A major overhaul of the workers’ compensation system in Washington is already helping keep costs down for businesses, state officials said Tuesday while disclosing a major rate increase isn’t needed to keep finances stable.
The Department of Labor & Industries said it’s proposing an average rate hike of 2.5 percent for 2012. The agency could have been pushing for a double-digit increase this year if it wasn’t for changes made in the Legislature.
Officials had been considering an increase of up to 8 percent as recently as this week to restore depleted reserves but went with a lower number amid concerns from businesses.
“We recognize the impact of painfully slow economic growth, and this proposal balances that with the needs of the workers’ comp system,” department Director Judy Schurke said.
The agency plans to work with business and labor leaders on a plan to rebuild fund reserves in the future. Public hearings will be held on the rate proposal in October before a final decision in December.
Amid concerns about the financial stability of the system, businesses worked with lawmakers this year on a variety of changes, with the biggest allowing the state to offer limited settlements to workers that would lower payout costs over the long term. Officials believe the changes will save $1.1 billion in potential spending over four years.
Jerry VanderWood, a spokesman for the The Associated General Contractors of Washington, said the group was pleased with the lower rate proposal, but he added that keeping rates at current levels was the preference.
“It’s all about the timing,” VanderWood said. “The rest of the economy may be in a recession, but the construction industry is in a depression.”
Labor groups aggressively fought against the settlements plan that lawmakers adopted, arguing the new rules will lead to workers accepting less than what they are entitled to receive. The groups also have also campaigned to raise the rates to build up the system’s reserves.
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