The biggest guessing game in the Capitol these days - big in both political and financial terms - is whether Gov. Arnold Schwarzenegger, who has demanded workers' compensation reform on behalf of employers, will make a deal with Democrats in time to forestall a multimillion-dollar ballot measure shootout in November.

The deadline for either cutting a workers' comp deal or launching a ballot measure war is rapidly approaching. With Schwarzenegger ramping up the pressure on Democrats, the odds for a compromise seem to be improving - much to the silent dismay of political consultants who have been anticipating a huge payday.

Schwarzenegger, having overcome the odds to win voter passage of Proposition 57, a $15 billion bond issue, on March 2, now has his political team working on the workers' comp initiative, and a drive is under way to collect the nearly 600,000 signatures needed to qualify the measure. The deadline for submitting signatures and securing a spot on the ballot is April 16, and that date has become the de facto deadline for a deal.

Last week, Schwarzenegger used an appearance at a Capitol event honoring agriculture to plug the ballot measure, saying that securing enough signatures would "get a clear message out there that you want to get rid of the fraud and the abuse of workers' compensation" and adding, "If we do not settle here, in a legislative way, then we will go to the ballot."

Employers have complained about soaring insurance premiums for workers' compensation, saying that the costs have become significant impediments to doing business in California. Schwarzenegger has taken up their cause, rating workers' comp reform just behind straightening out the state budget on his priority list. Democrats have allies among labor unions and attorneys who specialize in workers' comp cases. They have urged re-regulation of the insurance industry while offering only minimal changes in various cost factors.

Originally, Schwarzenegger and employers were demanding about $11 billion in savings, but a downward recalculation of total workers' comp costs, from about $25 billion a year to $18 billion, by the Workers' Compensation Insurance Rating Bureau, has led some to demand de-escalation, even though employers question the numbers. Sources close to the Schwarzenegger-employer side now indicate that savings in the $5 billion to $6 billion range probably would be enough to close a deal. That would be somewhat more than last year's Democrat-written overhaul of the system produced.

There's no deal yet, despite marathon negotiations behind Capitol doors, but those involved say gaps in several of the half-dozen-plus major areas of discussion have been closed and a leading Democrat, Sen. Richard Alarcón, says he's "very confident" it will happen.

The biggest sticking point appears to be one of the biggest workers' comp cost areas: benefits to workers who are declared to be partially, but permanently, disabled due to job-related injuries or illnesses. Schwarzenegger and employers want eligibility for those benefits tightened - which also would cut into attorneys' fees.

While the point-by-point talks and the signature-gathering continue, strategists for both sides also are weighing the costs and dynamics of a November ballot measure campaign. The former would be huge - perhaps $40 million - while the latter are uncertain. Polling indicates that while voters are generally in favor of reforming the huge system, they are leery about cutting benefits to injured workers.

Schwarzenegger's ability to sway voters, demonstrated in this month's election, is another factor, as is the presence of several other measures on the same ballot, such as the business-backed referendum that would overturn a new state law imposing a mandate on employers to provide health care coverage to workers. That measure involves many of the same political players - employers and unions, most prominently - and there would be both political and financial interaction. Would employers finance two big-dollar campaigns simultaneously - as well as a potential third dealing with lawsuits? Would unions or attorneys shift money from defending the health care mandate to attacking a workers' comp overhaul?

It's a three-dimensional chess game with huge stakes.