Workers’ Comp Bills Face Veto : Politics: Wilson will kill Democratic proposal to overhaul system and instead call Legislature into a special session to deal with the issue.

SACRAMENTO — Gov. Pete Wilson will announce today his veto of a Democratic proposal to overhaul the troubled $12-billion workers’ compensation system and call the Legislature into a special session to work on a new plan, an Administration source said.

Wilson, preparing to make workers’ compensation reform an issue against Democrats in the election two months from now, is expected to announce the veto at an annual prayer breakfast sponsored by business leaders, the source said.

Republicans have said the Democratic proposal does not make deep enough cuts in the employer-borne cost of the system.

The governor will direct the Legislature to return to solve the workers’ compensation problem in the first week of October. The lawmakers are required to return to Sacramento when called into special session, but are under no obligation to act.

“It’s up to them,” said the Administration source, who spoke on condition that he not be named. “They have two choices: They can come back and pass legitimate workers’ comp reform, or they can let it be turned into one hell of a campaign issue against them.”

Wilson has been citing the workers’ compensation reform as a cornerstone of his prescription for reviving California’s economy.

At a speech in San Francisco earlier this week, he called the $12-billion system “Exhibit A” on his list of ways in which laws and policies adopted in Sacramento have killed jobs. Referring to the Democratic bills he intends to veto, the governor derided “fig-leaf reforms” that would produce only “cosmetic change.”

“Phony reform is not good enough,” Wilson said in a speech Wednesday to the Commonwealth Club in San Francisco.

The Legislature narrowly passed a package of three workers’ compensation bills on the last day of the regular session last month, even though backers of the measures predicted that Wilson would veto them.

The measures sought to raise benefits for injured workers while cutting costs to employers who say they are being gouged by the system. Assemblyman Burt Margolin (D-Los Angeles) estimated that the bills would cut costs by $1 billion, although Republicans who voted as a bloc against the bills argued that the savings were minimal.

The bills sought to lower the costs of the system by capping fees charged by physicians, lawyers and other specialists who profit from the system by which workers injured on the job collect disability pay.

Word of the likely veto comes as Assembly Speaker Willie Brown (D-San Francisco) and Senate President Pro Tem David A. Roberti (D-Van Nuys) urged the governor to sign the bills, saying the changes they would bring about will “improve the climate for job creation.”

“This is not half a loaf,” the Democratic leaders said in a letter to Wilson. “This is a very good deal for California business, and they need to claim their victory now before it is too late for many of them.”

Jim Lewis, Brown’s press secretary, called on the governor “to rethink his position” and sign the bills. He was uncertain what Brown’s response would be to the special session.

“I would observe that the call for the special session is for obvious political purposes, being timed to return in the midst of the campaign season,” Lewis said.