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Workers' Comp Bill Clears Major Hurdle

Schwarzenegger, Nunez compromise on rate regulation, setting the stage for a Friday vote.

April 14, 2004|Marc Lifsher and Joe Mathews | Times Staff Writers

SACRAMENTO — Gov. Arnold Schwarzenegger and Assembly Speaker Fabian Nunez reached agreement Tuesday on the last remaining major obstacle to overhauling California's $22-billion system for aiding injured workers.

Barring any last-minute snags, the Schwarzenegger- Nunez deal greatly increases the likelihood that the Democratic-controlled Legislature will pass a much-anticipated workers' compensation insurance reform bill, probably on Friday. The measure, which would then be signed by the Republican governor and could take effect immediately, aims to save employers billions of dollars on their workers' comp premiums.

Lowering California workers' comp costs -- among the nation's highest -- is seen as a vital first step in Schwarzenegger's effort to improve the state's business climate and boost job creation, although some analysts and business leaders say the bill still falls short of providing the large savings that many employers are seeking. And some economists and business leaders say the state still must lower other high costs -- housing, energy, rents and taxes -- that they blame for driving businesses and jobs out of California.

Agreement on the last major obstacle in the workers' comp bill came Tuesday after Nunez (D-Los Angeles) said he had given up on a Democratic demand to put controls on workers' comp insurance rates.

Instead, the speaker agreed to a one-year study of the impact of the workers' comp reforms to make sure that savings are passed along to employers, not pocketed by insurance companies.

"We found a compromise. I think it's perhaps the last piece of the equation," Nunez said shortly after meeting for 90 minutes with Schwarzenegger in the speaker's office Tuesday afternoon.

Sources close to the governor's office confirmed that "there won't be any rate regulation" wording in the final workers' compensation bill.

Labor unions, the Democratic support group that pushed the hardest for insurance company rate regulation, were disappointed. "I can't fall in love with that," said Barry Broad, a lobbyist for the International Brotherhood of Teamsters.

Nevertheless, Nunez said that his Democratic partner in negotiations with the governor, Senate President Pro Tem John Burton of San Francisco, would sign off on the proposal, opening the way for key votes in a legislative conference committee today and floor votes in the Senate and Assembly on Friday. The governor could sign the bill into law that same day.

The bill will take effect immediately if it receives a vote of two-thirds of the members of the Senate and Assembly. If it gets a simple majority, it will take effect in 90 days.

The conference committee meeting is scheduled for 11 a.m. today, Burton's office confirmed. Only a few minor details needed to be hammered out late Tuesday night.

Only an unlikely major revolt by Democratic backbenchers, joining with conservative Republicans, could derail passage of the measure, now that Nunez and Burton have sealed an agreement with Schwarzenegger, legislative experts said. That aside, the two Democratic leaders should have little trouble mustering the simple-majority votes needed to send a bill to the governor.

The governor is "optimistic that the conference committee will report out a bill, and the Legislature will pass a bill that he can sign," said Rob Stutzman, Schwarzenegger's communications director. He cautioned, however, that the governor was still committed to a "two-track strategy" on workers' comp. Schwarzenegger will submit almost 1 million signatures to qualify a workers' comp reform initiative for the November ballot if he doesn't get a bill he likes by Friday.

"If something goes wrong, I want to be 100% backed up," Schwarzenegger said earlier Tuesday at an initiative signature-harvesting event at a Sacramento Costco store. But "I hope we can go the legislative route."

An upbeat Schwarzenegger emphasized his commitment to getting changes in workers' comp by either route.

"We are very close, very, very close" to reaching agreement on details of the bill, he said at the Costco event.

Some lawmakers greeted with relief rumors of a compromise that might free them from being pounded by labor unions, lawyers, doctors, business owners and other lobbying groups with a stake in the contentious workers' comp system.

"When you begin to hear the kind of leaks we are hearing, you begin to recognize that the governor has made a deal," said Assemblyman Dave Cox (R-Fair Oaks).

The governor apparently has been working very hard to guarantee that legislative talks don't get sidetracked. The talks came after Schwarzenegger and legislative leaders reached agreement April 2 on broad outlines of a reform measure, after which the governor took a week off to vacation with his family in Hawaii. As his staff and Democratic staff slogged through the complicated business of drafting hundreds of pages of legal jargon, the governor this week had been meeting almost constantly with Republican legislators, Burton and Nunez said.

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