The year was 1978, and California's political leadership was trapped between escalating public anger over rapidly rising property tax bills and powerful interest groups that didn't want to change the status quo, with a ballot measure being threatened if they didn't act.

The conflicting pressures paralyzed then-Gov. Jerry Brown and a Legislature strongly controlled by his fellow Democrats. They acted only after it was certain that the property tax initiative being promoted by anti-tax leaders Howard Jarvis and Paul Gann would qualify for the ballot. But their alternative, limiting relief to homeowners, was buried in a landslide of votes for Jarvis-Gann's Proposition 13.

Twenty-six years later, a similar scenario is developing around workers' compensation, the $25 billion-plus per year system that pays workers for job-related injuries and illnesses.

California employers, who have seen their workers' comp insurance premiums and self-insurance costs double and triple in the last few years, are demanding relief, while a powerful coalition of labor unions, medical care providers and lawyers who specialize in workers' comp cases wants to minimize changes that would affect their pocketbooks. Employers are threatening to place a measure on the November ballot if relief isn't forthcoming soon.

The major difference between the dynamics of 1978 and those of 2004 is that this time, the governor has chosen sides, threatening to lead the ballot measure campaign if lawmakers don't act.

Gov. Arnold Schwarzenegger has designated workers' comp reform as his major nonbudgetary goal, joining employers in contending that if workers' comp costs aren't brought into line with those of other states, California will suffer a devastating loss of jobs.

Just last week, the California Business Roundtable issued a study contending that nearly 40 percent of California companies are planning to move jobs out of the state, and quoting a survey that found 100 percent of the state's business executives view its business climate as unfavorable.

The Business Roundtable report was released as Schwarzenegger's deadline for legislative action was about to expire. The deadline was Monday, and both houses of the Legislature met only briefly without even attempting to meet it.

"What's occurring at this time is a disgrace," Republican Assemblyman Ray Haynes said in a brief floor speech as the Assembly adjourned for the day.

Legislative leaders have indicated that they may offer Schwarzenegger and employers some kind of reform plan in about a month, but it's likely to fall far short of the $11 billion in savings that the governor says his plan would produce. The question is whether it will be enough to forestall what could be a ballot measure battle that could cost contending factions upward of $40 million for television ads and other campaign costs.

The employer-backed coalition will begin its signature-gathering for a November ballot measure soon, and must submit those signatures by mid-April to be assured a spot on the November ballot. But even after signatures are submitted, there could be a deal that would stop a full-fledged battle, although if the measure qualified, it would still appear on the ballot.

What no one knows is how tough Schwarzenegger will be on this issue. As a new governor without a political track record, he's not been truly tested. Democrats and their allies clearly hope that he will take a half a loaf, or even a few slices, to avoid a ballot battle that there's no guarantee of winning.

By the same token, however, if Schwarzenegger succeeds, as now seems likely, in persuading voters to adopt two budget-related ballot measures today, overcoming what appeared to be long odds, his workers' comp ballot measure threat will have gained credibility and his negotiating position will have been strengthened.

Margita Thompson, Schwarzenegger's press secretary, didn't declare immediate war as the deadline passed Monday. "The deadline served a purpose since it got people to the table," she said, expressing hope that a bipartisan deal might still be reached and citing the almost daily meetings between emissaries of the contending factions. And, she said, workers' comp "will be the number one thing after (today's) election."