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How Will the CA Bail Industry Fund a No-SB10 PR Campaign? Asking for a Friend

Governor Brown signed SB10 on 8/28/18. Even though SB10 is a fragile, ill-advised, unfunded, industry killing, bureaucracy birthing, unconstitutional piece of crap, it is still set to become operative 10/1/19. That is, until the Referendum to overturn SB10 is certified. Once this is done SB10 will lay dormant until the next statewide election to be held on 11/3/2020

It should not be news to you the projected cost of the PR effort to get Californians to vote No to SB10 is a staggering 10-15 million dollars. The cost of the signature campaign to get a referendum on the ballot to overturn SB10 is a drop in the bucket by comparison. How will the millions needed for the PR campaign be raised? Will a hat be passed among bail agents and surety companies? Can we ask George Soros to underwrite the costs? Or, is something more drastic and unpalatable needed?

Like most sureties and large retailers operating in California, American Surety Company contributed our fair share of the cost to launch what would be a successful signature campaign to place a No-SB10 referendum on the ballot. A respectable portion of ASC’s contribution came from our bail agent partners. I personally made the calls and I was not shy about asking for meaningful contributions. I was not asking for $500, I was asking for $5000. “You want $5000!” I was asked. Yes, I asked each of them, “if someone kidnapped your business today, stopped all your revenue and ended your livelihood would you be willing to pay $5000 to get it back?” Because, I said, “SB10 is putting you out of business!” Most recognized the real threat and agreed to contribute. As we all know, their contribution was not in vain. The first step of the referendum process is projected to be approved for the 2020 ballot before the end of this month.

Next will come the second step of the process, promoting the No-SB10 referendum. If California’s bail industry is going to amass enough cash to fund a meaningful No-SB10 PR campaign in mid-2020, we must start planning now. Those of us participating in the costs of the PR campaign can expect to pay as much as five times the amount paid for the signature campaign. It’s a daunting task, I know.

In addition to funding needed for the PR campaign, surety companies are or should be weighing the risk of continuing to write new business in a state where a law has been passed that eliminates the bail market. There is a recent example of this occurring and that is New Jersey. New Jersey passed legislation in 2014 which implemented a statewide pretrial release program that went into effect 1/1/2016. During that two-year period there was an assumption among the bail industry, state legislators would come to the realization New Jersey could not afford to create a statewide bureaucracy that would cost hundreds of millions of dollars and the law would be revised. Many surety companies, including American Surety Company allowed their agents to continue writing bail up to 12/31/15. The legislature did not amend the law and it went into effect as planned on 1/1/16. The impact on the New Jersey bail industry was immediate and devastating. Unlike California, New Jersey does not have a referendum option to overturn this law. The bail industry is effectively dead in New Jersey.

In the wake of the new law, bail agents soon shut their doors. They could no longer afford to pay rent, retain staff to manage clients or hire recovery agents to mitigate losses. When loss reserves were depleted, surety companies stepped in and paid losses in the millions during the years that followed.

As my friend Charlie White from Tennessee is known to say, “I only say all that to say this”, with California having passed a bill that puts bail agents out of business, how are surety companies planning to ensure sufficient funds will be available to cover their share of the PR campaign? How will they simultaneously manage the risk of continuing to write business in a state where the governor and legislators have put a date certain on the end to commercial bail writers? Our company has delivered a plan to our agent partners on what must be done collectively to ensure we do our utmost to overturn a really bad law before it goes into effect. If you’re not writing through American Surety Company, what is your surety’s plan? Asking for a friend.

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