Accord Near on Workers’ Comp Deal

Californians began shelling out their first $11.7 million per day in higher taxes and thousands of government employees went without their paychecks Monday as Gov. Pete Wilson and the Legislature groped to put a budget package in place.

By late Monday, gubernatorial press secretary Bill Livingstone reported that “the pieces of a deal” on injured workers’ compensation--a necessary ingredient of any budget package--had been tentatively agreed to by Gov. Pete Wilson and representatives of the business community, organized labor and employees’ attorneys. “They’re pretty close,” he said.

California today enters the 16th day of the new fiscal year without a budget even though taxpayers have started paying the newly enacted higher sales and liquor taxes to finance the spending program.

The Legislature sent Wilson a $56.4-billion budget nearly a month ago, but Wilson has refused to sign it until the Legislature approves an additional $2.3-billion in tax increases needed to balance the spending program. The governor also has insisted upon some “reform” of the workers’ compensation program, which is not a direct budget issue.

Livingstone did not provide details of the potential workers’ compensation accord. But a business source familiar with the negotiating described it as “a modest step in the right direction” that would save employers an estimated $60 million annually by sharply curtailing claims for stress injuries during a worker’s first six months on the job.

During the first six months of employment, only stress brought on by a sudden, catastrophic job-related event would qualify a person for workers’ compensation, according to two sources. Now, approximately 20% of stress claims are filed during the first four months on the job.

The Republican governor and the Democratic-controlled Legislature face a self-imposed deadline of midnight tonight to resolve the budget deadlock. Or they could do what they did 12 days ago, and resort to a rarely used parliamentary procedure to give themselves another 12-day extension.

Wilson conceded Monday that “engaging in that parliamentary sleight of hand once again” is an option if a workers’ compensation and tax hike measures cannot be passed in time.

He told reporters that invoking the scheme “depends on how far we want to go in depriving people of paychecks. . . . There is a limit past which we can’t go because we’ll run out of cash.”

The governor reportedly decided, at least for now, to lower his sights on a major workers’ compensation program in favor of getting a budget package enacted. “He just can’t do some things now,” conceded a gubernatorial adviser, who asked not to be identified.

The aide said Wilson was pleased with final passage Sunday night of a relatively modest bill by Sen. Robert Presley (D-Riverside) that will allow authorities to bring misdemeanor or felony charges for filing fraudulent workers’ compensation claims.

More than 6,800 state workers--mostly highway laborers and employees of the Legislature--were denied paychecks Monday for lack of a state budget.

“The governor and the Legislature are beginning to lose touch with the real world,” charged Controller Gray Davis, the state’s paymaster.

At the same time, Californians began paying higher sales taxes and increased levies on alcoholic beverages, estimated to generate $11.7 million per day to help close a $14.3-billion gap between what the state will spend and what it will receive in revenue. Other features of the tax plan, including higher vehicle registration fees, will kick in later.

While Wilson and the Legislature have agreed on about $5 billion in new revenue, Assembly Republicans have blocked another $2.3 billion in higher taxes that Wilson and most legislative leaders insist is necessary.

Wilson and Assembly Republicans have contended that if workers’ compensation “reforms” are enacted, GOP legislators will vote to pass the additional tax bill.

Assembly Democrats, backed by their allies in organized labor, last week rejected a Wilson-supported workers’ compensation bill and, instead, approved a Democratic alternative that Wilson pledged to veto. That measure is pending in the Senate.

The governor on Monday reiterated his opposition to the proposal by Assemblyman Steve Peace (D-La Mesa). In a televised speech to the California Broadcasters Assn. in Monterey, Wilson called the plan a “poison pill to prevent passage of real reform.

“I am going to continue to thump all those who are involved in the necessity for reform until we have achieved it,” he told the broadcast executives.

One of the major sticking points in the Democratic bill was a provision that would repeal the “minimum rate rule,” which virtually guarantees insurance carriers hefty profits on workers’ compensation insurance. Under that provision, insurance companies are allowed to add 33% of their overhead expenses to the cost of employers’ premiums.

Under the tentative agreement reached Monday, however, the “minimum rate rule” would remain the same. In compromising, Wilson also backed off on his demand that it become more difficult for workers to collect compensation for stress injuries that occurred off the job. Under current law, which will remain the same, workers can collect compensation even if no more than 10% of the stress they suffer is work-related. Wilson had wanted to push the level to 50% while Democrats were unwilling to go beyond 33%.

The governor, instead, agreed to the provision sharply curtailing stress claims during the first six months of employment.

Tentatively agreeing to the settlement, according to sources, were the governor, California Manufacturers Assn. President William Campbell, California Chamber of Commerce President Kirk West and California Labor Federation Executive Director John Henning. Senate leaders also reportedly had all but signed off on the proposal.

Contributing to this story were Times Sacramento Bureau Chief George Skelton and Times staff writer Leo C. Wolinsky in Monterey.