Amid Budget Crunch, It’s Every Lobbyist for Himself

Union lobbyist Willie Pelote delivered a blunt message to lawmakers at a recent budget hearing: State employees won’t even consider taking a hit to help solve California’s fiscal crisis until Geoffrey the Giraffe takes one first.

With the American Federation of State, County and Municipal Employees and other public employee unions trying to fend off $470 million in cuts to their compensation, Pelote accused the goofy cartoon giraffe’s boss, the Toys “R” Us toy empire, of using its Delaware shell company to legally shelter itself from California taxes.

Never mind that the loophole he was railing against was closed years ago. The details will get ironed out later, he said in an interview the next day; what’s important now is drawing the line in the sand.

Pelote is among scores of lobbyists lining up to offer lawmakers surprisingly specific plans for plugging the state’s $34.8-billion budget gap. While they are not all fully baked, the plans all share a common theme: They point the finger at someone else.

Unions propose slashing corporate tax breaks instead of the salaries of middle-class state workers. Pharmacy owners fearing their Medi-Cal reimbursements will be reduced suggest that lawmakers target the drug companies instead. And a coalition of local government agencies, worried that they could take a beating in lost state revenue, proposed their own laundry list of new taxes and revenue shifts with the predictable common thread -- all the proposals leave their coffers intact.

With the deficit as huge as it is this year, lobbying has been turned on its head. It’s a defensive game now, with interests scurrying to save what they’ve got instead of trying to get more, as they do in boom times.

Longtime alliances are crumbling in this race for self-preservation. It is not enough for lobbyists to merely warn that proposed cuts would cripple the ability of their clients to provide essential government services. They must show lawmakers where to find money elsewhere. Sometimes they point at their friends.

“A few years ago, groups were looking for ways to help the government spend all its money,” said Chris Micheli, a lobbyist for several manufacturers. “Now many are trying to stave off cuts or prevent paying increased taxes. It’s, ‘Don’t cut my budget, cut the other person’s budget.’ ”

Micheli’s strategy included showing lawmakers data that make the point that it’s not corporate tax cuts, but runaway spending in education, public safety and social services that has created California’s fiscal mess.

A staple target for many groups is the Department of Corrections, which had been shown great mercy in these lean fiscal times. A coalition of educators, advocates for the poor, unions and others, for example, suggests that the state could save as much as $1 billion a year by changing parole rules, not sending certain nonviolent offenders to state prisons and halting the Delano II prison project.

One group that has not advanced a plan for spreading the pain of reductions more evenly is the prison guards union, a main beneficiary of the Department of Corrections and one of the biggest contributors to state lawmakers.

Forgive the authors if some of the pitches are in need of serious fine tuning. Crafting a budget proposal is no cakewalk. An army of accountants and other experts at the Department of Finance has been working over the holidays to come up with the governor’s final budget this month. The sharpest minds on the Republican fiscal staff say they are just too short-handed to put any solid ideas out there at this point.

Yet proposals, drafted in some cases by a lone lobbyist or two, are flooding in. Many of them are backed with solid research.

Consider the American Federation of State, County and Municipal Employees. Its point about Geoffrey may be outdated, but the argument that corporations are contributing proportionately less to state coffers than ever is backed by U.S. Census Bureau data, which show the percentage of state revenue generated from business taxes is at an all-time low.

Plans Get Early Push

Observers say they are not surprised to see some semi-ripe plans getting pushed hard early as special interests jostle for seats at the negotiating table.

“There is a tendency for people who squawk the most to get the most attention,” said Bruce Cain, director of UC Berkeley’s Institute of Political Studies. Especially now that the budget is in the hands of so many unseasoned legislators, thanks to term limits.

“A lot of people are voting on the budget for their first time,” Cain said. “The tendency is to rely heavily on lobbyists.”

Before Davis even released his first round of proposed cuts in December, a coalition of cities, counties and police and fire departments called Leave Our Community Assets Local held a news conference imploring him to adopt their plan -- a plan that hadn’t even been published yet.

The group vowed to abide by a strict “no whining” policy. That is, it promised to spend its time proposing solutions rather than complaining about cuts. Not entirely credible, as the group’s leaders spent a fair amount of the news conference warning how cuts could devastate local services. But they did follow up with one of the most comprehensive proposals on the table so far.

“It’s in our best interest” to help the state get through this, said Pat Leary, a lobbyist representing counties in the coalition.

Indeed, if the drafting of the last state budget is any indication, some of the group’s ideas -- which include inflating the car tax, collecting more sales taxes from goods sold online and changing the payback strategies on certain bonds -- will get the attention of lawmakers.

“The counties went in early last year and said to the Department of Finance, ‘Here are some ways you can do this,’ ” said Jean Ross, executive director of the California Budget Project, a nonprofit research group that studies the effect of budget policies on the poor.

“They were really able to help frame some issues. It’s a way of getting your ideas into the process and seeing what shakes out.”

Other groups have taken notice and are bringing their own plans forward.

The California Medical Assn. came out early with a proposal to help restore funding to hospital trauma centers through a nickel-per-drink fee on alcoholic beverages. The plan is being pushed through Senate Bill 5x, drafted by Sen. Gloria Romero (D-Los Angeles).

Old Issues Revisited

Professional Engineers in California Government used its plan as an opportunity to once again roll out its findings on an issue that has infuriated the engineers since the mid-1990s: the state’s hiring of independent contractors.

Bruce Blanning, a union executive assistant, assured lawmakers that they can save $100 million a year by refusing to contract out 1,500 engineering jobs, and sending the work to state employees instead.

“Each contracted out engineering job or person a year cost the state $70,000 more than having the work performed out front by Caltrans staff,” he said. “There is no dispute or debate over the numbers.”

Then there are the groups that might be expected to work together in better times that turn on one another.

The Wine Institute has responded to the nickel-a-drink proposal by suggesting that the state raise general sales tax rates instead, something other industry groups are mobilizing against.

“It is fair, it is not discriminatory,” Mike Falasco, the institute’s legislative representative, said of a general sales tax hike.

The National Assn. of Chain Drug Stores is out front with a position paper accusing the makers of the drugs they sell with overcharging consumers. The association’s solution? Force Medi-Cal patients to use generic drugs -- but for goodness sake, do not cut prescription reimbursements to pharmacies.

The report says it is time for drug companies with profit margins “nearly five times higher than the average profit of Fortune 500 firms” to “bear their fair share” of soaring Medi-Cal costs “because they are driving up drug use.”

In a letter to the governor earlier this month, the Assn. of California State Supervisors suggested that any layoffs should come from the rank and file, and not its members, who are mid-level managers.

Of course, members of the rank and file in a packed hearing room erupted in applause recently when a union leader suggested that managers should be getting the ax.

Cain said the infighting may only be beginning.

“This type of lobbying can create some real tension between groups and break down some traditional alliances,” he said.

If things get really bad, Cain said, even close allies such as public school advocates and those for higher education could turn on each other.

“It can get unseemly,” he said. “But you want to make sure you don’t get left behind.”