California Elections : Gann Faces Huge Odds in Battle for Pay-Cap Measure

Anti-tax crusader Paul Gann may be facing his toughest test as he campaigns against enormous odds for his salary-slashing Proposition 61.

For starters, consider these hurdles: The California Taxpayers Assn., a past Gann ally, is leading the battle against the Nov. 4 ballot measure. Opponents expect to spend upwards of $5 million to fight the initiative, while Gann says the pro-61 campaign will be “in deluxe city” if it is able to muster $100,000.

Further threatening the measure’s chances is a disputed prediction by the legislative analyst that Proposition 61 could cost taxpayers $7 billion in a one-time buy-out of the vacation and sick leave accumulated by 1.5 million state and local government employees. The $7-billion figure will appear not only in the explanatory pamphlet the state sends to voters, but also on the ballot itself.

Nor are Proposition 61’s prospects helped by an abundance of confusion over how many people would be affected and when it would take effect. Those questions probably will be settled in court if Gann succeeds in this fourth foray into government-by-initiative since he co-sponsored Proposition 13 with Howard Jarvis in 1978.

Gann, reminded of these stumbling blocks, points out that he has overcome such adversity in the past. At the same time, he is philosophical about his chances.

“They can knock me down, but they can’t beat me,” Gann said in an interview. “Only I can beat myself.”

Measure’s Purpose

What Proposition 61 is supposed to do, Gann said, is to limit state and local government workers’ salaries, starting with the governor’s; impose a ceiling on what the government can pay people it hires under contracts, and prohibit public employees from carrying over accumulated sick pay and vacation benefits from year to year. Nothing more, nothing less, Gann contends.

But the measure’s opponents argue that Proposition 61 is a mean-spirited, ambiguous and poorly written proposal that will wreak havoc in state and local government for years to come. Passage, they say, would usher in government mediocrity, cause a flood of resignations and retirements, require the hiring of thousands more public employees, transform the University of California into a third-rate institution and jeopardize public safety and health.

“From a taxpayer’s standpoint, there are at least a half-dozen serious problems with it,” said Richard Simpson of the California Taxpayers Assn., who is serving as co-chairman of the anti-Proposition 61 campaign. “First of all, it doesn’t save any money.”

What It Would Do

Specifically, the measure would:

- Cap the salary of the governor at $80,000. The governor now is paid $49,100 a year, but is scheduled under 1983 legislation to get a raise to $85,000 on Jan. 5.

- Limit the salaries of the other statewide officeholders--attorney general, secretary of state, treasurer, controller, superintendent of public instruction and lieutenant governor--to $52,500. Those salaries, ranging from $42,500 for most officers to Atty. Gen. John Van de Kamp’s $47,480, also are scheduled to climb to more than $77,000 on Jan. 5.

- Establish a $64,000 ceiling--80% of the governor’s salary--on the salaries of all other appointed or elected state and local government officials.

- Impose a maximum of $64,000 a year on any government employment contract and limit any such contract to four years’ duration. A limit of $75 an hour also would be set for an outside contractor, such as an attorney.

- Prohibit government employees from carrying over unused sick leave and vacation benefits from year to year. Those days not used by Dec. 31 each year would be forfeited.

Government officials estimate that more than 9,000 state and an equal number of local government employees would be affected by the $64,000 salary cap. About 4,200 of those are teachers and administrators of the University of California, including more than 1,200 faculty members of the medical and law schools. The deepest cut would be in the salary of UC President David P. Gardner, who at $178,200 a year is the highest-paid state official.

Gann contends that the number of employees affected would be closer to 7,000. He says it is his intention that workers under civil service protection--including some doctors and lawyers and certain appointed administrators--would be exempt from the salary cuts.

In Los Angeles County, officials say, about 1,900 county employees would be affected, including 818 doctors and 401 attorneys. About 250 employees on the Los Angeles city payroll also would experience a salary rollback.

Also targeted for salary cuts are about 1,000 judges, ranging from the municipal court to California Supreme Court levels. Their salaries probably would not be slashed until their current terms expire, but about 450 would be affected the first year, according to government estimates.

Could Wipe Out Savings

All this salary cutting could save taxpayers $250 million in the first year it takes effect, according to John Vickerman, chief deputy legislative analyst. But Vickerman, who wrote the nonpartisan analysis of the measure that will appear on the state’s voter pamphlets, warned at the same time of other costs--such as the potential $7-billion one-time hidden costs.

Gann’s measure provides some escape hatches from its provisions. The state or a local government would be permitted, for example, to raise salaries or contracts above the established limits if it first obtained voter approval or approval by two-thirds of the Legislature. But those steps, opponents argue, would be cumbersome, if not impossible, to take.

The specter of Proposition 61’s passage has already triggered attempts to prepare for or to circumvent it. Many police officers and firefighters, whose pensions are based on their final salary, are filing just-in-case notices of early retirement. Questions of whether the Gann limits apply only to salaries or both salary and benefits have thousands of additional employees worried over their fate. (Gann said the limits apply only to salaries.)

The Metropolitan Water District and the City of Los Angeles, meanwhile, recently joined a growing list of government agencies to order multiyear contracts drawn for their top managers in case of a Proposition 61 victory. These agreements presumably would insulate--at least for the life of the contract--any initial salary rollbacks.

Predicts Backfiring

But Gann confidently predicts that such pre-election loophole maneuvering will backfire on the initiative’s opponents.

“They’re trying to defraud the taxpayer before the taxpayer gets to the voting booth,” Gann said in an interview. “What they’re out to do is tell the voting public to go to hell.”

Those not actively moving to insulate themselves from the measure, meanwhile, are warning that they may leave government service if the Gann proposal is adopted.

“Where are they going to go?” Gann scoffed.

At the University of California, Proposition 61 already has had a chilling effect on recruitment for about a dozen faculty positions, according to UC spokesman Ron Kolb.

“You compete nationally for the best teaching and administrative staff,” Kolb said. “If we can’t offer competitive salaries, we will not only be unable to attract (talented teachers), but we’ll lose the ones that are here.”

If the measure passes, Kolb said, university lawyers are expected to contend in court that UC should be excluded from its provisions.

Second-Rate Status

Kolb’s argument is echoed in a general way by the taxpayer association’s Simpson, who describes Proposition 61 as “an invitation to mediocrity” that would relegate California to second-rate status in the competition for the most qualified employees.

“There’s one extremely fallacious argument that Mr. Gann has . . . that there are two markets for skills and talents, a public and a private one,” Simpson said. “Why should we come up with one set of rules for government and another set of rules for the private sector?”

At first blush, the Gann initiative would appear to be in trouble based solely on the impressive lineup and the campaign bankroll of the measure’s opponents, which is expected to climb into the millions of dollars.

Guiding the “No on 61” effort is the Burlingame-based consulting firm headed by Richard Woodward and Jack McDowell, who ran the successful campaigns to pass this year’s “deep pockets” initiative and the 1984 measure creating the California Lottery. In the coming weeks, Woodward-McDowell will launch a multimillion-dollar media campaign telling voters that the Gann initiative will harm education, jeopardize public safety and reduce California to second-rate status.

Mix of Opponents

In addition to gubernatorial rivals George Deukmejian and Mayor Tom Bradley and the taxpayers association, the opponents count in their corner an odd mix of business, labor, law enforcement and educational leaders. Among the state co-chairs are Superintendent of Public Instruction Bill Honig, Los Angeles Fire Chief Donald Manning, Orange County Sheriff Brad Gates and the presidents of the state PTA and League of Women Voters.

Although very few members of government employee unions make enough to be subject to the $64,000 limit, the unions are vocal in their opposition to the measure, partly out of concern that Proposition 61 would have a ripple effect on salary scales, and would eventually depress lower-echelon salaries.

By sharp contrast, Gann’s tiny campaign force, based in the Sacramento offices of the Gann-founded Public Advocates, is virtually alone in promoting the measure. The 74-year-old tax crusader has been crisscrossing the state with sidekick Ted Costa extolling the virtues of Proposition 61. Among the handful of other pro-61 campaigners is economist and unsuccessful GOP Senate candidate Arthur Laffer.

If the Proposition 61 match-up appears to be a lopsided one, Gann aide Costa, for one, is not worried.

“How many people . . . that are opposing us supported Proposition 13?” Costa asked rhetorically. “Start with the governor; he didn’t support 13, the mayor didn’t support 13. We expect the people to pass this thing.”

66,000 Sent Checks

Gann said that more than 66,000 people wrote small checks to support the measure while 125,000 volunteers circulated petitions to qualify the measure, one of five initiatives on the Nov. 4 ballot. Gann said he does not expect to raise more than $100,000 to promote Proposition 61, but noted that he only needed a fraction of that to win approval of past tax-cutting measures.

Recent polls, including one by The Times, indicate mixed voter sentiment on the measure. The Times Poll, conducted in early September, showed the proposal losing, while a California Poll taken several weeks earlier showed it slightly ahead. Both voter surveys showed a large undecided vote, understandable at that early stage in the campaign.

Apparent uncertainty over the initiative has provided fertile soil in which both sides are planting their respective predictions of the consequences of passage. There is general agreement, however, that passage would inevitably send the measure into court.

Certain to be prominent in the opposition campaign is legislative analyst Vickerman’s estimate that, if Proposition 61 passes, the cost of paying off public employees for their accumulated vacation and sick leave benefits could be as high as $7 billion.

Controversial Issue

The $7-billion estimate is the most controversial issue of the campaign, because it is based on what Vickerman said would be an unlikely occurrence. Vickerman has said on several occasions that the courts will probably hold that benefits accrued before the election would not be touched, and that for 1986, only those earned between Nov. 5 and Dec. 31 would need to be used or lost.

Still, he said, there is a chance that a court could rule that the prohibition applied retroactively, and that state and local governments would be obliged to pay workers for all the accrued benefits.

“We are assuming that the courts will hold this prohibition (against carrying over vacation and sick leave) as prospective only, Vickerman said. But, he added, there is a chance that a court could force a $7-billion pay-out. Such a ruling would cost the Los Angeles County government $260 million, according to Chief Administrative Officer James C. Hankla.

“Because (Gann) did such a poor job of drafting . . . we were in a quandary and had to give the best advice to the voters--the most logical interpretation by the courts,” Vickerman said.

Gann swore in a court declaration that he had never intended to threaten previously earned benefits. He added in an interview that even if the opponents are right, the state eventually has to pay those accumulated benefits anyway.

“I never cost the taxpayers anything,” Gann angrily protested. “They’re saying if 61 wins, it will cost taxpayers. What will it do if 61 loses?”