California Legislature sets ambitious agenda in last week of session

SACRAMENTO — Entering the final week of their legislative session, state lawmakers still must grapple with controversial proposals to overhaul California’s overburdened public pension system, revamp its costly workers’ compensation scheme and change the way corporate taxes are assessed.

Legislative leaders said they hoped to pass an ambitious agenda aimed at convincing voters that they are responsible stewards of Californians’ money. The outcome is likely to set the stage for Gov. Jerry Brown’s high-stakes campaign to raise billions of dollars in taxes to close the state’s deficit.

“The hope is that our work here lays the foundation,” said Assembly Speaker John A. Pérez (D-Los Angeles).

Trying to boost public confidence in Sacramento, Brown has pushed lawmakers to remake the state pension system. The Democrats who dominate the Legislature, however, have been reluctant to adopt key parts of the 12-point plan he proposed last year. Brown wants to raise the retirement age for most new public workers from 55 to 67 and adopt a hybrid 401(k)-style benefit plan for new hires.

Lawmakers are expected to debate a modified proposal that tackles abuses such as pension “spiking” but permits retirement earlier than 67. They have also been discussing a possible cap of about $100,000 on how much public employees can receive from a state pension plan, with workers having the option of also paying into a cash balance plan that would guarantee a specified rate of return.

Meanwhile, the Legislature faces a drive to overhaul the $16-billion-a-year workers’ compensation system. Medical and legal costs have spiraled since the law was last rewritten eight years ago, and permanent disability benefits to injured workers have fallen by about 60% since then.

A coalition of labor unions and large employers, including Safeway Inc. and the Walt Disney Co., want to boost benefits paid to permanently injured workers. But they want to cut costs by streamlining a system that often delays or denies payments to victims of on-the-job accidents and illnesses.

Lawyers who represent injured workers are aggressively fighting the plan, which Brown has backed publicly.

Lawmakers will also consider a major change in tax policy. Pérez is pushing legislation that he said would close a corporate tax loophole and raise $1 billion for scholarships for middle-class college students.

The Assembly passed his proposal, which would eliminate a tax formula that can allow out-of-state corporations to pay less in California taxes. But it is unclear whether the measure will pass the Senate. Some GOP votes would be needed, and Republicans generally see the measure as a tax increase hurtful to businesses that provide jobs in California.

Other major bills still pending would:

• Authorize the California Department of Motor Vehicles to issue driver’s licenses to illegal immigrants who are granted work permits under a new Obama administration program. The president has halted deportation for many people brought to this country illegally when they were minors.

• Outlaw the open carrying of rifles and shotguns in public.

• Establish a statewide teacher evaluation system. Its provisions — how much weight should be given to student test scores, for example — would be negotiated with unions.

• Extend for two years a tax credit for film and television productions in California.

• Enact the country’s first ban on “conversion” therapy for gay minors.

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Times staff writer Marc Lifsher contributed to this report.