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Governor Schwarzenegger Proposes Selling a Portion of State-Run Workers Comp Insurer

Source: LA Times

Posted on 25 Jun 2009

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A substantial number of budget revisions went before the California Legislature on Wednesday to try and address California's fiscal woes. One of the proposals includes Governor Schwarzenegger's proposed sale of the state-run Workers' Compensation insurance company to bring in $1 billion.

The committee approved the move of selling a portion of the State Compensation Insurance Fund (SCIF), but a legislative analyst has said such a complicated sale would be "very unlikely" to provide financial relief within a year.

In his 2009-10 May Revision General Fund Proposals, Schwarzenegger proposed seeking "a private entity to purchase a portion of SCIF's book of business, with the SCIF remaining as the insurer of last resort."

Schwarzenegger's plan also includes $1 billion in Medi-Cal cuts that would require a federal waiver. But without the waiver in hand, "you shouldn't be counting the savings," complained Assemblyman Jim Nielsen (R-Gerber), a member of the joint committee.

These proposed plans are part of a Democrat-driven plan, which on paper reduces the state deficit by $23.2 billion and contains $7.2 billion in bookkeeping maneuvers. Moves to account for billions more are one-time fixes, are sure to be challenged in court or are grounded in rosy assumptions that the Legislature's own fiscal advisors say are unlikely to materialize.