The Budget Today--Utopia Tomorrow : Workers’ comp is a real issue--a scandal, perhaps--but not a budgetary one

It’s now more than a week past the July 1 state budget deadline and legislative negotiations have bogged down over a mess that’s in desperate need of major reform: workers’ compensation. But as important as that issue is, the crucial budget process must not be held hostage to it.

Under pressure from the business community and his fellow Republicans in the Assembly, Gov. Pete Wilson has agreed to press certain aspects of the workers’ compensation issue before important details have been worked out. In particular, Wilson wants workers who file stress claims to prove that at least 50% of their injuries stem from “actual events” on the job; currently, workers need prove only that 10% of injuries are job-related. (No such percentage requirements exist for physical injuries.) He also wants to eliminate benefits for stress caused by a legitimate firing, demotion or other personnel action.

Although, on the face of it, those sound like common-sense revisions, there are possible complications that are of particular concern to police, fire and other public safety employees for whom job stress is a serious problem. The place to fully explore the ramifications of these and other proposals is the legislative policy committees. In fact, an entire spectrum of workers’ compensation reforms has been under consideration in these committees this year.

Wilson’s decision to push the issue at this time was political. He is trying to win the votes of a few Assembly Republicans for the tax increases he needs to balance his budget. The GOP Assembly members fear they won’t get all the workers’ compensation reforms they want through the legislative process, so they are asking Wilson to include them in the budget document in exchange for affirmative votes on new taxes.

Unfortunately, this ploy is costing Wilson allies elsewhere. The governor had forged a remarkable alliance with Senate Republican and Democratic leaders that brought about $5.2 billion in tax increases and nearly $7 billion in cutbacks, including deep cuts in welfare. This has been a painful process that leaves the budget just $2.2 billion short of closing a historic $14.3-billion deficit. But now these legislative leaders feel aggrieved. They figure they refrained from demanding that their pet issues be addressed in the budget, so why should GOP hard-liners get what they want on workers’ compensation?

Democrats accuse Wilson and the previous governor of dragging their feet in establishing a council in 1989 partly to fight fraudulent workers’ compensation claims. Republicans argue that the council won’t address their concerns. But it should be given a chance to make the attempt.

Wilson and the Legislature are close to completing a budgetary process that will go down in history as one of the most difficult ever negotiated--a process for which Wilson and Speaker Willie Brown deserve great credit. But the decision to squeeze bits and pieces of workers’ compensation reform out of the Legislature at the same time appears to be a tactical error. The governor should remove this issue from budget negotiations and find another way to win the votes he needs to end the stalemate.

The longer Wilson and the Legislature drag the budget process out, the less of an achievement it will be.