Gov. Backs Pro-Business Propositions

Embracing the business lobby’s two top concerns on the November ballot, Gov. Arnold Schwarzenegger on Friday endorsed measures that would limit lawsuits and overturn a law that would require companies to provide healthcare for workers.

An advisor to the governor said Schwarzenegger still would devote “the lion’s share” of his campaign efforts to defeat two ballot measures addressing the expansion of gambling. But the governor’s new endorsements are a badly needed coup for business groups, as recent polls have shown they so far have failed to persuade the majority of voters.

Both propositions on the Nov. 2 ballot are the California Chamber of Commerce’s biggest priorities in the election. People on the opposite side of both measures said they were blindsided by Schwarzenegger’s action Friday.

“I’m very disappointed that the governor is playing ‘girlie man’ for the Chamber of Commerce,” said Sen. John Burton (D-San Francisco), who authored the healthcare law that Proposition 72 seeks to repeal. “I had lunch with him yesterday and he did not have the [expletive] courtesy to tell me anything about this. He broke bread with me yesterday and broke my heart today.”

Burton’s law, SB 2, was passed last year but suspended when the referendum was filed. The law would require companies with 50 or more employees to provide healthcare coverage by January 2007 or pay into a special state fund that would do it. Businesses insist the new responsibilities would ruin many of their operations, but the law’s advocates insist it has been tailored to protect the state’s smaller businesses.

The most recent census figures report that 6.5 million Californians -- 18.4% of the population -- had no health insurance last year. The state nonpartisan legislative analyst’s office said the healthcare law could lead to 1 million more people receiving medical coverage.

“Achieving improved healthcare access and affordability for all working Californians is a positive goal,” Schwarzenegger said in a statement. “However, we must find a better way than doing so at the cost of putting employers out of business. Well-intentioned as it may be, Proposition 72 will only reverse California’s recovery and trigger an exodus of jobs from the state.”

The campaign to keep the law has raised $1.3 million so far, state records show, while the repeal campaign has raised $7 million, including donations of more than $100,000 from Macy’s, Target, Office Depot and the California Restaurant Assn. Still, a Field Poll released a month ago found that 48% of likely voters supported keeping the law, while 31% would repeal it.

Jot Condie, president of the restaurants association, said Schwarzenegger’s endorsement would help. “It underscores the argument that this is bad for California’s economy, that this is the wrong solution to frankly the right problem,” he said.

But Jamie Court, president of the Foundation for Taxpayer and Consumer Rights, a Santa Monica nonprofit group, said it was not enough for Schwarzenegger to oppose “the only plan on the table” to reduce the number of Californians without healthcare.

“Gov. Schwarzenegger owes the public an explanation of what he will do to help those who cannot afford health insurance if he is to oppose a common sense proposal already in place in Hawaii,” Court said. “Schwarzenegger needs to think more about the plight of patients and less about the big corporations that are shifting increasing burdens for healthcare costs onto employees and patients.”

Court and other consumer advocates also lambasted Schwarzenegger’s endorsement of Proposition 64, which would change the state’s Unfair Competition Law.

The initiative is aimed at limiting the 70-year-old law, which lets private citizens sue companies even when people filing the complaints have not been personally injured. The proposition would allow only the state attorney general or local public officials to sue on behalf of the public to enforce laws governing business competition.

“Proposition 64 will stop the legal practice of shakedown lawsuits, in which private lawyers file suits without any client or any evidence of harm,” Schwarzenegger said. “This turns lawyers into bounty hunters, stalking innocent small businesses that create jobs and opportunity in California.”

Environmentalists, who have filed suits under the law in the past to supplement enforcement by government officials, said they felt betrayed by Schwarzenegger since the governor just three weeks ago assured them that he wanted to fine-tune the law in the Legislature, not at the ballot box.

“This will drastically limit environmental enforcement,” said Bill Magavern, a Sacramento lobbyist for the Sierra Club.

Business advocates contend that they don’t want to junk the law, only limit its abuse by lawyers who gin up complaints, seeking quick financial settlements from small and medium-sized employers. “This is modest reform,” said Peter Welch, president of the California Motor Car Dealers Assn. in Sacramento.

Welch’s association has contributed about $2.5 million of the $9 million that industry groups, led by the Chamber of Commerce, have raised for the pro-Proposition 64 campaign.

“I think this is a wildly popular governor, and, yes, he is going to help,” Welch said.

The governor’s backing plus a new series of TV commercials could go a long way toward educating voters on the details of a complex issue, said John Sullivan, a campaign co-chairman and president of the Civil Justice Assn. of California, a business-backed legal reform lobby. A Field Poll last month showed voter sentiments running 2 to 1 against Proposition 64.

“This will make a significant difference,” Sullivan said. “It shows that our proposal fits the broader plan to restore California’s economic strength.”

So far, the governor has taken positions on nine of the 16 propositions on the ballot. His track record is impressive, as this spring he helped catapult two of his own initiatives to victory, authorizing him to borrow $15 billion to balance the state’s budget. But it is unclear whether he can tip the balance in this fall’s crowded ballot, especially on measures that are not his own.

The state budget propositions “were his and he promoted those measures as really part of his overall plan for California,” said Mark Baldassare, director of research at the Public Policy Institute of California. “Endorsements on ballot measures created by others -- that’s a whole other matter, similar to how people might view his particular endorsements of candidates.”