A Year When Deals Prevail

Piercing two years of partisan gridlock, a humbled Gov. Arnold Schwarzenegger and Democratic lawmakers brandishing newfound clout created one of the most fruitful legislative sessions in years, if not decades.

Ambitious accords that emerged from Sacramento at session’s end Thursday take on some of California’s most neglected problems, such as its congested roads and dilapidated levees. Lawmakers tackled a daunting worldwide problem -- global warming -- intending that their efforts to reduce greenhouse gases would be emulated throughout the country.

Other deals -- to raise the minimum wage and compel drug makers to lower their prices for the working poor -- were notable because they dissolved angry impasses that had existed since Schwarzenegger was elected.

“This is probably the most productive session on issues that matter to the people of California in 20 years, issues where their lives intersect,” said Barbara O’Connor, a Cal State Sacramento professor and longtime Capitol observer.

The collaboration was particularly abnormal for an election year, when political posturing often quashes efforts at compromise.

But this year, all parties had important reasons to appease one another.

With an election nearing, Schwarzenegger needed to rehabilitate himself after his calamitous overreaching of 2005, when his effort to wrest political power from the Democratic Legislature backfired with the defeat of all four of his special election initiatives. That failure neutralized his favored way to prod legislators: threatening to go to the ballot.

Democratic leaders realized the preelection season gave them a brief window in which they held the advantage over the governor. Plus they had their own dismal public image to mend.

“There was a confluence of factors this year that probably will not be there next year,” said Senate President Pro Tem Don Perata (D-Oakland).

Much of the year’s success was made possible because Schwarzenegger dropped the imperious stance he had displayed toward the Legislature early in his tenure, when he belittled the Democrats as “girlie men,” mused about the possibility of reducing their jobs to part-time status and accused them of being vassals to labor unions.

Instead, Schwarzenegger ceded the lead to Democratic lawmakers and relegated himself to a supporting role, even though ultimately it meant that many of his own priorities would wither.

In laying out his agenda in January, Schwarzenegger took his cues from Democrats by adopting ideas they had been championing, such as a massive public works improvement project to be built through borrowing billions of dollars.

“Schwarzenegger began searching around for what clearly had popular support after he found out what did not have popular support, which was everything he had promoted last year,” said Tony Quinn, a political analyst.

The governor abandoned the hard-line approach he had shown in his first two sessions, when he negotiated with legislators only sporadically and vetoed measures that did not fully satisfy him.

When his efforts to negotiate the public works package in time to place it on the June ballot collapsed, he told the four Republican and Democratic legislative leaders to forge a compromise themselves.

The final deal, which will appear on the November ballot, asks Californians to approve $37 billion in new borrowing as part of a $116-billion construction effort to improve and expand the state’s roads, public transportation, waterways, affordable housing stock and school buildings.

It would be the largest such endeavor in California since the 1960s.

When the only hope of compromise meant abandoning his previously held positions, he did so.

In July, Schwarzenegger capitulated on the Democratic demand that drug makers face penalties if they did not agree to discount their medicines for poor people. It was a major concession because his own health advisors had warned that the Democrats’ choice of punishments -- restricting companies from selling their drugs to the state’s MediCal program -- was a terrible idea that had proved to be a flop in other states.

“I’ve been saying all along the governor’s adopting a Democratic agenda,” Assembly Speaker Fabian Nunez (D-Los Angeles) told reporters last week. “But really I think another way to describe it is the governor has come to us and said, ‘Hey, I want to do those things that Democrats want to get done.’ Why should we turn our back on that?”

Schwarzenegger’s new focus sidelined his key allies in his first two years: the business lobby and the Republican minority in the Legislature. Both moderate and conservative members of the GOP were openly frustrated with Schwarzenegger by session’s end, when he signed off on a global warming bill that will allow the California Air Resources Board to impose unspecified fees and fines on industry to lower emissions of greenhouse gases, heresy in anti-tax circles.

“Sometimes it looks like he’s doing things that he thinks he needs to get elected,” said Assemblyman Ray Haynes (R-Murrieta). “At other points, it seems like all he’s trying to do is make Republicans angry. They solicit our opinion and decide not to follow it.”

Assemblyman Keith Richman (R-Northridge), one of the moderates, said Schwarzenegger’s ideological twists reminded him of Gov. Gray Davis in 2002, when the Democratic governor was up for reelection.

Davis “was driven by the left to sign bills he previously wouldn’t sign,” Richman said. “This is almost deja vu.”

On all of the negotiations, the Democrats had to give up much of what they wanted as well, including a requirement that the state’s minimum wage automatically increase each year to keep up with inflation.

But in areas that were not Democratic priorities, Schwarzenegger had no juice in either party to get anything through the Legislature.

His pledge to provide tax credits to keep Hollywood studios from filming out of state went nowhere.

He could not push through a change to the way the Legislature draws its own election districts, even though Democratic leaders had vowed they would come up with a plan this year. It was his last chance at any kind of political reform in his first term, something he had promised days before the 2003 recall, when he lifted high a broom and declared, “Special interests are going to go crazy because they know I’m here to kick some serious butt.”

Instead, in the last days of the session, two special-interest titans that are among the Democrats’ biggest funders -- Indian tribes and labor unions -- openly clashed in the Capitol, with the unions ultimately beating back Schwarzenegger’s attempt to expand Indian gambling.

The governor’s $6-billion plan to accommodate prison overcrowding also came to naught. With the prison guards union lobbying heavily, Democrats rejected most of Schwarzenegger’s proposals, and Republicans dropped their support for the little that was left.

Despite those defeats, the governor emerged from the session with his popularity among likely voters hovering near 50%, an improvement from a year ago but 19 percentage points below where it was in August 2004, according to a Public Policy Institute of California poll released last week. He holds a 13-point lead over state Treasurer Phil Angelides, his Democratic challenger.

“We moved the state forward in so many ways,” Schwarzenegger said in a statement. “This session shows what we can accomplish when we work together for the good of California, and I am proud of what we have achieved.”

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jordan.rau@latimes.com