Legislators Resolve Some Problems : Key Bills Shatter Usual Stalemate

It took a dramatic reversal by Gov. George Deukmejian and some unlikely compromises, but in the last three weeks, while racing frantically to wrap up its two-year session, the Legislature did the unexpected by resolving a series of king-sized problems.

A couple of nagging headaches--Deukmejian’s plan to build a prison near downtown Los Angeles and restoration of $283 million worth of programs previously vetoed by the governor--prompted the Legislature on Saturday to extend the 1985-86 session an extra two weeks beyond a scheduled weekend adjournment.

Assembly Speaker Willie Brown (D-San Francisco) announced, however, that the remainder of the session would be restricted to “a very short agenda.” He vowed: “We will resolve it one way or the other. Everybody’s just trying to find a way to break the logjam.” Both legislative houses will meet again Thursday.

Regardless of the few issues that remain unresolved, however, the Legislature’s actions in August have shattered the conventional wisdom that nothing much gets done in an election year. History had indicated that the main accomplishment probably would be political posturing, rhetoric and stalemate, with the governor and 100 of the 120 lawmakers looking ahead to the November elections.

Political games were played, to be sure. Nevertheless, during the past three weeks, the Assembly and Senate managed to pass legislation to:

--Overhaul California’s 50-year-old unitary method of taxing multinational corporations, ending a 10-year struggle over a taxing system that many believe has discouraged investment in the state.

--Order the nation’s most extensive divestiture of public pension funds in companies doing business in racially divided South Africa.

--Forge a landmark anti-litter bill that ended two decades of fighting between environmentalists and the beverage industry over refunds on bottles and cans.

--Provide a $5-billion, five-year boost to overcrowded school districts that otherwise could not afford to build new classrooms.

--Open California to out-of-state banks, ending a decade-old battle by New York banks eager to enter the nation’s richest market for consumer financial services. Even as Deukmejian and legislative leaders were locked in hard negotiations Saturday, gubernatorial Chief of Staff Steven A. Merksamer was praising the overall outcome of the session as “very successful” with “major achievements historic in their dimensions . . . unlike some of the (other sessions) in the last few years.”

Speaker Brown, a veteran of many sessions, described this one as “fabulous.”

Productive Three Weeks

The productive three weeks that followed the Legislature’s summer recess highlighted a two-year session that saw other major accomplishments such as the passage of a mandatory automobile seat belt law and the first major overhaul of the state’s welfare system since Ronald Reagan was governor.

The session has produced its share of winners and losers. Big multinational corporations won a tax break that they had hungered after for years, environmentalists had their so called “bottle bill” and school districts that had been unable to keep up with growing enrollment got money instead of promises.

The Republican governor eliminated a potential campaign issue for his reelection opponent, Los Angeles Mayor Tom Bradley, by dramatically shifting his stance on divestiture and embracing a position that previously had been claimed by Democrats Bradley and Brown. Deukmejian also got a bill revising the unitary tax system and--last year--the landmark welfare overhaul by compromising with Democrats.

Speaker Brown recorded a significant accomplishment when he pushed through his mandatory seat belt law, which holds the promise of saving lives, and Senate President Pro Tem David A. Roberti (D-Los Angeles) forced the governor to approve a major new social program--state care of “latch-key children” of working parents.

But it has been a disappointing two years for businesses and city governments that have found no real answer to an insurance crisis that has left some of them unprotected, for financially strapped rural communities, and for advocates of campaign finance reform.

It also has been a session marked by record campaign contributions solicited from powerful special interests with much to gain or lose as bills inched their way through the legislative labyrinth.

A record was established in 1985 when state elected officials collected more than $25 million in contributions, a figure that is certain to be surpassed this year as the November elections approach.

Few Easy Answers

But even as hundreds of measures found their way to the governor’s desk, the Assembly and Senate at times have appeared bedeviled by a series of crises that offer no simple solutions.

Hoping to provide more room for an exploding prison population, lawmakers set aside money to complete the nation’s largest prison construction program. But their efforts were losing ground to a tidal wave of new convicts that outpaced all projections.

Deukmejian promised a “rural renaissance” for depressed regions of the state, but ran into some hard political realities. The $37 million in grants and loans he proposed to promote economic development were sliced to $8 million while much of the rural north remained in the grip of high unemployment and a deep recession.

AIDS also emerged as a pressing political issue and a record amount of money was allocated for research and treatment of the dreaded disease. Two bills aimed at promoting development of an AIDS vaccine, and appropriating a total of $10 million, easily won final passage on Friday.

But Deukmejian vetoed a measure to protect AIDS victims against job discrimination.

Insurance Dilemma

In what may be the session’s biggest failure, voters, dissatisfied with the Legislature’s inaction on the insurance crisis, stepped in and overwhelmingly approved Proposition 51 on the June ballot, a significant revision of the state’s liability insurance system that supporters hope eventually will cut premiums.

Of all the issues to come before lawmakers, the fight over unitary tax reform for multinational corporations epitomized everything both good and bad about the legislative process.

It became known as a full employment act for lobbyists as big corporations poured hundreds of thousands of dollars into the campaign treasuries of dozens of lawmakers in hopes of obtaining a major tax break.

No one knows for sure how much money was contributed in the unitary tax fight because there were so many players. “It’s hard to say, probably a million dollars or more in the last three years,” Sen. Alfred E. Alquist (D-San Jose), the chairman of the Senate Budget Committee and a key negotiator in the unitary compromise, said on Saturday. Some skeptics said the Legislature was reluctant to solve the problem because it would dry up the money well.

Difficult Compromise

In both 1984 and 1985, just when it appeared that a compromise was at hand, unitary tax reform bills died in the closing hours of the session.

This year’s bill, like many in the past, would allow corporations to be taxed solely on the profits their subsidiaries generate in the United States. The 50-year old unitary method based their taxes on worldwide profits, bringing complaints that it discouraged investment in California.

Before the Legislature’s summer recess, few expected the unitary tax bill to go very far because Democrats had linked it to their demands for divestiture of state funds from companies that do business in South Africa.

But Deukmejian, who earlier advocated a go-slow approach on divestiture and had threatened to veto any unitary bill linked to that issue, suddenly switched positions in June. He agreed to full divestiture after South Africa imposed an unprecedented state of emergency and jailed hundreds of blacks in predawn raids.

That dramatically changed the climate for unitary tax reform and the bill, long advocated by foreign companies and the White House, swept to Deukmejian’s desk by overwhelming margins.

Back From the Dead

“Until they struck a deal on South Africa, unitary was a dead duck,” one legislative aide said.

The divestiture bill Deukmejian agreed to sign requires the sale of up to $8.3 billion in state pension fund investments in companies doing business in South Africa over a four-year period. It also clears the way for the University of California to go ahead with its own $3.1-billion divestiture plan by indemnifying UC regents of any personal liability in disposing of the university’s holdings.

Deukmejian’s unexpected switch put him at odds with President Reagan, his longtime political ally, who continues to favor a milder approach of diplomatic pressure.

But the governor said he hopes California’s action--the largest such divestiture in the nation--will push Reagan to support stronger sanctions. “We have condemned apartheid in the strongest possible terms,” the governor declared after the measure passed.

After months of delicate negotiations between the beverage industry and environmentalists, a compromise was struck on an anti-litter bill calling for refundable deposits on beer and soft drink containers.

Provision for Refunds

The compromise requires beverage distributors to pay a 1-cent deposit, which would be passed on to consumers as part of the product’s price. Beginning Oct. 1, 1987, consumers would begin collecting refunds at neighborhood recycling centers.

Passage Friday night of the interstate banking legislation, one of the most heavily lobbied measures of the session, is expected to vastly expand competition among financial institutions in California as the big New York banks begin to enter the state in 1991. As part of the compromise, California banks and savings and loans were given permission starting next July to expand into 11 Western states, where they hope to strengthen themselves for the competitive battle ahead.

Education got an economic shot in the arm as the Legislature Friday night agreed to spend $5 billion on school construction over the next five years. The money is to come from several bond issues, including an $800-million measure on the Nov. 4 ballot, tidelands oil revenues and developer fees. Deukmejian last year vetoed a similar package of school construction legislation, but then embraced it as a top priority for this year.

Some of Deukmejian’s other goals proved more elusive.

Democrats wary of providing the Republican governor with a potent political campaign plank turned down Deukmejian’s plan to reorganize the state’s handling of toxic wastes. Democrats came up with their own plan, but the governor vetoed it.

Issue in Campaign

Toxics has become a key issue in Bradley’s fight to unseat Deukmejian. Bradley scored with television commercials that accused the governor of botching toxic cleanup and accepting campaign contributions from polluters.

The governor fought back, saying that he had signed more than 90 toxic cleanup bills and increased the budget for cleanup programs from $58 million to $144 million.

The Legislature seems determined to deprive Deukmejian of a $150-million toxic waste cleanup bond issue proposed for the November ballot. Meanwhile, the Bradley forces have allied themselves with the successful drive to put a rival toxics measure on the ballot, Proposition 65, in hopes it will foster a big turnout of anti-Deukmejian voters.

As the November election drew near and investigators continued to probe into the illegal use of campaign contributions by convicted political corrupter W. Patrick Moriarty, the Legislature turned a deaf ear to calls for campaign finance reform.

A proposed initiative that would have imposed limits on campaign contributions and expenditures failed to qualify for the ballot. Soon thereafter, Speaker Brown, a premier fund-raiser himself, shelved his own reform proposal that he had introduced, saying that he did not have enough votes to pass it.

Problem for Cities

Of all the matters left undone, the one that has attracted most public attention was the Legislature’s inability, so far, to deal with an emerging insurance crisis that forced many cities to go without liability coverage and some businesses to close their doors.

For the better part of a decade, trial lawyers successfully fought back any legislative attempt to change liability laws that were blamed by some critics for encouraging huge legal judgments. At the same time, a powerful insurance lobby held back efforts to regulate the industry or force reductions in rates.

After voters overwhelming approved Proposition 51, the so-called “deep-pockets” insurance reform initiative, there were predictions that the Legislature would “bow to the will of the people” and enact far more sweeping reforms.

Instead, there has been a legislative stalemate, with Deukmejian putting his weight behind changes in the legal system while Brown supports only measures that would force more regulation on insurers.

Several measures were enacted, including Brown-authored bills prohibiting midterm cancellations and premium increases on commercial policies and forcing insurers to provide state regulators with more information.

For cities unable to afford liability insurance, a bill by Assemblyman Dan Hauser (D-Arcata) would make it easier for them to pool their resources and provide their own coverage.

Reform Bids Fail

But the major reform bills advocated both by Deukmejian and Brown have been rejected, in some cases without a single committee vote.

“There has been very little meaningful reform as the result of some difficult times,” conceded Roxani Gillespie, state insurance commissioner.

Fred Hiestand, a Sacramento attorney who pushed for the “deep-pockets” initiative, predicted that “it will become apparent very soon to the people that Proposition 51 did not solve the problem of availability of affordable insurance. The pressure will be on again.”

In another matter, Deukmejian like Edmund G. Brown Jr., his Democratic predecessor, so far has come away empty handed after trying for several weeks to raid the pension funds of state workers to get $300 million to help balance the new state budget. He lost support of both Assembly Republicans and Senate Democrats. Brown had attempted a similar move when he was in office, but it was turned down by the courts.

Partisan warfare also broke out over the unchecked growth of California’s prison population as 155 new inmates arrived each week.

Delay in Openings

Democratic lawmakers accepted the need for more lockups. But they rejected the governor’s request to completely waive requirements for lengthy environmental impact reports on $77 million worth of emergency projects and on the construction of 10 new prisons. The emergency cells were to have been completed by July, but most are not scheduled to open until just before the Deukmejian-Bradley showdown in November.

The fighting didn’t end there. Deukmejian’s hopes of building a new prison near downtown Los Angeles suffered a setback last year when Speaker Brown refused to permit a vote on the controversial project. The partisan dispute only worsened when Bradley announced his opposition to the downtown plan and proposed building the prison near the Magic Mountain amusement park in Saugus.

But with the elections on the horizon, some lawmakers began to get nervous about being portrayed as soft on crime. It was in that atmosphere that the Assembly, under prodding from Brown, approved the Los Angeles prison project. But the Senate, pressured by Latino groups and Eastside residents, rejected the governor’s plan Saturday.

The Legislature responded to another crisis, the worsening AIDS epidemic, by appropriating additional money for research, patient care and educational programs.

‘Great Human Tragedy’

In each of the past two years the Legislature provided more funds for the disease, acquired immune deficiency syndrome, than Deukmejian requested. And each year, Democratic legislators loudly protested when the governor vetoed funds they say are essential to battle an epidemic Deukmejian himself has described as “one of the great human tragedies of our time.”

Top Administration officials complained that the Democrats are “playing politics with AIDS,” trying to embarrass the governor by allocating far more than they knew he was willing to accept. These same aides point out that the $29 million that Deukmejian approved to spend on AIDS this year almost equals the amount spent by all other states combined, according to a George Washington University study.

Yet, as the debate raged over over how much AIDS spending is enough, the total number of cases in California continued to climb--to 5,444 by July 31, 23% of all U.S. cases. Of that 2,492 have died. The Department of Health Services predicted there will be 30,000 cases of the fatal disease in the state by 1990 at a $5-billion cost to victims, government and private insurers.

As the Legislature struggled to end its session, lawmakers sent to the governor two bills to encourage development of a vaccine to prevent the incurable disorder.

Highway Safety Issue

Last year, midway into the session, what began as a fight between insurance companies and Detroit’s auto makers last year ended in a victory over highway deaths and injuries as lawmakers voted to require motorists to use automobile seat belts and manufacturers to install air bags in new California cars beginning in 1989.

Speaker Brown described it as his biggest legislative achievement. The California Highway Patrol said the seat belt law has contributed to the savings of an estimated 100 lives on the state’s highways during the first seven months of this year, as compared to 1985.

The landmark reform of California’s welfare system, meanwhile, was a case where the political agendas of Republicans and Democrats happened to mesh in an unexpected way.

The workfare system pushed by Deukmejian requires as many as 175,000 able-bodied welfare recipients to work, receive job training or go to school as a condition for receiving aid checks. The new program will be phased in by individual counties over the next four years.

For more than a decade it was conservatives who called for such a plan, yet it was liberal legislators who provided the key for approval. That occurred when Roberti attached to the workfare bill his own plan for providing child-care services for working parents.

Change in Stance

By abandoning their traditional opposition to mandatory work, the Democrats gained passage of the largest social program enacted during the Deukmejian Administration.

There were other winners and losers as the two-year session neared an end.

Foes of abortion tried to force a political showdown between Assembly Republicans and Speaker Brown over a bill that would have required minors to obtain parental consent or a court order before undergoing the procedure. They came away empty handed, however, and three Republican committee chairmen who dared defy the powerful Speaker lost their committee posts.

Watermelon farmers who lost their crops to pesticide contamination, meanwhile, lobbied successfully for a $6.2-million taxpayer bail-out. No money was provided for those who got sick from eating the tainted fruit nor for farm workers who lost their jobs during the Fourth of July holiday incident last year.

The Legislature also did something very uncharacteristic--it did away with a state regulatory board, in this case the Board of Dry Cleaning and Fabric Care. “A useless piece of bureaucracy,” said Assemblyman Ross Johnson (R-La Habra).

Snickers for a Name

At times, lawmakers found they could do little more than put the best face on a bad situation.

For example, faced with prison overcrowding, legislators grappled in recent days with what to name a new maximum-security prison to be built in economically depressed Del Norte County.

They settled on “Prison of the Redwoods,” a lyrical title that brought more than a few snickers from law enforcement types who had difficulty imagining some of the state’s most hardened criminals doing time in a place that conjures up images of a pristine redwood forest.