled from 1995 to 2000.
Other Contributing Factors|
Excessive litigation. From 1992 - 1999, 30% of open and closed indemnity claims in California ended up in litigation, versus 14% nationally.
Risky state intervention. As discussed above, SCIF has been under-pricing coverage and presently provides 50% of all coverage, putting it at serious financial risk, potentially adding to the state's financial burden, and driving other insurers out of the market.
Other significant contributors. Out of date fee schedules, outpatient surgical center loopholes, self-serving physician referrals, excessive vocational rehabilitation expenditures, and other provisions collectively contribute to the problem in a meaningful way but by themselves do not constitute the core problems.
Five Step Plan to Rein in the Runaway Workers' Compensation System
Gain control over abusive claims. Policymakers must
take action now to end abusive and expensive overuse of medical
services. Recent actions to address the problem are a step in
the right direction, and now we need to build on that work, and
take the lawyers out of the business of influencing medical treatment
As Governor, I will. . .
Impose Evidence-Based Standards. We should follow the lead of other states that have successfully implemented objective and enforceable medical utilization guidelines that are based on the best medical evidence, including a scientifically tested "medical necessity" standard for care. This will reduce the likelihood of widely diverging medical care recommendations for similar diagnoses. I will ensure all guidelines fulfill the requirement imposed by Article 14, Section 4 of the California Constitution that all reasonable medical services that are necessary to cure and relieve a work-related injury be provided.
Partner with Private Sector. Revise and expand existing legislation to incorporate tools and techniques employed by the private sector to make and keep health care effective and affordable.
Provide incentives for employers to contract with private health plans offering broad and well-established provider networks;
Expand the range of provider alternatives offered to employees, including utilization of an employee's pre-existing primary care physician;
Ensure network care from inception through claim conclusion, and;
Provide dispute resolution through independent medical review (IMR) panels accompanied by rights of appeal.
Reduce excessive disability costs. Currently, disability ratings are not tied to accepted standards of medical evidence, and this invites gaming by lawyers. Reducing the likelihood of wide ranging and inconsistent outcomes will reduce the incentive to litigate as attorneys and un-entitled applicants realize that litigation is unlikely to materially alter the outcome. We can do this by ensuring that disability ratings are based on uniform standards of medical evidence.
As Governor, I will
Give injured workers' access to an efficient dispute resolution process so that temporary disability claims are resolved fast and fairly.
Hold down rising costs by implementing the American Medical Association (AMA) guidelines for rating disabilities.
Eliminate Unnecessary Costs Due to Litigation, Fraud, and Abuse. Frivolous litigation is driving workers' compensation costs higher while denying injured workers' access to consistent, efficient, and fair adjudication of disputes. When judges and lawyers decide treatment and disability levels - workers and businesses lose. Recent legislation does not go nearly far enough toward addressing costly fraud and abuse in the system. For example, a dispute resolution procedure that relies upon vague guidelines and fuzzy language is a trial lawyer's dream, and will provide no help with reducing fraudulent claims.
As Governor, I will
Implement Independent Review. Give injured workers access to Independent Medical Review (IMR) panels staffed by experienced and independent physicians who can use evidence based standards to resolve disputes fast and fairly. Permit appeals regarding medical services, peer review, service utilization and quality assurance to a medical director under the Division of Workers' Compensation and further judicial review with respect to other issues.
Re-invigorate the Division of Workers' Compensation. I will provide new management and a new mission of keeping the costs low for Californians. This means, among other steps:
Tracking claims and payments data
Rooting out abusive providers
Monitoring IMR panels to ensure fair and efficient adjudications of claims disputes
Reevaluate the State Compensation Insurance Fund (SCIF)
As Governor, I will
Conduct independent audit, claims, and actuarial reviews of SCIF to determine the extent of the problem in order to propose more detailed resolutions
[Support AB [1357 (Matthews)] which realign board of directors and allows for exempt senior management positions.]
Address Other Significant Factors. Unlike the recent legislation, I will work to comprehensively address all significant drivers behind the workers' compensation crisis, including medical fee schedules, vocational rehabilitation expenditures, potential cost increases arising from the recent legislation, and more.
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