The California Chamber of Commerce applauds Gov. Gray Davis for vetoing SB 996 and SB 546. In his veto message the governor said the two workers’ compensation bills “would have imposed excessive burdens and pressures on California businesses and public spending.”
Estimates are that SB 996 would have cost employers $2.7 billion by the time its provisions were fully implemented in 2005. Employers are already paying on average 25% more for workers’ compensation coverage in 2000 than they paid in 1999, and premiums are expected to go up again in 2001. Also, beginning next year, employers will be assessed an additional $48 million surcharge to cover the unpaid claims of Superior National Insurance, a major workers’ comp carrier which went under.
In his veto message, Gov. Davis indicated his interest in signing a workers’ compensation bill that provides a benefit increase for injured workers but pays for the increases with savings found elsewhere in the system. The Chamber has consistently said it would support a balanced approach such as this and looks forward to helping to craft such legislation.
SB 546 would have increased unemployment benefits by 65% without any offsetting reforms to mitigate the cost impact. The California Chamber opposed SB 546 because it would have increased the unemployment insurance tax rate for employers in 2004 even under the current good economic climate. And if there were only a modest increase in unemployment, the Unemployment Insurance Trust fund would have been at risk of insolvency, even with a drastic increase in the UI tax rates that would go into effect by existing operation of law.
If the benefits had been increased, the Employment Development Department would have had to raise taxes on California employers by $600 million. Without the passage of this bill, the EDD estimates that rates would go down in 2003 and the difference between that total and the tax increases as a result of SB 546 would be $700 million.
Allan Zaremberg
President
California Chamber of Commerce
Sacramento
