GSBAA Opposes AB 1406 (Gordon) Insurance: bail licenses
GSBAA opposes AB 1406 because it will cost bail sureties and their bail agents $30.00 per bond posted with the money going into a Bail Investigation and Prosecution Fund. This bill is authored and supported by the Department of Insurance (“DOI”) which regulates the bail industry.
According to the DOI, the bail agent would not be able to recoup this charge from his or her customers. Most bail agencies are small “mom & pop” businesses and this will be a tremendous hardship for them to pay. For example, if a mom & pop bail agency posts 1,000 bail bonds in a year they will have to pay $30,000.00 in charges per year without being able to recoup this cost from their customers. We are already in tough economic times and this cost will drive many small bail agencies into bankruptcy.
The DOI claims that this bill is needed because of an increase in the number and severity of complaints about bail agents in the last 5 years. However, despite our request, they have failed to provide data supporting this allegation. This violates Proposition 26 which only exempts reasonable regulatory costs necessitated by “issuing licenses and permits, performing investigations, inspections, and audits, enforcing agricultural marketing orders, and the administrative enforcement and adjudication thereof.” (Article 13A §3(b)(3))
It is important to remember that the State and DOI have the burden to prove by a preponderance of the evidence that this charge is reasonable:
The State bears the burden of proving by a preponderance of the evidence that a levy, charge, or other exaction is not a tax, that the amount is no more than necessary to cover the reasonable costs of the governmental activity, and that the manner in which those costs are allocated to a payor bear a fair or reasonable relationship to the payor’s burdens on, or benefits received from, the governmental activity.(Article 13A §3(d))
Furthermore, for years the bail industry has requested that the DOI work with the industry to revamp and clarify bail laws and regulations. Several drafts of proposed amendments have circulated over the years, but the DOI has failed to take action on those amendments. The lack of clarity in bail laws and regulations is one reason why a Modesto jury recently acquitted bail bondsman Aleo John Pontillo of all criminal charges against him after a five month trial and an investigation that went on for several years and costs millions of dollars. Mr. Pontillo may not have been acquitted if the DOI worked with us to clarify what constitutes “good cause” for a pre-forfeiture surrender under Penal Code §1300.
Also, the State of California already receives sufficient money from the bail industry in the form of a premium tax which is paid on the gross premium of all bail bonds posted in California. If more money is really needed for DOI regulatory enforcement, which we doubt, the funds should be allocated from this source.
In closing, setting up a Bail Investigation and Prosecution Fund is pointless if the bail laws and regulations are unclear and unenforceable. This bill should be defeated so that the DOI can do their due diligence in working with the bail industry on crafting reasonable clarifications and amendments to bail laws and regulations that will better serve the business interests of the bail industry and the regulatory interests of the DOI.
Should you have any questions please contact our legislative advocate, Kathryn Lynch, at (916) 443-0202 or firstname.lastname@example.org.
John Bench, President
Golden State Bail Agents Association