Legislators, Wilson Spar Publicly, Seek Deal in Private : Budget: Brown calls governor ‘a political terrorist’ for linking workers’ compensation reform to spending plan. Pressure on Republicans to approve tax increases continues.

SACRAMENTO —  Resuming budget deliberations after a long weekend away from the Capitol, Democratic lawmakers and Republican Gov. Pete Wilson continued their public jousting Monday but privately sought a compromise to help erase what is left of the state’s $14.3-billion budget shortfall.

Wilson showed no signs of backing away from his insistence that the Legislature enact changes in the state workers’ compensation program in exchange for higher taxes on the most affluent Californians.

Democrats stepped up their criticism of the governor’s strategy. Assembly Speaker Willie Brown (D-San Francisco) labeled Wilson a “political terrorist” for linking the state’s $56-billion budget to workers’ compensation--an issue Brown maintains is unrelated to the spending plan.

“The budget should not be held hostage by a political terrorist,” Brown told reporters. “Any person who tries to hold the budget up for a single issue is in that category.”

However, Brown implied that he would not try to block a workers’ compensation deal if a compromise could be reached that would entice Assembly Republicans into voting for $2 billion in taxes that the governor says are needed to balance the budget.

The Speaker, his staff and a handful of key Democratic lawmakers spent much of the day in a conference room trying to craft compromise language on workers’ compensation and develop a new package of additional taxes that Democrats would find more palatable than the one Wilson has put on the table.

About $5 billion in new and higher levies have been approved, including a 1 1/4-cent increase in the state sales tax that will take effect Monday whether or not the budget is approved.

Wilson met privately with Senate President Pro Tem David A. Roberti (D-Los Angeles) and separately with a group of Senate Republicans.

On workers’ compensation, Wilson wants to make it more difficult for employees to collect disability payments for on-the-job stress. He would do so by raising from 10% to 50% the amount of their stress that workers would have to show came from their employment. He also would prohibit the payment of benefits for stress caused by a lawful firing, demotion or other personnel actions.

The tax package Wilson supports would temporarily raise the top rate from 9.3% to 10% on individuals earning $100,000 and couples making $200,000. Individuals with incomes of $200,000 and couples making $400,000 would pay 11%. The bill also includes provisions to allow companies to deduct expenses for research and development and to carry forward operating losses and use them to offset taxable income in future years.

Roberti complained Monday that the governor’s workers’ compensation proposal would hit public employees hard because they apply for disability due to stress more often than private-sector workers. Roberti said government workers already are expected to absorb pay cuts, layoffs and benefit reductions.

“Before employers want to pay their fair share of taxes, they need a sweetener,” Roberti said. “Nobody’s been giving public employees a sweetener. It has been a bitter pill the whole time through.”

Roberti said he will be pushing Wilson to balance the package by conceding something to public employees. He did not elaborate. One senator with knowledge of the negotiations said the Democrats may try to extend unemployment benefits from 26 weeks to 39 weeks. The extra benefits would be paid from surplus funds in the unemployment insurance program.

Wilson has until July 16 to sign or veto the budget bill that the Legislature sent him June 20. He averted an earlier deadline and gained an extra 12 days of negotiating room by invoking a rarely used parliamentary procedure and sending the bill back to the Assembly, which immediately returned it to him.

Although the governor could do the same thing again, that seems unlikely. Some state employees are due to be paid July 15 and cannot be issued their checks unless a budget is enacted for the fiscal year that began July 1.

There had been widespread concerns that the budget impasse would endanger the state’s AAA bond rating. But Standard & Poor’s, a leading credit rating agency, said that while it is “disappointed” with the delay, it will wait until later this week to re-evaluate the state’s credit status.

Legislative insiders were betting that some resolution will come by Thursday.

If vacation plans are any indication, Wilson is more prepared for the long haul than the Democratic legislative leaders. Brown is due to leave July 15 for a jazz festival in Switzerland. Roberti is hoping to catch the play “Miss Saigon” on July 25 in London. Wilson is not scheduled for a vacation until early August.