Nunez’s high-stakes deal

It has not been the best of times for Assembly Speaker Fabian Nunez (D-Los Angeles). He has been the subject of reports in The Times describing how he dipped into campaign funds to pay for, among other things, expensive Bordeaux wines and a stay at a ritzy Barcelona hotel. On-again, off-again negotiations over healthcare reform seem stuck in neutral, with a vote in the Legislature put off indefinitely. A term-limits reform initiative that he’s engineered has unexpectedly encountered tough opposition.

All the bad news increasingly means one thing: Nunez’s political future is in the hands of one man, Gov. Arnold Schwarzenegger.

Here’s why.

Proposition 93, which will be on the Feb. 5 ballot, would change the state’s term-limits law. Legislators may now serve three two-year terms in the Assembly and two four-year terms in the Senate. Proposition 93 would allow them to serve 12 years in one house.

Nunez is scheduled to be termed out of the Assembly in November. If Proposition 93 passes, however, he could serve in the Assembly -- and presumably as speaker -- for six more years. If the measure fails, Nunez would immediately become a lame-duck speaker, and talk of a successor would begin Feb. 6.

That’s why he desperately needs Schwarzenegger’s endorsement of Proposition 93. Most observers believe that voters will defeat the measure if it lacks the governor’s seal of approval.

But Schwarzenegger’s support comes at a price. The governor has consistently used Nunez’s desire to change the term-limits law as leverage in his negotiations with the speaker about healthcare reform, and it seems to be paying off.

Initially, Nunez opposed aspects of Schwarzenegger’s healthcare reform proposal. The speaker objected to the idea that all individuals must have insurance because he believed not everyone could afford it, and he wanted businesses to spend more of their payroll on their workers’ healthcare than the contribution the governor is seeking. The individual mandate is a cornerstone of the Schwarzenegger plan.

But in recent weeks, Nunez has drifted closer to the governor’s positions on universal coverage and the business contribution. The speaker’s office is quick to say that Nunez’s support for the individual mandate is qualified: If insurance coverage costs more than 6.5% of an individual’s income, he would be exempt from the universal requirement, which some critics say would exempt too many people. As for business, Nunez originally set the payroll tax at 8% but now supports a sliding scale up to 6%. Schwarzenegger would cap business’ contribution at 4%.

There’s another reason for Nunez’s change of heart. The speaker launched the term-limits initiative in the wake of the productive 2006 legislative session, whose achievements included the landmark law curbing greenhouse gas emissions in California. But yesterday’s huzzahs of bipartisan cooperation have been replaced by today’s partisan bickering, which climaxed in the summer’s budget standoff and spotlighted the 2007 session’s noteworthy lack of legislative achievements.

Meanwhile, opponents of Proposition 93 have begun to come forward. State Insurance Commissioner Steve Poizner has taken over the “no on 93” campaign. The Republican millionaire made an initial donation of $1.5 million and a pledged to spend “whatever it takes” to defeat the measure. The state’s prison guards union previously endorsed the measure but has switched sides, a bit of payback after a proposal to raise prison guards’ pay died in the final hours of this year’s legislative session. The opposition is expected to seize on this year’s late budget and the collapse of healthcare reform as evidence of an ineffective legislative leadership that should be ousted.

A healthcare deal would go a long way toward offsetting these negatives. Earlier this year, the governor tied his support for a new term-limits law to redistricting reform. But the Legislature couldn’t agree on how to change the way legislative and congressional districts are drawn. That Nunez can still hope for Schwarzenegger’s endorsement of Proposition 93 testifies to the governor’s enduring desire to leave a legacy of healthcare reform.

Republicans in the Legislature refuse to back any plan that would involve new taxes, which requires a two-thirds vote for passage. So Schwarzenegger and Nunez have decided to bypass the Legislature on the funding question and attempt to qualify an initiative for the November ballot that would specify how healthcare reform would be paid for.

If a plan ends up on the ballot, it would be a tough sell. All previous healthcare initiatives have been defeated. And with current budget forecasts for 2008 putting the revenue shortfall at $10 billion, an expensive reform plan -- some estimates put the price tag at $12 billion -- would face even more trouble. To win passage, Schwarzenegger will need help from unions and Nunez. But if Proposition 93 fails in February, the lame-duck Nunez could be ousted as speaker, losing his bully pulpit to campaign for reform. That would leave Republican Schwarzenegger as the face of a campaign relying heavily on unions and other Democratic-friendly groups while confronting stiff opposition from many business groups.

With healthcare negotiations stalled, time would seem to be running out for Nunez. Worse for the speaker, the more he inches toward the governor on a healthcare plan, the more he risks losing the financial support of unions in an initiative campaign, which would be crucial for passage. The cost of his political maneuvering may be the speakership.