Article by Erik Smith. Published on Friday, March 25, 2011 EST.

Gregoire Straddles the Line After Weeks of Heavy Lobbying from Union Interests – House Democratic Leaders Have Measure Bottled Up, and Governor Readies New Proposal

Gov. Christine Gregoire speaks with reporters Thursday. Right, Jim Camden of the Spokane Spokesman-Review.

By Erik Smith

Staff writer/ Washington State Wire

OLYMPIA, March 25.—Workers’ comp remained the hottest issue in town Thursday as the governor explained why she is backing away from a bill everyone thought she supported, and which at least half the Legislature seems to love.

            Gov. Christine Gregoire told reporters the bill seems to be going nowhere in the state House, where Democratic-party leaders have taken the side of the state’s labor unions and have said no to the idea of lump-sum settlement agreements. That’s why she is drafting a new proposal that essentially drops the idea.

            What mattered most is what she didn’t say. Gregoire offered no signal of support to those who are eager to carry on the fight. Until now, most people in the state Legislature have assumed that she was behind what everyone calls “the governor’s bill.” But Gregoire’s comments Thursday left many wondering if she ever was, or if the heavy union lobbying of recent weeks has forced her to change her mind.

            Right now House Democratic leaders have the measure bottled up in committee. There’s still a chance that there might be a battle in the House to force Senate Bill 5566 to the floor for a vote. But before war begins, lawmakers await a signal from the governor that she’ll sign it. That signal hasn’t come yet.

            Lump-Sum Settlements are Central Issue

            Settlements have emerged as the single biggest issue in this year’s debate over the future of the financially troubled state workers’ compensation system. By giving injured workers the choice of settling claims for big one-time cashouts, as allowed in 44 of the 50 states, Washington might be able to save billions of dollars in long-term liabilities. That’s because the payouts would ultimately be a bit less than the cost of long-term pensions – perhaps 80 percent of the full pension value.

            Business likes the idea because it would eventually translate into lower taxes. And a new estimate from the Department of Labor and Industries indicates it would be a big hit with workers as well. Thousands would take the money, it said, shaving $1.2 billion from the state’s liabilities in the first two years alone as pensioners rush to settle, and saving another $250 million a year after that.

            Labor hates the idea, calling it a cut in benefits. Workers might be tempted to make a bad choice, union officials say. The business lobby and its supporters in the Legislature dispute the idea that it represents any cut in benefits.

            And what happened is this. The governor started the session with a modest proposal – voluntary lump-sum settlements only for workers over age 55. But where Gregoire asked for half a loaf, the Senate gave her a full one. Republicans teamed up with moderate Democrats in the Senate, amending the governor’s bill and allowing settlements for all workers.

            House Democratic leaders have bottled it up in committee, where House Labor Chairman Mike Sells, D-Everett vows it will never see the light of day. Minority Republicans say they’ll vote en masse to bring the bill to the floor. All it’s going to take to win the battle is a handful of Democratic votes. That leaves Democratic moderates in the House to decide whether they want to risk a battle with their party’s own leaders. The governor’s support would be key. There’s not much point if she’s going to issue a veto.

            No Signal From Governor

            The governor had a chance to offer a signal Thursday and didn’t. She spoke with reporters briefly after addressing a conference of aerospace industry officials at the state Capitol. Gregoire said she was drafting a new proposal because the current bill appears to be in trouble. When reporters asked how she felt about that, the governor straddled the line.

            “The objection in the House is that 5566 is a insurance-industry way of doing business, pay a worker off and forget them, and that’s not consistent with 100 years of practice in the state, nor do I believe it to be consistent with what the voters said in November, so it’s a fundamental philosophical difference. I don’t see it moving, but I refuse to call it a day and go home with what we have done already. We have more work to do. We have got to put the pension fund on a sustainable trajectory.”

            The comment led a reporter to ask how she felt about the idea of lump-sum settlements.

             “I am struggling with it, and I understand the philosophical disagreement with it,” she said. “As 5566 came out of the Senate it doesn’t work. It would call for several amendments, we have looked at that. If the Legislature decides that they want to pursue it, we have looked at it as an alternative, but meanwhile, I am not willing to risk, in the short amount of time that we have left, hanging my hat on 5566 and it fails, and I have nothing going home.”

            The governor said her next proposal, soon to emerge in the form of a new bill, would save about $1 billion over four years. Ironically, some elements unquestionably are benefit cuts, including a proposal to temporarily freeze cost-of-living increases for pensions.

            All it Takes is a Few Votes

            Republicans say they aren’t ready to give up. “We love the governor’s bill,” said House Minority Leader Richard DeBolt, R-Chehalis.

            The unions have gotten to the Democratic-party leaders in the House, he said. “Why is the speaker sitting on it?” he asked. “He’s trying to earn labor’s love back.”

But all it’s going to take to pass the bill is a few votes from Democratic moderates and a willingness to do battle on the House floor. “We have the votes,” he said. “From what I’ve heard there are eight or ten over there [on the Democratic side].”

            DeBolt says he is convinced the governor really is behind the bill as it passed the Senate. “She is pulling everybody together,” he said. “We have had very frank discussions on it, we just have one caucus that has issues right now, and we need to get that caucus to move. I hope she can. She keeps trying.”  

            Speaker Says He’s Troubled

            One thing to note about the workings of the House Democratic Caucus – the key player isn’t the labor chairman but rather Speaker Frank Chopp. Yet Chopp’s role in the Legislature’s decision-making is often hidden because he rarely speaks publicly or at length, and he leaves others to divine and interpret his intentions. Chopp was cornered by a pair of reporters Thursday as he left the aerospace meeting and asked why he appears to be putting his foot down on the lump-sum settlement proposal.

            The tight-lipped speaker said, “We are concerned about the impact on injured workers.”

            The labor argument?

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