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SACRAMENTO — After vetoing workers’ compensation reforms for three years, Gov. Gray Davis this year declared the legislation long overdue and signed the labor-friendly bill into law. 

Why the change? 

Finally, Davis said, he received a reasonable compromise after the first, second and third measures would have cost businesses and insurers too much. 

This year, the fourth workers’ compensation bill he received was a reasonable compromise that benefits both workers and business had finally been reached, Davis said. 

While labor and business representatives agree the bill was a compromise, some political observers said the flip flop had more to do with Davis’ incremental approach to government and his uncanny ability to wring the most political dollars out of every player involved in an issue. 

“It’s an election year. Doesn’t this make him look like a good guy?” said Cher McIntyre, director of advocacy for San Francisco-based Consumer Action. “It’s pretty straightforward that Davis is going to do what’s politically expedient.” 

On the road to workers’ compensation reform, Davis collected more than $20 million in campaign contributions from labor unions, the insurance industry, attorneys groups and business interests that all have a stake in workers’ compensation costs. 

But labor’s $4 million in contributions didn’t seem to sway the governor, said Art Pulaski, executive secretary-treasurer of the California Labor Council. 

“As an insider, I have to honestly say that it is remarkable how little money seems to influence his decisions,” Pulaski said. “That frustrates a lot of people who give money.” 

It also may make fund-raising easier for Davis, who avoids excluding any interest. 

Davis wouldn’t have won the Democratic gubernatorial nomination four years ago without union support, but when he reached office, labor leaders criticized him for ignoring their priorities. Each workers’ compensation veto came as “big disappointments,” said Pulaski. This year, Davis’ ability to reform workers’ compensation will certainly be touted as a reason for workers to re-elect him, he said. 

Like Pulaski, Stanley Zax, chairman of Woodland Hills, Calif.-based Zenith Insurance Co., the state’s fourth-largest provider of workers’ compensation insurance, said the $200,000 he’s given Davis during the past four years didn’t buy political influence, just an opportunity to be heard. 

“I don’t contribute to anybody who doesn’t come to my office and sit down and talk to me about different issues, but the governor makes his own decisions,” said Zax, who has donated more than $1 million to a variety of campaigns in California since 1998. “I never had a discussion with him about whether he should sign or not sign a workers’ compensation bill. Never.” 

Money just gives him a chance to share his ideas, Zax said. 

“There ain’t nobody I know who’s willing to come talk to me about public policy because my name is Stanley Zax and I’m just sitting here,” he said. “Obviously they want money for their campaign. I don’t find that but kind of the logical end result of our system.” 

Davis has repeatedly said that contributions help him run for office, but do nothing to influence his political decisions. 

Workers’ compensation laws ensure that employees who are hurt at work get a fixed amount of money to avoid lawsuit. The laws also provide benefits for dependents of workers hurt or killed on the job. 

Insurance companies and major employers in California had opposed the increases, arguing that they would cost them too much, while labor representatives said their workers needed to be assured of more money if hurt. 

For more than a decade, workers’ compensation has been a sore issue in state politics. In 1991, under Gov. Pete Wilson, workers’ compensation emerged as the sticking point in the prolonged budget debate with Wilson charging that the Legislature had been “corrupted” by campaign contributions over the issue. 

Fred Main, general counsel for the California Chamber of Commerce, said he was more surprised at Davis’ three years of vetoes than the signed law this spring. 

“Davis is a Democrat,” Main said. “Democrats are concerned about the impact of organized labor. Organized labor was a strong supporter for the change. The governor wants to make sure his base is strong for him.” 

The new reforms, which take effect on Jan. 1, 2003, will eventually pump an extra $2.5 billion into the statewide compensation system, raising maximum benefits for injured workers from today’s $490 a week to $602 next year and $840 in 2006. After 2006, automatic hikes would follow the state’s average wage increases. The bill also doubles death benefits to a maximum of $320,000. 

While the increases are significant, the bill only raises California from 49th to about 40th in the country in terms of the level of benefits. 

Doug Heller, an advocate at the Foundation for Taxpayer and Consumer Rights in Santa Monica, Calif., said Davis faced “severe embarrassment” this year if he vetoed it again because there was a serious threat of a ballot initiative. 

In addition, although opposed by the insurance industry, the reforms were structured in a way that they aren’t going to have a major financial impact on insurers or large businesses. 

“It was a palatable compromise for all parties,” said Nicole Mahrt, spokeswoman for the American Insurance Association. 

Bob Stern, president of the Los Angeles-based Center for Governmental Studies, said Davis realizes he can raise as much money as he wants. 

“But to solidify his support, he needs labor,” Stern said. “These are people who get out the votes, and in an election year, votes are even more important than money.”