California employers breathed a sigh of relief on Tuesday as Gov. Arnold Schwarzenegger vetoed two bills that threatened to increase workers' compensation costs.

As expected, Schwarzenegger vetoed SB 815, by Senate President Don Perata, D-Oakland, which would have doubled permanent disability benefit levels paid to injured workers.

Perata put the bill together hurriedly at the end of the legislative session after intense pressure from labor unions and attorneys for injured workers, who cited instances where benefit payouts to injured workers had been slashed by up to 80 percent. Employers complained that there was little chance for hearings on the proposed increases.

Earlier this month, the Workers' Compensation Insurance Rating Bureau said that if the Perata legislation were signed, it would recommend a 2 percent average increase in insurance premiums charged to employers, while if the bill were vetoed, rates should drop 6 percent.

In his veto message, Schwarzenegger said that the reforms he helped push through in 2004 prompted workers' compensation insurance premiums to drop 50 percent and have resulted in $11 billion in savings to employers. He said that his administration was wrapping up a review of the reforms and that it was premature to enact benefit increases until that review is completed later this year.

"The changes proposed by SB 815 are not based on a comprehensive analysis and will double the cost of permanent disability benefits I simply cannot support a measure that would reverse many of the economic gains now powering California's economy."

News of the veto was greeted with cheers from the employer community. "Keep in mind rates went down in July also, so you will see a nice decrease in your workers comp cost at renewal. We need to thank the Governor for his veto," said Scott Hauge, president of Small Business California in an e-mail to his small business members.

Schwarzenegger also vetoed AB 2942, by Assemblyman Paul Koretz, D-West Hollywood, which would have exempted doctors and hospitals treating workers with burn injuries from the normal workers' compensation medical fee reimbursement schedules.

Schwarzenegger said his administration was working on implementing new federal guidelines for reimbursements to doctors treating burn victims.

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