The agreement, which Gov. Chris Gregoire brokered in talks that ended Sunday, solves one of the 2011 session’s most contentious issues: cutting costs in the state-run workers’ compensation system.
The deal in House Bill 2123 is expected to reduce costs in the insurance system by more than $1.1 billion over four years. More than half of that savings comes from a piece opposed by organized labor – dubbed a “structured settlement” – that offers the opportunity for older, permanently disabled workers to get their money sooner by giving up the chance for a larger lifelong pension.
Business groups wanted the one-time, lump-sum payments that most other states offer, but instead Washington will be the only state to mandate that settlements be parceled out over time.
“I think that makes us unique ,and I’m proud of the safeguards we’ve put in for workers,” said Rep. Tami Green, the Lakewood Democrat who helped negotiate the agreement.
“This bill has the best interests of the workers in mind while protecting our employers from large increases in their workers’ compensation rates,” Rep. Cary Condotta, R-East Wenatchee, said in a statement. “Given the political landscape of Olympia, I think this is a reasonable compromise.”
House Democrats were split: 29 in favor, 25 opposed and two missing. Among the dissenters were South Sound Reps. Chris Reykdal of Tumwater, Steve Kirby of Tacoma and Connie Ladenburg of Tacoma. Kirby said the worker protections did not go far enough.
But Republicans, and most Democrats, agreed it was time to rein in costs in a system that has more permanent pensions and far higher pension costs than other states. The package includes an Oregon-style wage subsidy for companies that bring recuperating workers back for light duty, and it also freezes cost-of-living raises for pensioners for one year.
The Association of Washington Business supports the plan as a way to limit premium hikes, which had been forecast to jump by double digits for some business sectors this year. Gregoire said that size of rate hike won’t happen now, but it was not clear how high rates might go.
The Washington State Labor Council protested the changes but had not decided yet what its response would be or whether to pursue a ballot measure.
Republican Rep. Barbara Bailey of Oak Harbor, a frequent critic of emergency clauses, amended the legislation to add such a clause to block a citizen referendum challenge.
Labor could still mount an initiative drive, but it would require more than 240,000 valid voter signatures, twice as many as a referendum, by early July in order to qualify for the Nov. 8 ballot.