Gov. Arnold Schwarzenegger said Thursday that he is willing to come down from his proposed $11.3 billion in cuts to the state's ailing workers' compensation system.

The governor said new insurance industry figures showing the cost to pay benefits and treat injured workers in 2004 will be lower than had been projected leaves more room to negotiate and head off a Republican-backed drive to put the issue on the ballot.

During a news conference in Long Beach, Schwarzenegger said he would "sit down and make a deal" if lawmakers agree to a reform package that will produce a 25 percent to 30 percent cut in workers' compensation costs, instead of the roughly 50 percent cuts in his own reform proposal.

"This is good news for the effort to find a good compromise in the Legislature," said Sen. Richard Alarcón, D-Sun Valley, who is working closely with Senate President Pro Tem John Burton on a Democratic workers' compensation plan.

Insurance Commissioner John Garamendi said the governor's statement was key not because of the numbers, but because "he's willing to negotiate. It's about getting good, solid reform."

Lawmakers - especially Republicans - have focused on achieving major cost cuts in the state-run program, which is plagued by high insurance premiums and medical costs but pays injured workers some of the lowest benefits in the nation.

How far the governor is willing to come down remains unclear.

Savings in the Schwarzenegger plan were based on annual workers' comp costs of $24.9 billion. But this week, a key insurance group - the Workers' Compensation Insurance Rating Bureau of California - revised the number to $17.9 billion because of savings expected from new workers' compensation laws this year and a smaller self-insured market.

In the $24.9 billion scenario, a 25 percent to 30 percent cut would save $6.2 billion to $7.5 billion. Cutting that same percentage from a $17.9 billion system would yield savings of $4.5 billion to $5.4 billion.

"What he's indicating is, in order to get a deal, he understands he may have to give on some issues," said the governor's communications director, Rob Stutzman. "He'll come some distance from his starting point."

"There are all kinds of debate about what the real costs are," Schwarzenegger said Thursday. "Not even the experts agree."