Lawmakers will consider changes in pension, workers’ compensation and tax policy, likely setting the stage for the governor’s campaign to raise taxes to close the deficit.

By Michael J. Mishak and Patrick McGreevy, Los Angeles Times
August 27, 2012, 3:10 a.m.

SACRAMENTO — Entering the final week of their legislative session, state lawmakers still must grapple with controversial proposals to overhaul California’s overburdened public pension system, revamp its costly workers’ compensation scheme and change the way corporate taxes are assessed.

Legislative leaders said they hoped to pass an ambitious agenda aimed at convincing voters that they are responsible stewards of Californians’ money. The outcome is likely to set the stage for Gov. Jerry Brown’s high-stakes campaign to raise billions of dollars in taxes to close the state’s deficit.

“The hope is that our work here lays the foundation,” said Assembly Speaker John A. Pérez (D-Los Angeles).

Trying to boost public confidence in Sacramento, Brown has pushed lawmakers to remake the state pension system. The Democrats who dominate the Legislature, however, have been reluctant to adopt key parts of the 12-point plan he proposed last year. Brown wants to raise the retirement age for most new public workers from 55 to 67 and adopt a hybrid 401(k)-style benefit plan for new hires.

Lawmakers are expected to debate a modified proposal that tackles abuses such as pension “spiking” but permits retirement earlier than 67. They have also been discussing a possible cap of about $100,000 on how much public employees can receive from a state pension plan, with workers having the option of also paying into a cash balance plan that would guarantee a specified rate of return.

Meanwhile, the Legislature faces a drive to overhaul the $16-billion-a-year workers’ compensation system. Medical and legal costs have spiraled since the law was last rewritten eight years ago, and permanent disability benefits to injured workers have fallen by about 60% since then.

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