Many Found Elements to Hate in Gov.’s Plan

For a few hours Wednesday night, it looked as though Gov. Arnold Schwarzenegger had salvaged an improbable victory.

Negotiations on his public works reconstruction project, which had been heading nowhere for weeks, suddenly rebounded. Legislative leaders called their members in for a vote, and the California Assembly approved two popular parts of Schwarzenegger’s plan: $24 billion in improvements to the state’s levees and schools.

But by the time they were done, the election-year plan Schwarzenegger had been trying to put together since Christmas had imploded. Senate leaders, rubbed raw by the fractious negotiations, had closed their shop and gone home, taking with them the last lingering hopes of placing a deal on the June 6 ballot for voters to ratify.

“That candle has burned out,” said Assembly Speaker Fabian Nunez (D-Los Angeles).

Those spasmodic final hours were a fitting coda to Schwarzenegger’s effort to prove he could extract achievements from a Capitol that he had long derided as dysfunctional. As described by negotiators from both sides of the aisle, negotiations were so erratic that by the end, California’s leaders were relying on the state printer, one of the most obscure bureaucracies in Sacramento, for the last word on when their time would run out -- when it would be too late to print and distribute ballot materials.

Schwarzenegger had guided the talks in a Rashomon-like process involving individual meetings with the four leaders of the Legislature. One would depart the governor’s suite only to find that his understanding of the deal on the table differed from that of his colleagues.

Time and again, the governor assured Democrats he could deliver Republican votes that never came. And the legislative chiefs proved incapable of crafting a deal on their own as they had under previous administrations.

By last week, relations had soured so much among the Capitol’s powerhouses that the Legislature’s Democrats were sabotaging each other with a dismissiveness usually reserved for the opposition.

Rebuilding California’s physical foundations was supposed to be the centerpiece of Schwarzenegger’s political resurrection as he headed into election season, still smarting from his losses in last year’s special election. When he unveiled a $68-billion borrowing proposal in January, it had something for everyone: 9,000 miles of rebuilt highway lanes for suburban and rural commuters in Republican areas; 8,500 miles of bike and pedestrian paths for environmentalists; money for new reservoirs for agriculture; billions to shore up the levees that protected thousands of homes in the Sacramento-San Joaquin Delta and Northern California; and $38 billion in improvements for school construction.

But it quickly became clear that the plan also included something to hate for everyone. The Assembly’s Republicans, far more frugal than the governor from the same party, strongly objected to the amount of money Schwarzenegger wanted to borrow to pay for his program; it would cost taxpayers more than $3.7 billion a year to pay off.

Democrats, meanwhile, demanded billions more for their favored areas: mass transit, urban parks, affordable housing and hospitals.

Over the last month, Schwarzenegger and Democratic leaders hammered out the framework for a compromise: a $49-billion plan that they thought gave all sides what they wanted. But they had miscalculated, fatally: The governor belatedly discovered that his fellow Republicans were not interested, except with changes that Democrats wouldn’t consent to.

The Republicans’ biggest demand was money and authorization for new water storage, which Schwarzenegger described Thursday as “almost a religious issue” that “was like the holy war in some ways.”

Kevin McCarthy of Bakersfield, outgoing leader of the Assembly’s Republicans, said: “The Democrats wouldn’t come to any common-sense agreement when it came to concerns of the Republicans. They’d put more money into housing and soccer fields than ... they put into storing water.”

Privately, some Republicans said they resented the governor for taking them for granted. Democrats saw the new demands -- coming after they had cut a deal with Schwarzenegger -- as duplicitous.

“My guys said if this was a labor negotiation, we would be on strike a long time ago,” said Senate President Pro Tem Don Perata (D-Oakland). “When you are going to do a deal, you come in with deal points. You don’t continuously throw things on the table.

“You don’t try to play one person against another,” he said, “which everyone felt was what was going on.”

McCarthy agreed: That “doesn’t work.”

Still, Schwarzenegger was adamant about a June deal. “If we can’t do this by Friday [March 10], we are all losers,” he told the leaders at a joint meeting last week, according to two participants.

By Tuesday, after further compromises had been offered and rejected, and support began to fall away even from the leaders’ own party members, things came to a head. The fed-up leaders walked together to Schwarzenegger’s office to say they wanted to start over, aiming for a smaller, less-divisive plan for the November ballot.

Schwarzenegger would have none of it. “He said flat out this was not acceptable,” Perata said.

The administration tried to ratchet up the pressure on Republicans, asking donors and local activists to weigh in on Schwarzenegger’s behalf. It didn’t work.

“Most of them have said they’re going to call the governor’s office back and let them know that they understand my perspective and agree with it,” said Assemblyman Keith Richman (R-Northridge).

By Wednesday night, the only thing the leaders could agree on was a $4.1-billion package to refurbish California’s levees. Then the Assembly approved $19 billion in education bonds as well -- violating that agreement, in the Senate’s view. The chamber adjourned without taking action.

On Thursday, Schwarzenegger was upbeat.

“I see a great move forward,” he told reporters at a news conference. “We will have it done this year.”

Times staff writers Peter Nicholas and Evan Halper contributed to this report.