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San Jose Mercury News (California)
Mar 25, 2004 - 01:00 AM

by Kate Folmar; Mercury News Sacramento Bureau

Workers' comp showdown near;

SCHWARZENEGGER PREPARES BALLOT QUESTION
ROSEVILLE -- With momentum building for a legislative deal on workers' compensation reform and time running short, Gov. Arnold Schwarzenegger on Wednesday personally collected signatures on petitions to place the matter before voters if lawmakers don't craft a deal this week.

Schwarzenegger has set a Friday deadline for top legislators to agree to a plan to revamp California's costly and convoluted workers' compensation system. That would allow a vote to occur before the Legislature takes its spring recess at the end of next week.

A deal appears close, but sources say a key sticking point is how to ensure savings would be realized by employers.

There appears to be broad agreement on getting injured employees back to work faster, and reports have varied on whether the governor is open to regulating workers' compensation premiums -- as a growing chorus of Democratic lawmakers, workers and consumer advocates have demanded.

At a Costco in Roseville, Schwarzenegger continued pressing the issue, one of his top priorities for jump-starting California's economy. He schmoozed with employees and shoppers, signed autographs and collected signatures on petitions that would place his plan on the November ballot if legislative talks falter. The signatures must be turned in by April 16.

Briefing reporters outside the store, Schwarzenegger continued his carrot-and-stick pressure on lawmakers. The Republican governor also clarified his evolving stance on accepting political contributions -- saying he did not want any contributions from insurers that write workers' comp policies and that he would send back any he received.

Previously, Schwarzenegger's campaign officials said they would not accept insurance contributions received after the March 2 primary, when the workers' comp debate began in earnest. They returned one $50,000 contribution from an insurer that arrived after that date.

Wednesday, Schwarzenegger said he wanted no contributions from insurers involved in workers' comp, regardless of when they arrived. Schwarzenegger has received at least a quarter-million dollars from insurance companies with major stakes in the talks.

''If I get a campaign contribution from an insurance company that deals with workers' compensation, I will send it back, because I don't want to be beholden to an insurance company that deals with workers' compensation because I know I need to negotiate with them,'' Schwarzenegger said.

The governor's stand appeared to take his campaign team by surprise. Monday, Schwarzenegger fundraiser Marty Wilson defended the decision to hold on to insurance money received before the primary election. But Wednesday, Wilson said he would ''seek further clarity.''

Doug Heller, executive director of the Foundation for Taxpayer and Consumer Rights, lauded the governor's new stance, but said the real proof that Schwarzenegger is not beholden to insurance companies would come in his actions.

"The real test of Arnold is whether he can ignore the special-interest money and take a practical position on workers' compensation -- and that includes regulating his donors,'' he said.

Schwarzenegger has pledged to enact reforms that will give relief to employers who have seen their premiums soar. But some critics have said his proposal would cut benefits to workers injured on the job. At the signature-gathering event, Schwarzenegger seemed optimistic about the ongoing negotiations on California's system of caring for, and replacing the salaries of, employees hurt on the job.

''We are chipping away on things. We are getting closer and closer to coming to an agreement,'' said Schwarzenegger, sporting a black bomber jacket emblazoned with the phrase, ''Join Arnold. Fix workers' comp. Terminate fraud.''

''I hope that we will be there by Friday, but we are not there yet. That's why I'm out here; otherwise, I would stop gathering signatures. I'm out here gathering signatures because I want to put the pressure on the legislators.''

Schwarzenegger was coy about his openness to regulating the industry -- but he did not dismiss the concept outright.

''It is definitely something to consider,'' he said. ''We have to do everything we can to bring the costs down.''

In a news conference earlier Wednesday, consumer groups and the senator who wrote last year's round of workers' compensation reforms called for regulating the workers' comp insurance industry as the auto-insurance industry was with 1988's Proposition 103. They seek an immediate, one-year rate freeze, a premium rollback to relieve employers, and regulation to block excessive rate increases.

''If the governor is going to make the step -- and we hope he will -- toward regulation, let's make sure it's regulation that really works,'' Heller said.

A day earlier, Insurance Commissioner John Garamendi proposed that lawmakers give him limited power to regulate what insurance companies charge employers for premiums, through 2007. He also discussed his proposal with the governor. Insurance companies immediately assailed Garamendi's plan as too restrictive.
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Mercury News Staff Writers Dion Nissenbaum and Deborah Lohse contributed to this report. Contact Kate Folmar at kfolmar@mercurynews.com





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