ARNOLD WANTS BILL BY FRIDAY WORKERS' COMP REFORM DEMANDED.

Byline: David M. Drucker and Harrison Sheppard Sacramento Bureau

SACRAMENTO - Gov. Arnold Schwarzenegger wants lawmakers to approve his $11 billion workers' compensation reform package by Friday so it can be ready for his signature by April 1, when they depart for a 10-day spring holiday, administration officials said Tuesday.

To keep up the pressure, the Republican governor is scheduled to hold an event today in suburban Sacramento to support a voter initiative mirroring his workers' compensation overhaul plan. Schwarzenegger has vowed to campaign for the measure, targeted for the Nov. 2 ballot, if the Legislature ignores his call to reform the troubled insurance system.

The administration is optimistic a bipartisan solution can be reached and on the governor's desk by March 31, which according to some state officials is the legislative deadline for approval if businesses are to see their rates reduced this year. Schwarzenegger aides declined Tuesday to elaborate on the progress of the talks.

``The governor wants workers' comp reform as soon as possible, so the most important thing is to know, the sooner the better,'' press secretary Margita Thompson said. ``But we've got certain constraints we're dealing with ... so one of the things that needs to happen is it needs to be passed and to his desk before the legislators go out for their spring break.''

Schwarzenegger previously had set a March 1 deadline for the Democrat- controlled Legislature to approve his reform package, and threatened to take his plan to the ballot if it failed to act. He maintains his preference for a legislative solution, but since last week has encouraged voters to sign the petition for his initiative as a backstop against the failure to achieve a deal.

A number of impediments to a compromise remain - including subjectivity in medical findings, medical review and control over doctor choice - but a key one that has emerged lately is rate regulation.

The governor and Republican legislators oppose it, saying a free-market system that encourages competition among insurers is the only way to keep rates low over the long term. Democrats say that without it, the savings generated by any overhaul the state implements might be kept by the insurance companies and never benefit employers.

Despite these differences, state Sen. Richard Alarcon, D-Van Nuys, chairman of the Labor and Industrial Relations Committee, said the governor's Friday deadline is ``not impossible,'' though he indicated it is not absolutely necessary that it be heeded.

``The deadline has moved in my mind to April 16,'' Alarcon said. ``That is the critical date, because we want to make sure we head off any ballot initiative. I think that's everybody's goal, including the people sponsoring the ballot initiative.''

Alarcon had earlier said the real deadline for the Legislature to pass and the governor to sign a bill was March 31. That would allow the 90 days for the new laws to take effect in time for the state Workers Compensation Insurance Ratings Bureau to recommend lower rates in July.

But that date would not matter if the reform package includes rate regulation, which could take effect immediately, Alarcon said. Republicans, meanwhile, appear adamantly opposed to such a provision, and one Republican leading the reform effort contends that the two sides are farther apart than Alarcon believes.

``We might be 90 percent in agreement on things that don't lower premiums, but we don't agree on the things that will lower rates,'' Assemblyman Abel Maldonado, R-San Luis Obispo, said. ``If it was even close, I would know.''

Insurance Commissioner John Garamendi met with Schwarzenegger for 47 minutes Tuesday morning to discuss workers' compensation. Garamendi has a plan that includes a form of rate regulation, but which also seeks to find a middle ground between Schwarzenegger's pro-business stance and pro-labor proposals by legislative Democrats.

``He is a very good listener,'' said Garamendi, a Democrat. ``He was interested, wanting to understand the details, how it works. He did not indicate whether he found it acceptable or not.''

The administration has repeatedly said that Schwarzenegger believes in a free-market solution - a position Thompson reiterated Tuesday during her weekly briefing with reporters. But Alarcon said the governor can be persuaded otherwise, particularly if there are other elements in the package that he supports.

``I believe the governor has all along said he wants a broad set of reforms on workers' compensation and I believe he might be friendly to maximum rate regulation if he feels the broad set of reforms has a desired effect on reducing the costs of workers' compensation,'' Alarcon said.

The administration has said nothing publicly to lend credence to Alarcon's belief, and Thompson said Schwarzenegger is committed to a reform package based on free-market principles.

David M. Drucker, [phone]

David.Drucker(at)dailybulletin.com

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(color) The governor hopes to have a workers' comp reform bill on his desk by Friday.