Building Bridges, Not Burning Them

Times Staff Writers

Recognizing that his combative tactics and rightward shift flopped with voters, Gov. Arnold Schwarzenegger has been trying out a new identity ahead of tonight's State of the State speech: that of a humbled centrist ready to give ground to his rivals.

The governor's office has carefully orchestrated leaks on a string of proposals that will be formally announced in the speech. All give the appearance that, as he heads into this election year, Schwarzenegger is surrendering on the major partisan disagreements of his term.

On each of the grievances marshaled against him, he has made some gesture aimed at assuaging powerful interest groups that defeated him in the November special election.

To placate labor and other Democratic interests, he suggests that he wants to raise the minimum wage. And in apparent defiance of drug-industry campaign donors, he says Californians should have the tools to buy cheaper medicines abroad.

But he is not so much staking out new positions as repackaging old ones. He is already on record favoring a higher minimum wage in California, and he long ago asked Washington to ease federal rules against the import of prescription drugs.

What Schwarzenegger has shown is that, entering the campaign season, he wants less acrimony and few reminders of the lost year that was 2005, when early hopes of bipartisan progress were quashed by the polarizing special election. He has a long way to go to recapture the broad public support he enjoyed early in his tenure.

A statewide poll made public Wednesday by the nonpartisan Public Policy Institute of California shows that 60% of those surveyed believe the state is headed in the wrong direction, with only 32% approving of Schwarzenegger's performance.

This year, Schwarzenegger is intent on avoiding a confrontational turn. He is delaying until 2007 any major work on the state's costly pension system -- an overhaul he embraced last year but then abandoned in the face of virulent opposition from unions and Democrats.

There's no talk of the urgent need to "fix a broken system" -- the mantra of his last campaign. Gone are the references to the "evil" in Sacramento. His new mantra is the antithesis of edgy: "Infrastructure."

The centerpiece of his 2006 agenda, to be announced tonight, is a multibillion-dollar bond issue -- subject to legislative and voter approval -- to pay for new highways, bridges, schools, ports and levees. There is something in the package for both parties and for every interest group.

"If you're in a construction union, that sounds pretty good to you," said Daniel Mitchell, professor of management and public policy at UCLA. "Every city that has a pothole to fill might see virtue in it. So there's an awful lot of people who will feel real warm" about the governor's plan.

Barry Broad, a labor lobbyist who has been critical of the governor in the past, said the infrastructure plan is an "area where we can reach some consensus on all sides."

The governor and his aides have been careful to call Democratic leaders and brief them on the State of the State speech and the proposed state budget still being crafted -- a useful courtesy that was not always extended last year on major policy goals.

The governor sought to appease the powerful coalition of education leaders and school groups this week, before he publicly unveils his spending plans, which include repayment of some of the money borrowed from schools in recent years.

Education leaders spent millions of dollars on campaign ads last year to defeat the governor's special election initiatives, damaging his approval ratings in the process. But they came out of meetings with him this week and praised him for his attempts at conciliation, while adding that the schools are still owed money.

But many of the positions the governor is taking are merely a restatement of what he has said in the past.

Schwarzenegger tonight is expected to voice support for a $1 increase in the minimum wage, spread over 18 months. That deviates little from his previous stance.

Vetoing an increase in the minimum wage last year, Schwarzenegger explained that he considered a wage hike "appropriate" -- but he opposes Democratic efforts to tie future increases to the cost of living.

Even with support for a minimum wage increase, Schwarzenegger would not necessarily be out of step with his campaign donors in the business community. Some of his business supporters say they are resigned to an increase, given polls that show Californians support one. But they hope the governor is steadfast in resisting cost-of-living increases.

"We just want to see if we can get something that's more digestible for the bottom line," said William Dombrowski, president of the California Retailers Assn. Automatic increases are "a big deal.... The business community -- including us -- is opposed to that."

Another leak from the governor's office indicated that he would help enable people to cut medical costs by buying prescription drugs overseas. He sent a letter to Congress urging that lawmakers lift the federal ban on imported drugs.

In 2004 and again last year, Schwarzenegger vetoed bills that would have allowed Californians to buy drugs abroad. But Schwarzenegger wrote such a letter to the federal government 16 months ago. His position is much the same: He still believes only the federal government has the authority to open doors to the international marketplace.

Some lawmakers want Schwarzenegger to follow the practice of 10 other states, which have taken steps on their own to import prescription drugs from other countries. An estimated 2 million Americans are buying medicines from Canada. But the governor, who has received more than $576,000 in campaign contributions from the drug industry, wants the federal government to move before California authorizes importation.

"It just seems a lot of this agenda of changing heart is calculated more for show than for effect," said Assembly Majority Leader Dario Frommer (D-Glendale), one of the lead lawmakers working on the drug issue. "The prescription drug pronouncement is a classic example."

Schwarzenegger proposed rescinding a planned fee increase at state public colleges and universities, using better-than-expected economic growth to end a cycle of tuition hikes in recent years. It was a welcome holiday gift for California students.

But some lawmakers worry that without assurances that the money would also be provided in 2007-08, Schwarzenegger may be setting the stage for another round of steep tuition hikes after the governor's race is over.

And the money he would devote to offsetting the increase -- $129 million -- is a fraction of the $100-billion-plus state budget.

No matter what Schwarzenegger hopes to accomplish this year, he faces the campaign-season reality that the Democratic-controlled Legislature may not cooperate. Hoping to deprive Schwarzenegger of a reelection victory, Democrats could block the bond issue, lest they give the governor a public-works program to campaign with.

Schwarzenegger is already turning his attention to the campaign. He recently hired a new campaign manager, Steve Schmidt, a 35-year-old operative in the Bush White House. He had previously hired a new chief of staff, communications director, Cabinet secretary and appointments secretary.

Meanwhile, Senate leader Don Perata (D-Oakland) said he would aim to put the bond measure on the June ballot, before opposition mobilizes. Perata said he would collaborate with the governor on the public works project. But he acknowledged that the gubernatorial election could complicate matters.

"There will be those who will want to step on the cape to make sure things don't get off the ground," he said.

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Times staff writer Dan Morain contributed to this report.

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