Business Sees an Ally in Governor

Working in tandem with Gov. Arnold Schwarzenegger, the state’s leading business group is emerging as a dominant lobbying force in the Capitol and aiming for more success in the November elections and in the Legislature.

The California Chamber of Commerce recently endorsed seven Republicans running for legislative seats, in part to create an Assembly and Senate more apt to support business. Schwarzenegger has endorsed the same people.

And the chamber is joining Schwarzenegger in what he has identified as his most urgent priority of the campaign season: defeating Proposition 70, a ballot measure that would allow unlimited gambling on Indian land.

All this follows a legislative session in which the chamber notched important victories, courtesy of Schwarzenegger.

It put out a “special veto edition” of its newsletter Sept. 6 that targeted 37 bills sponsored primarily by Democratic lawmakers. Schwarzenegger followed the chamber’s recommendations 89% of the time.

The chamber’s ascendance reflects the shifting political alignments in the Capitol. Former Democratic Gov. Gray Davis began his tenure with a pro-business approach but migrated toward labor -- part of the Democratic base -- when his support began slipping.

Schwarzenegger, a Republican, has consistently backed business, seeing job growth as the antidote to California’s economic problems. And he is tapping the Chamber of Commerce or its members for staff, political support and campaign donations.

“I do believe the chamber feels Arnold Schwarzenegger is more dependable sticking with them than Gray Davis was,” said Allan Hoffenblum, a Republican political consultant. “Gray Davis started as a pro-business Democrat, but when he perceived himself to be in trouble with his reelection, he had to pay more attention to his base: labor. Arnold Schwarzenegger’s base includes business.”

Allan Zaremberg, president of the chamber, said: “His goals are similar to our goals. And if his goals are achieved, then our goals will be achieved. That’s what he campaigned on, and that’s what the public embraced.”

The chamber is deeply entwined with Schwarzenegger’s government. Three former staff members at the institution now work for the governor, including the senior aide who oversees his legislative agenda, Richard Costigan. Donna Lucas, a deputy chief of staff who also works as an advisor to First Lady Maria Shriver, once served on the state Chamber of Commerce’s board of directors.

“It is true the governor has folks working with him who did work with the chamber. So certainly there are personal relationships that are always a factor in things like this,” said William Hauck, president of the California Business Roundtable, a nonpartisan group made up of business chief executives.

For Schwarzenegger, the chamber is a desirable ally. It has about 15,000 members that employ one-quarter of the state’s workforce. The governor has collected more than $1 million in political contributions from companies represented on the chamber’s board, including $250,000 each from Hewlett-Packard and Anheuser-Busch and $200,000 from PG&E.;

Chamber officials took 11 members of the governor’s legislative team to dinner in March, at a cost of $60 per person, according to state disclosure forms. Zaremberg said the purpose was to have them meet with veterans of former Republican Gov. Pete Wilson’s administration and hear suggestions on running a legislative shop.

“We did nothing more than hope to help them do their jobs in terms of process and logistics: This is how we processed the bills. This is how we put files together.”

When the chamber wanted to raise money to underwrite events at the Republican convention in New York, it tapped one of the governor’s main fundraisers and political advisors: Martin Wilson.

Critics worry that the chamber’s access to Schwarzenegger’s government results in extraordinary influence over public policies.

Art Pulaski, executive secretary-treasurer of the California Labor Federation, AFL-CIO, said: “His veto messages often seem to be written by the Chamber of Commerce, which I guess makes sense because he’s recruited from big business to serve on his legislative team.”

Chamber officials say the details of their legislative agenda for 2005 are not yet set. But with Schwarzenegger in power and with a group of pro-business Democrats in the Legislature gaining clout, the chamber might stand its best chance in years to press long-standing business priorities.

Assemblyman Joe Canciamilla (D-Pittsburg), chairman of a caucus of a dozen moderate Democrats nicknamed the “Mod Squad,” said, “They have a much better chance than in the past to get some issues through.”

One business goal has been restoring a practice in which people who are paid hourly wages receive overtime after completing a 40-hour week. That’s the way it was under Wilson. Under Davis, the law was changed so that overtime would kick in when employees worked more than eight hours in a day.

Schwarzenegger’s communications director, Rob Stutzman, said “it’s certainly possible” that the governor would push for the change.

The relationship between Schwarzenegger and the chamber got off to an auspicious start. Breaking with a custom dating back more than 100 years, it endorsed Schwarzenegger in last year’s recall election. Since then, the agendas of the two have overlapped again and again.

The governor’s California Performance Review calls for restoration of the manufacturers’ investment tax credit in an expanded form.

The chamber calls for “reviving and extending” the tax credit in a report on its website.

The chamber is a leader of the group that gathered signatures for Proposition 64, a measure that would limit the state’s Unfair Competition Law, which allows people to sue businesses whether they’ve been directly harmed or not.

Environmentalists said Schwarzenegger assured them at a meeting in August that his preference was to correct through legislation any abuses wrought by the law. But he wound up supporting the chamber-backed initiative instead.

“So far, I haven’t seen any daylight between him and the chamber,” said Bill Magavern of the Sierra Club.

One obstacle the Chamber of Commerce faces is the Legislature. It is still controlled by Democrats who might fear that a pro-business agenda could offend parts of their electoral base.

But even there, the chamber’s prospects are brightening. Republicans picked up three seats in 2002. And the Democratic Mod Squad has been willing to cooperate with the chamber on some issues.

“I think they feel they [the chamber] are on more friendly ground” with the governor, said Assemblyman Mark Ridley-Thomas (D-Los Angeles), who heads the Assembly Committee on Jobs, Economic Development and the Economy. “And they can get a more receptive ear now. But I would advise that they not overplay their hand by going overboard in terms of their thinking they have a good thing going on.”

The governor’s office bristles at suggestions that Schwarzenegger wants to appease the chamber. If anything, aides suggest, the opposite is true.

“The chicken-and-egg is, Schwarzenegger said this is what I’m going to do: I’m going to turn around the job-killing environment of California’s that’s over-regulated and overtaxed,” Stutzman said. “Of course the chamber supports that.”

In the legislative session that ended in August, the chamber’s victories included Schwarzenegger vetoes of bills that would have raised the minimum wage, capped pollution at Southern California ports and restricted the outsourcing of jobs.

There were scattered defeats. The governor signed four bills the chamber had hoped he would kill. In one instance, though, the author, Assemblywoman Sarah Reyes (D-Fresno), believes an embarrassment from the governor’s past may have persuaded him to sign the bill.

Reyes’ bill would have required employers to provide more sexual harassment prevention training. As a candidate, Schwarzenegger was criticized for his treatment of women.

“That was an issue that surrounded him,” Reyes said. “And I would think any good political consultant would advise that this is probably a bill you wouldn’t want to veto.”

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Times staff writer Marc Lif-sher contributed to this report.