Gov., Lawmakers Still Miles Apart on Ballot Measures

Despite months of talks, Gov. Arnold Schwarzenegger and Democratic leaders are nowhere near reaching compromises that could avert the Nov. 8 special election called by the governor, officials said Monday.

The Legislature, as it moves to finish work for the year, has until Thursday to place its own proposals on the special election ballot, according to the secretary of state. Last year, Schwarzenegger and lawmakers fashioned last-minute agreements that avoided pitched fights over local government funding, workers’ compensation insurance and state borrowing.

But lawmakers said no such settlements are imminent for the proposals Schwarzenegger has endorsed on the ballot: limiting state spending, lengthening the probationary period for teachers and stripping legislators of the power to shape their own election districts.

“At this juncture, the voters are going to have to sort it out,” Senate President Pro Tem Don Perata (D-Oakland) told reporters as legislators returned to Sacramento for the last three weeks of their annual session, where about 830 bills are pending.

The specter of the special election, which would include five initiatives along with the three endorsed by Schwarzenegger, has largely overshadowed proposals that could make their way through the Democrat-led Legislature before it adjourns Sept. 9. Nonetheless, those measures will likely reach center stage as the session’s end looms.

Democratic leaders are putting much of their energy toward passing a $10-billion bond for roads, ports and transit projects. If approved by the Legislature, signed by the governor and approved by voters in a spring election, it would be the largest transportation bond in the state’s history.

In 2002, the Legislature passed anther $10-billion measure, to underwrite construction of a high-speed rail network. But that has not yet gone before the electorate, and this newer bond proposal could end up superseding it.

Lawmakers are expecting to approve increases to the minimum wage and are considering a raft of measures that would expand healthcare benefits to the poor. The Republican governor last year vetoed similar proposals, but Democrats have tweaked them in hopes of making them more appealing this year.

The 50-cent minimum wage increase, for instance, still would raise hourly pay to $7.25. But rather than hike it in another year by an additional 50 cents, as last year’s proposal would have done, this plan would link future increases to the rate of inflation. The change has yet to win over the state’s business lobby, which fears higher wages would hurt employers and reduce hiring.

Many of the healthcare bills are aimed at expanding coverage for the young, considered a more sympathetic group than the population at large.

“We have a body of bills that are going to be going down to the governor’s office that I believe will improve the quality of life for Californians,” said Assembly Speaker Fabian Nunez (D-Los Angeles).

One late-arriving issue is how California should deal with a U.S. Supreme Court decision in June that allows governments to take private property through eminent domain for economic development efforts. Democratic leaders are hoping to devise rules to determine the circumstances in which such takings should be permitted.

The Legislature could also act on a number of the governor’s proposals, including bills to encourage greater installation of solar panels and speed up the way Caltrans designs and builds road projects.

Schwarzenegger is also pressing for stricter limits on junk food and nutrition-deficient drinks sold in schools. And the governor plans today to introduce legislation to fortify the state’s sex-offender laws.

One of the trickiest issues facing legislators concerns the way hospitals are financed. In June, the Schwarzenegger and Bush administrations agreed to a five-year deal limiting the way California can spend $18.4 billion on Medicaid healthcare for the poor.

The governor and Legislature now have to work out exactly how that money is divided among public and private hospitals, which have complained that funding decreases could drive them out of business.

The deal Schwarzenegger struck with the Bush administration will make it much harder for hospitals to use Medicaid money in ways that end up benefiting poor people not covered by the program. For years, California has used Medicaid money to help hospitals that treat large numbers of poor people not covered by the program.

The Democrats have misgivings about a component of the deal that shifts 554,000 blind, elderly and disabled poor people now in Medicaid into managed care. But the Schwarzenegger administration said the Bush administration insisted upon that condition.

Yet all these measures have received far less attention than those on the November ballot. The governor has insisted all year that he would push forward with the special election if legislators did not agree to his proposals.

Still, there has been much speculation in Sacramento that Schwarzenegger might relent: His approval ratings have plummeted, public opinion polls show little enthusiasm for his proposals or for the election, and his initiatives have run into one legal problem after another.

Democrats even solicited a legal opinion from the Legislature’s counsel that said Schwarzenegger had the authority to cancel the election. A more likely scenario, which occurred last year, would be for the Legislature to work out its differences with Schwarzenegger and place alternative measures on the ballot. Then all sides would urge the electorate to choose those initiatives over the ones currently on the ballot.

However, neither side is showing much desire to compromise.

Democrats have been unwilling to accept the overarching idea of Schwarzenegger’s “Live Within Our Means” initiative, which would give the governor broad power to make midyear spending cuts and would place inflexible caps on how much lawmakers could spend, even in years when state coffers were overflowing.

On Friday, Schwarzenegger succeeded in keeping on the ballot one of his proposals, which would give a panel of retired judges the authority to draw legislative and Congressional districts.

Two lower courts had tossed the measure off the ballot, because proponents had collected signatures for a version different from the one reviewed by the state attorney general, who writes the titles and summaries for measures.

Secretary of State Bruce McPherson, who had been criticized for not acting faster to reveal the discrepancies, said Monday that he was pressing for a new law giving his office the responsibility for making sure future petitions match what is submitted to the attorney general.

The Democrats and the state’s labor unions, meanwhile, believe they have a good chance of defeating Schwarzenegger’s proposals and further eroding his political power.

“This is going to be a referendum on the governor,” said Perata, who asserted that Schwarzenegger’s emphasis on a special election had stymied more “thoughtful” approaches to state problems.

“We have virtually wasted a year, at a time when we cannot afford to do that,” he said.

Other leaders were striking a less pessimistic public posture.

The governor’s spokeswoman, Margita Thompson, said, “The governor is an extremely optimistic person, and he will not accept defeatist attitudes. He will continue to work as hard as he can for a negotiated bipartisan agreement on the ballot.”

In an interview, Nunez said that while “given the time frame, it is unlikely” that deals could be reached, he was “still hopeful we could work out our differences.”

Times staff writer Nancy Vogel contributed to this report.