AUGUSTA – Is it a battle to enhance Maine’s business climate and, ultimately, protect the availability of jobs? Is it a scheme to promote hysteria as a way of boosting insurance industry profits or aiding employers at the expense of employees?

Whatever the answer to those questions, the Workers’ Compensation fight at the State House is casting a shadow over this year’s state elections.

Gubernatorial candidates are weighing in; lawmakers are warning one another of the price to be paid at the polls.

Except for a few fascinating exceptions, the conflict has defined party lines, pitting Democrats against Republicans and aligning outgoing independent Gov. Angus King with the business community against organized labor.

The suddenly arising dispute echoes – indeed, stems from – one a decade ago, when lawmakers and then-Gov. John McKernan became embroiled in a bitter contest that temporarily closed state offices and agencies and led to a sweeping overhaul of Workers’ Compensation law.

That the current imbroglio began in earnest only after tax-and-spending legislation had been enacted has limited the immediate fallout on state government this time around.

“Ten years ago, the budget was tied up,” said Senate President Pro Tem Michael Michaud, D-East Millinocket. “The difference between this and 10 years ago is there’s no potential shutdown.”

Increasingly, however, among many of those involved in the legislative rematch, passions have become inflamed to a level reminiscent of the early 1990s.

On the business side, there is the specter of higher insurance costs. Total annual premium now is about $350 million, according to state officials.

“Clearly, there’s a concern about the rates going up,” Michaud acknowledged.

Labor sees an attack on protections that were scaled back before.

“It’s a retroactive benefit cut,” said Maine AFL-CIO President Ed Gorham.

At issue is the eligibility of workers who are injured on the job for long-term Workers’ Compensation benefits. The duration of a worker’s eligibility is determined by the level of permanent impairment.

A Feb. 6 state supreme court ruling interpreted current law to allow unrelated pre-existing conditions to be considered along with work-related injuries in determining an employee’s level of permanent impairment.

Business advocates and the King administration maintain such “stacking” was not envisioned in the negotiations that produced the overhaul of the Workers’ Compensation system in 1992.

Warning that the law court decision in Kotch v. American Protective Services Inc. could produce substantially higher system costs, King has called for lawmakers to overturn it.

“Workers’ Compensation is just that,” said Peter Gore of the Maine State Chamber of Commerce. Compensation is “supposed to be for work-related injuries,” he said.

Lawmakers appeared to agree almost at the outset of this year’s legislative debate to write new law excluding nonwork-related injuries.

In negotiations that followed, lawmakers have appeared to accept the inclusion of previous and new work-related injuries – at least prospectively – in determining levels of impairment.

But a deadlock developed over how to treat older claim cases.

Republican lawmakers say the strength of the Maine economy is at stake.

“You cannot suffer an on-the-job injury if you do not have a job to begin with,” House Republican leaders Joe Bruno of Raymond and William Schneider of Durham said in a statement last week.

Democrats are anxious not to be branded anti-business, but have questioned industry estimates of potential system costs associated with various changes in law.

For the time being, the 89-61-1 Democratic majority holds the upper hand in the House. In the Senate, things are different.

Democrats control that chamber, too, 18-16-1. But two members of the majority bloc – Sens. Marge Kilkelly, D-Wiscasset, and John Nutting, D-Leeds – have sided with the governor, as has independent Sen. Jill Goldthwait of Bar Harbor.

Further complicating the mathematics of Senate voting is the relatively pro-labor stance of the sole dissenter in the Republican minority bloc, Sen. Peter Mills of Skowhegan.

King and his administration’s officials argue that a new law is needed, and that it must be cost-neutral.

“The fact [is] that we’re already a high-cost state in terms of premium and benefits,” said Commissioner Catherine Longley of the Department of Professional and Financial Regulation.

Administration critics charge that the governor’s approach toward retroactivity would rob employees of rights they won in the last round of State House warfare.

“The stuff they are messing around with now has nothing to with Kotch,” Gorham said. “It has to do with trying to screw injured workers out of benefits going back to 1992.”