Killing bill in legislature adds to health crisis in state.

Two months ago I discussed the severe hospital crisis being experienced in California. As indicated then, one of the main culprits is AB 394, an extremely costly and restrictive bill signed into law on October 10, 1999. This bill, authored by then Assemblywoman, now Senator Sheila Kuehl, mandates minimum nurse-to-patient ratios. The ratios became effective, by regulation, on January 1, 2004. Unfortunately, when the ratios were determined, there was no provision for the inability of many hospitals to meet them due to the current severe shortage of nurses in California.

At the time I discussed this problem, the Valley Industry and Commerce Association ("VICA") began a letter and telephone campaign strongly urging our legislators to recognize the devastating effects of AB 394 and suggesting that the ratios either be increased or that implementation be delayed to alleviate the serious impact that had begun.

When the ratios became effective, those that applied to the "general medical and surgical" category were 1:6. Lurking behind the scenes however was a provision requiring a decrease in the ratio to 1:5 slated to begin on January 1, 2005. On February 20, 2004, Assemblymember Robert Pacheco (City of Industry) introduced AB 2963 into the Assembly. This bill would require, by January 1, 2005, the State Department of Health Services to evaluate the regulations that became effective on January 1, 2004 relating to nurse-to-patient ratios in the medical/surgical care units of hospitals in California. The bill would prohibit the department from imposing the 1:5 nurse-to-patient ratio requirement upon the hospitals unless the department is able to demonstrate that all of the following conditions are satisfied: (1) There is a sufficient supply of nurses available to meet the 1:5 nurse-to-patient ratio requirement with no loss of bed availability; (2) There are measurable improvements to patient care as a result of the 1:5 ratio requirement; and, (3) The cost projected in moving from a 1:6 to a 1:5 ratio does not exceed projected revenues.

In supporting the bill, the California Healthcare Association stated that since January 1, 2004, virtually all hospitals have been out of compliance with the regulations because: (1) They do not have and cannot find sufficient nurses to meet the requirement (2) Patient census in hospital emergency departments is unpredictable, and (3) Excluding all behavioral healthcare professionals from the ratios has made it impossible to staff the medical/surgical units in a manner that best meets the needs of behavioral health patients.

AB 2963 was referred to the Assembly Committee on Health on March 24, 2004. Four Valley legislators are members of the committee. On April 20, 2004, a vote was taken to determine whether to approve the bill and pass it on to the Committee on Appropriations. The results of the vote were: Ayes 5, Noes 10. The bill failed. The votes of our Valley legislators were: Ayes: Richman, Noes, Frommer, Koretz, Montanez.

The following are the "job/business killer bills" I have chosen to profile this month:

* AB 94: This bill would allow property taxes to be increased to cover the costs of certain public service employee pension programs approved by the voters prior to July 1, 1978. Although Proposition 13 limits property taxes to 1 percent of assessed property value, an exception was provided to allow increases ("extraordinary property tax rates") for payments under those pension programs. In 1985, the Legislature capped local extraordinary property tax rates to rates imposed during 1983. Pension costs have significantly increased since 1983 and the increased costs must now be funded from the general fund. AB 94 removes the cap established in 1985 for 26 local agencies thereby allowing these agencies to increase property taxes to cover the additional pension costs, effectively making these additional costs impervious to budget cuts. If the legislature is forced to reduce the pension payments to balance the general fund budget, as required by the recent passage of Proposition 58, this bill would enable the shortfall to be offset by an increase in property taxes.

Status: Passed Assembly and Senate, vetoed by governor on October 11, 2003, consideration of Governor's veto now pending.

Valley legislators voting for bill: Assembly, Frommer, Koretz, Levine, Montanez, Pavley; Senate, Alarcon, Kuehl, Scott.

Valley legislators voting against bill: Assembly, Richman, Strickland; Senate, Knight, Margett, McClintock.

* SB 179: This bill provides that any person or entity who enters into a labor contract for construction, farm labor, garment, janitorial or security guard services when the person or entity knows or "should know" that the contract does not provide funds sufficient to allow the labor contractor to comply with all applicable laws or regulations governing the services to be provided under the contract, is subject to liability and specified civil penalties. The bill would not apply to persons or entities that have executed certain collective bargaining agreements, or to labor or services to be performed on one's personal residence. This bill potentially adds significant costs by making it necessary to hire an attorney to draft contracts each time a business uses a specialty contractor to assure qualification for the rebuttable presumption of non-violation. The bill would provide a disincentive to hiring these specialty contractors resulting in a loss of jobs.

Status: Passed Senate and Assembly, approved by governor on October 12, 2003.

Valley Legislators voting for bill: Senate, Alarcon (author), Kuehl; Assembly, Frommer, Koretz, Levine, Montanez, Pavley.

Valley legislators voting against bill: Senate, Knight, Margett, McClintock; Assembly, Richman, Strickland.

Gregory N. Lippe, CPA, is managing partner of the Woodland Hills-based CPA firm of Lever, Lippe, Hellie & Russell LLP (LLHR) and a director of the Valley Industry and Commerce Association (VICA).