COMMITTEE SEES LITTLE RELIEF ON WORKERS' COMP STAFF AND WIRE SERVICES.

With California's business community howling about skyrocketing workers' compensation costs, a special legislative committee began grappling with the problem Tuesday but offered little assurance of a major turnaround.

The Senate committee's chairman, Richard Alarcon, D-Van Nuys, said small businesses in California can expect to see their premiums reduced between 5 percent and 10 percent next year as part of a package the committee is negotiating.

``It may not seem like a lot compared with increases they've seen,'' Alarcon said after the first hearing. ``At least we will stem the increases.''

Workers' comp costs, which cover treatment of employees who suffer job-related injuries, have shot up about $20 billion in the past eight years, climbing from $9 billion in 1995 to roughly $29 billion this year, Insurance Commissioner John Garamendi said.

Business leaders have said that workers' compensation costs are the most serious threat to economic recovery in the state.

The six-member, two-house committee met for about four hours Tuesday and planned to take another four hours of testimony this afternoon as it tries to find ways to control costs that officials say have become unbearable for many businesses.

Officials trace the problem to the removal of minimum workers' comp insurance rate levels in the mid-1990s and the resulting price war that drove about a quarter of the state's workers' comp insurers into bankruptcy.

Garamendi said it is ``absolutely essential'' that lawmakers adopt corrective legislation.

``It has to be real and substantive. Without that the insurance industry will not survive, nor will the business community.''

But committee members differed on how much they could wring out of the system.

Sen. Charles Poochigian, R-Fresno, said the committee should try to find $11 billion in savings, saying that would cover the increased cost of employers' insurance in the past three years.

``The further we are below $11 billion, the worse off employers are and employees are,'' he said. ``To turn the economy around we have to show a greater level of improvement to the workers' comp system than the $2 billion, $3 billion or $4 billion that's been bandied about.''

But Assemblyman Fabian Nunez, D-Los Angeles, said Poochigian's goal wasn't realistic.

``We ought to have two guiding principles,'' he said. ``We ought to look for meaningful workers' comp reform, but we cannot do it at the expense of workers who are injured on the job.''

Some questioned how lawmakers could ensure that any savings they generated would translate into lower insurance bills for employers.

``Give me whatever power you think is appropriate to force those rates down and I will do it,'' Garamendi replied.

The legislative session ends Sept. 12. Alarcon said committee members are serious about emerging with a reform package before the deadline.

``The bottom line is if we don't get substantial workers' comp reform, every legislator is going to have hell to pay in their own districts,'' Alarcon said.