Davis Whittles at Stack of Bills

At 6 p.m. last Wednesday, 17 state health and social services officials, budget experts and senior staff of Gov. Gray Davis gathered in a secure Capitol conference room with nothing but bulging ring-binder notebooks--no television cameras, lobbyists or even well-meaning lawmakers to distract them.

For three hours, pausing only to devour slices of pizza, they dissected 55 health-care bills approved by the Legislature and forwarded to the governor’s office. It was the fifth such session conducted by Davis’ senior staff that day, on legislation affecting everything from education to the environment, all aimed at distilling months of legislative debate and lobbying into a simple recommendation to the governor: Sign or veto.

At this session, participants talked about what each bill was supposed to do, why it was good or bad policy and what it would cost or save Californians.

By the time the closed-door conference broke up, Davis’ Deputy Chief of Staff Susan Kennedy was prepared to make recommendations to her boss that would determine the fate of most of the 55 measures.

Davis has until Sept. 30 to act on more than 1,200 bills approved by the California Legislature before it adjourned in the wee hours of Sept. 1. Most are now sitting only a few feet from the governor’s office, in a locked inner sanctum known as the “War Room,” packed in file boxes marked “Chillin’ “--a slangy way of saying the bills have yet to reach the governor’s desk.

As Davis approaches the end of his first term, endless speculation shrouds his decisions on legislation and appointments, in part because of the Democratic governor’s penchant for secrecy.

Many Republican lawmakers, lobbyists and other critics say the governor is guided by political calculations and campaign contributions. Davis and his supporters, however, say those decisions are the culmination of a rigorous review by staff members and the governor himself.

The Wednesday vetting session attended by a Times reporter--a rare glimpse inside the Davis administration--suggests a freewheeling debate among Davis’ trusted aides and executive branch officials as bills make their way from the Legislature to the governor’s desk.

“I think he cares about his legacy and doesn’t want to be seen as hurting the economy,” said Sen. Sheila Kuehl (D-Santa Monica), noting that Davis has signed dozens of her bills over the last four years, including many that were opposed by powerful interests. “[But] you could not say this governor is serving moneyed interests if you look at the bills he’s signed.”

At the same time, Davis aides acknowledge the governor factors in who is supporting and opposing any major bill--just as lawmakers listen to lobbyists and campaign contributors when they’re weighing legislation.

Davis pays particular attention to the priority lists of powerful interest groups like the California Chamber of Commerce, the California Labor Federation and the Sierra Club, said Press Secretary Steven Maviglio.

“He’ll go down and look and see what the different groups said about it in their letters and testimony and read through all that,” he said.

One of the more closely watched decisions Davis must make is on a bill that would provide paid family leave to workers--something that is common in other industrialized countries.

The bill, SB 1661, presents Davis with a dilemma: Its author is Kuehl, and its sponsor is the California Labor Federation, which counts it as perhaps the most important of 19 bills it currently has on Davis’ desk.

But the California Chamber of Commerce hates the bill and put it high on its annual “job-killer list.”

Davis isn’t saying what he’s going to do, and both sides admit they can only guess as to whether the governor will sign or veto the bill.

The governor’s cautious preference for not tipping his hand on a controversial piece of legislation frustrates many lawmakers.

“You rarely hear early on from the governor or governor’s staff on any piece of legislation,” Kuehl said.

In this case, however, Davis eventually warned Kuehl through staff contacts that he would object to legislation requiring businesses to shoulder the costs of family leave, she said. So Kuehl shifted the costs to employee contributions and scaled back the bill’s reach by inserting amendments that cut the length of any leave to six weeks from 12 and imposed other restrictions.

Aware that Davis might make a decision on her legislation in the middle of an all-night session of bill signing, Kuehl said she tries to make sure she has given his staff the answers to every question he might ask.

“I still don’t know if it’s going to be signed,” she said.

As the day of a final decision on major bills nears, lobbyists also try to work every last possible angle.

For Tom Rankin, the president and legislative point man for the California Labor Federation, that means pitching senior staff members one final time, firing off letters that will go into the file the governor reviews and organizing allies to bombard Davis and his staff with their own phone calls, faxes, letters, e-mails and personal contacts.

The California Chamber of Commerce is making a similar effort, but chamber officials also don’t know which way the governor is leaning.

“Our guess is that it’ll be one of the last he takes up because it’s one of the more controversial bills out there,” said Michele Perrault, a spokeswoman for the group.

Davis isn’t known for soliciting advice from legislators--another fact that grates on some members of the Senate and Assembly.

“[Former Republican Gov. Pete] Wilson called legislators to talk to them about their bills, and if it was really a big bill, he let them come down and make their pitch to him,” said Assemblyman Bill Leonard (R-San Bernardino). Davis occasionally calls a bill’s author to ask about the legislation’s intent and its importance, but that’s where he draws the line, said Maviglio.

“When he’s in a bill-signing mode, he doesn’t like to be pressured about legislation,” Maviglio said. “He doesn’t take a lot of calls from legislators during that time. He likes to look at the bill in its folder from a fresh perspective rather than doing a favor for a legislator.”

Before Davis and his staff can begin their deliberations, the bills have to be physically moved from the Senate and Assembly to the governor’s office--no small feat with 1,200 bills and accompanying documents.

Since Aug. 12, a contingent of National Guard personnel has been cloistered in the windowless War Room in the governor’s office, helping the staff sift through sheaves of documents and letters.

After leaving this room, the serious vetting begins in the meetings led by Davis Chief of Staff Lynn Schenk, Deputy Chief of Staff Kennedy and other senior staff members.

At the Wednesday session on health-care legislation, Kennedy was joined by Richard Figueroa, the governor’s legislative assistant for health care and a walking encyclopedia on the 100-odd health-care bills approved this year.

Others around the four tables drawn into a rectangle included Grantland Johnson, secretary of the California Health and Human Services Agency; Diana M. Bonta, director of the state Department of Health Services; Rita Saenz, director of the Department of Social Services; and a few budget experts from the Department of Finance.

Kennedy kept the discussion moving at a fast pace, firing off probing questions, soliciting various positions on a particular bill and cutting off the discussion when she had heard enough to make a recommendation.

“What does the bill actually do?” she asked again and again. “Why are we doing this?” “What problem are they trying to fix here?”

The $24-billion budget shortfall that confronted the state this year--and the threat of another huge gap next year--hung like a cloud over the discussions.

“We’ve got a $24-billion deficit--does this increase our general fund cost?” Kennedy asked about a bill that is supposed to improve health-care access.

Kennedy ended the discussion on that bill after 20 minutes, with the health and finance contingents split on whether the governor should sign or veto the legislation. The governor would probably be inclined to sign, Kennedy said, but she admonished the bill’s advocates in the room to find a way to avoid hiring new people to administer the program.

Some bills passed muster on merits but failed the cost test in a brutal budget year.

“So what’s our veto message?” Kennedy asked about some bills.

The aim is to deliver bad news as gently as possible, acknowledging the need a bill was designed to address without seeming too callous for killing it because it costs money the state doesn’t have.

The packet Davis gets on every bill includes a summary that describes the legislation and its fiscal impact, lists arguments for and against the bill and notes sponsors, supporters and opponents.

Some of the bills are dozens of pages long and have been heavily amended over the past months in the Senate and the Assembly. Others are the product of a legislative sleight of hand known as “gut and amend,” essentially disguising a bill by slipping it into the carcass of a dead bill.

On most difficult bills, Davis will gather in his Cabinet room with senior aides, representatives of the affected agencies and the finance director, aides say. The governor starts with a set of broad questions: What does this bill really do? How does it compare to what other states have? Is California acting alone? Is there federal legislation that covers this? Is there a need for this bill?

“He’ll sit there and often engage in debate about the bill, have an advocate for the bill, or--whatever position the staff recommends--actually argue with him,” said Maviglio. “On a difficult bill, I’ve seen him spend more than an hour.”

But the vast majority of bills involve only small technical changes in law and require little discussion. Davis plows through hundreds of them as he travels the state, performing his duties as governor, campaigning for reelection and, critics note, raising funds from groups and individuals who often have a stake in legislation sitting on his desk.

“When we can sneak five bills in an hourlong ride somewhere, that’s five fewer bills,” Maviglio said.

Davis will finish the month with a four-day bill-signing marathon. As he decides landmark issues such as binding arbitration for farm workers and paid family leave, legislative assistants will be waiting at computers, ready to write a veto or signing message dictated by the governor.

“A good number of the letters have a message, ‘This is a great idea, but we don’t have the money,’ ” Maviglio said. “I think you’ll see a lot of that this year.”