Schwarzenegger Calls for Workers’ Compensation Reform by March 1 in State of the State Address

Gov. Arnold Schwarzenegger (R) in his 27-minute State of the State address Tuesday called for reforms to the state's $29 billion workers' compensation system, urged voters to support ballot initiatives to help balance the state budget and pledged not to increase taxes to close the remaining budget gap, the San Francisco Chronicle reports (Martin et al., San Francisco Chronicle, 1/7). "Our workers' comp costs are the highest in the nation -- nearly twice the national average. Our high costs are driving away jobs and businesses," Schwarzenegger said. Aides said Schwarzenegger's workers' compensation reform plan could reduce costs for employers by as much as $11 billion (Mendel, San Diego Union-Tribune, 1/7). Schwarzenegger asked lawmakers to pass workers' compensation reform legislation by March 1. "If modest reform is all that lands on my desk, ... I am prepared to take my workers' comp solution to the people. It will be on the November ballot," Schwarzenegger said (Martin et al., San Francisco Chronicle, 1/7).

Budget

Schwarzenegger promoted March ballot initiatives that would allow the state to use a $15 billion bond to restructure debt and create a limit on state spending, the Contra Costa Times reports. Schwarzenegger said, "[I]f passed by the people, [the measures] will save our state from a June bankruptcy." However, the Legislative Analyst's Office said that if the bond is passed, the state will have debt payments from 6.4% to 6.9% over the next five years, which might jeopardize its ability to fund health care programs, according to the Contra Costa Times (Borenstein, Contra Costa Times, 1/7). Schwarzenegger's speech did not contain specifics about the budget he is expected to propose on Friday; however, he said that "painful spending cuts" to programs may be included in the budget, USA Today reports (Kasindorf, USA Today, 1/7). Schwarzenegger's aides have said the budget will not include tax hikes but will include funding cuts to state programs, including Medi-Cal and Healthy Families (California Healthline, 1/6). Schwarzenegger said the budget will contain proposed reductions to programs' budgets that "leadership requires, economics demands and the public expects. These cuts will not be easy, but they will not be forever" (LaMar/Hannah, Contra Costa Times, 1/7). The Sacramento Bee reports that elderly people, people with disabilities and advocates rallied outside the Capitol Tuesday to protest planned cuts to health care and other services (Benson, Sacramento Bee, 1/7).

Reaction

Consumer advocates and labor officials reacted "coolly" to Schwarzenegger's call for workers' compensation reform, saying that the proposed changes could benefit insurers and not maintain benefits for injured workers, the Los Angeles Times reports (Mathews et al., Los Angeles Times, 1/7). Reaction from lawmakers "broke fairly predictably along party lines," the Sacramento Bee reports (Delsohn, Sacramento Bee, 1/7). In the official Democratic response speech, Senate President Pro Tem John Burton (D-San Francisco) promoted a plan to increase taxes on the highest-income state residents to fund social programs. "We believe that people have to be protected, like the elderly, blind and disabled. We have to make sure that poor women and children are not thrown deeper into poverty than they are now," Burton said (Los Angeles Times, 1/7). After the speech, Burton said that the March 1 deadline for workers' compensation reform is "a totally unrealistic date" (Salladay, San Francisco Chronicle, 1/7). Sen. Sheila Kuehl (D-Santa Monica) said that Schwarzenegger "didn't mention the word health care or anything to do with the health care crisis, the insurance crisis, the emergency room crisis, hospitals closing." Sen. Dennis Hollingsworth (R-Temecula) said that Schwarzenegger addressed "[n]ot only the need for but the benefits of fixing" the state workers' compensation system. Assembly Speaker Herb Wesson (D-Culver City) said lawmakers will "be able to understand exactly what the governor's words meant" when they see his budget proposal on Friday (Delsohn, Sacramento Bee, 1/7).

Editorials, Opinion Piece

Summaries of editorials and an opinion piece addressing Schwarzenegger's speech are provided below.

Fresno Bee: Schwarzenegger "put a hopeful face on what will be the grim task of massacring public services in California if he stands in the way of a tax increase as part of a budget solution," a Bee editorial states, adding that even with reforms to the state workers' compensation system, the state's budget "deficit is not temporary" if taxes are not increased (Fresno Bee, 1/7).

Los Angeles Times: While Schwarzenegger's speech was "masterful," his refusal to increase taxes will necessitate the use of temporary revenue "to avoid safety-net cuts so deep that voters recoil," a Times editorial states (Los Angeles Times, 1/7).

San Diego Union-Tribune: Schwarzenegger "struck just the right notes" in calling for the reform of "the state's job-killing workers' compensation system," a Union-Tribune editorial says, adding that "Schwarzenegger is poised to spend his considerable political capital in transforming state government" by going "directly to the people on workers' compensation and other issues" (San Diego Union-Tribune, 1/7).

San Francisco Chronicle: Many of Schwarzenegger's proposals to close the budget deficit, including reforming the state workers' compensation system, are "worth pursuing," but if Schwarzenegger "continues to adhere to his no-tax pledge, he may find himself cutting into programs that maintain the quality of life that makes this state the 'empire of hope and aspirations' he so eloquently described last night," a Chronicle editorial states (San Francisco Chronicle, 1/7).

Dan Walters, Sacramento Bee: Schwarzenegger's speech "delivered conservative red meat, not only on the budget but in calling for an overhaul of workers' compensation," columnist Walters writes in a Bee opinion piece, adding that the speech also "se[t] up what could be a climactic battle over the ideological direction of state government" between Schwarzenegger and the Legislature (Walters, Sacramento Bee, 1/7).

Broadcast Coverage

The following broadcast programs reported on Schwarzenegger's speech:

CNN's "NewsNight with Aaron Brown": The segment includes comments from political analyst Elizabeth Garrett, Schwarzenegger and Los Angeles County Supervisor Zev Yaroslavsky (Feldman, "NewsNight with Aaron Brown," CNN, 1/6). The complete transcript is available online.

KCRW's "Which Way, L.A.?": Guests on the program included Lou Cannon, former West Coast correspondent for the Washington Post; Sen. Betty Karnette (D-Long Beach); Sen. Tom McClintock (R-Thousand Oaks); Dan Schnur, a Republican political media consultant; and Darry Sragow, an attorney and Democratic political consultant (Olney, "Which Way, L.A.?," KCRW, 1/6). The complete segment is available online in RealPlayer.

KQED's "California Report": The segments report on reactions from members of the Legislature and California residents (Myers/Varney, "California Report," KQED, 1/7). The complete segments will be available online after the broadcast.

KQED's "Forum": Guests on the program will include Susan Rasky, a professor at University of California-Berkeley's Graduate School of Journalism; Scott Shafer, host of KQED's "California Report"; and Walters (Krasny, "Forum," KQED, 1/7). The complete segment will be available online after the broadcast.

MPR's "Marketplace": The segment includes comments from Marilyn Cohen, a bond expert with Envision Capital Management; Scott Pattison, executive director of the National Association of State Budget Officers; Jean Ross, executive director of the California Budget Project; Kim Rueben, a research fellow with the Public Policy Institute of California (Glaser, "Marketplace," MPR, 1/6). The complete segment is available online in RealPlayer.

NPR's "All Things Considered": NPR's Ina Jaffe reports on the content of Schwarzenegger's address (Jaffe, "All Things Considered," NPR, 1/6). The complete segment is available online in RealPlayer.

NPR's "Morning Edition": The segment includes comments from Schwarzenegger, Senate Minority Leader Jim Brulte (R-Rancho Cucamonga) and Assembly Budget Committee Chair Jenny Oropeza (D-Los Angeles) (Jaffe, "Morning Edition," NPR, 1/7). The complete segment is available online in RealPlayer.

NPR's "Tavis Smiley Show": NPR's Tavis Smiley discusses Schwarzenegger's address with Duf Sundheim, chair of the California Republican Party, and Art Torres, chair of the California Democratic Party (Smiley, "Tavis Smiley Show," NPR, 1/7). The complete segment is available online in RealPlayer.

Additional Coverage

Links to additional coverage of Schwarzenegger's speech are provided below.

"Schwarzenegger Plans Fee Hikes, Education Cuts," (Schodolski, Chicago Tribune, 1/7).

"Partial Text of the Governor's Address," (Los Angeles Times, 1/7).

"Now the Hard Part Begins for Governor," (Finnegan, Los Angeles Times, 1/7).

"Schwarzenegger Promises Better Times for California," (Murphy, New York Times, 1/7).

"Analysis: A Good Pitch, But Can He Deliver?" (Chance, Sacramento Bee, 1/7).

"Both Sides Await Details," (Sanders, Sacramento Bee, 1/7).

"Schwarzenegger Communicates a Theme of Action," (Ainsworth, San Diego Union-Tribune, 1/7).

"Job Creation Is Heart of Plan To Revive State's Sagging Economy," (Gladstone/Marimow, San Jose Mercury News, 1/7).

"Analysis: Relying on Sweet Talk and Threats," (Nissenbaum, San Jose Mercury News, 1/7).

"Schwarzenegger Warns State," (Emshwiller, Wall Street Journal, 1/7).

"Schwarzenegger Seeks to Raise Debt," (Sanchez, Washington Post, 1/7).

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