Donor-backed bills challenge governor

Times Staff Writer

SACRAMENTO -- There is a pair of bills on Gov. Arnold Schwarzenegger’s desk that puts him on the spot:

They would cost taxpayers hundreds of millions of dollars, including a hike in the “car tax” that Schwarzenegger vilified in his first campaign for office. And signing them would belie his self-styled image as a reformer who won’t stand for business as usual in the Capitol, because they were forged in classic under-the-radar deal-making.

The measures as passed were not publicly debated. They received little vetting by policy experts. They were not fully written until the clock had almost run out on lawmakers preparing to adjourn and get out of town last month. And key provisions were shaped by a small group of big campaign contributors.

The bills could raise taxes on consumers to fund subsidies available to oil companies and would lay the groundwork for a controversial expansion of ferry service in the Bay Area.


The causes were advanced by key donors to Assembly Speaker Fabian Nunez (D-Los Angeles) and Senate leader Don Perata (D-Oakland), who pushed the proposals through.

“They do these things at the last minute, so nobody knows about them and there is nobody to say, ‘Hold on here. Wait a minute,’ ” said Robert Fellmeth, Price professor of public interest law at the University of San Diego. “When you are in the dark, bad things happen.”

The two measures were not the only donor-driven bills to gain sudden late momentum. A last-minute bill that would allow Anschutz Entertainment Group, a major political contributor and owner of Staples Center, to tap millions of dollars in public money also sits on the governor’s desk. And a surprise bid by the politically powerful prison guards union to win a backdoor pay hike -- a raise it has failed to achieve through collective bargaining -- nearly squeaked by.

Nunez and Perata denied jamming pet programs through the Legislature in the dead of night. The leaders said the rushed rewrites of the bills they championed were common-sense compromises to build support among stakeholders.

“We had to take amendments to satisfy concerns that the administration had,” Nunez said.

Perata said he thought all relevant parties had been told by the nonprofit business group Bay Area Council, a proponent of the measure, about the last-minute changes in his ferry bill: “I just assumed the Bay Area Council had been doing all that work.”

Opponents of the measures are dubious.

“It is just not the way I want to do business,” said Alan Lowenthal (D-Long Beach), chairman of the Senate Transportation and Housing Committee, who voted against Nunez’s bill, a clean energy measure. “Many people who voted for this held their nose when they did.”

The Nunez bill, AB 118, would raise taxes on consumers to fund $210 million in new energy subsidies and clean-air programs. Lowenthal is among a group of environmental policy experts in the Senate who says a large share of the money could end up going to oil companies to fund pollution-reduction measures already required by law.

By the time the final version of the bill reached the Senate, Lowenthal said, there was no time left to amend it to preclude that scenario.

The subsidies would be paid for with increased vehicle registration fees; the “car taxes” Schwarzenegger once promised were off the table. The legislation would increase the fee by as much as $11 and tack new fees on boat and trailer owners.

Anti-tax groups and others are demanding a veto. Administration officials say the governor has not decided whether to sign the bill.

Nunez said the text of the bill does not allow oil companies to cash in, a reading shared by the California Energy Commission, which would be involved in setting grant distribution guidelines.

Environmentalists are split on the measure, with some groups joining oil companies, car manufacturers and green technology firms to support the plan and others denouncing it as a sham.

“This is not a giveaway,” Nunez said. “I don’t see anywhere in the bill where it says oil companies can draw down these dollars. That interpretation is a stretch.”

But Senate staffers who reviewed the bill say oil companies, which lobbied aggressively for the measure, would benefit. The staff’s analysis of the legislation called the subsidies “simply a grant program to private sector fuels and energy companies paid for by the public.”

Those concerns stalled the bill on the Senate floor on the final night of the session. There weren’t enough votes to pass it.

Perata stepped in. He pressured colleagues to vote for the Nunez measure. In an interview, Perata said he did so despite having “absolute faith” in the staff members who said the bill was flawed.

“It was important to the speaker,” Perata said. “I didn’t question why it was so important. He is the leader of that house. So I just pushed it. I’ve done that with a number of the bills the speaker has carried. I just put my shoulder against it and got it out of here. I know a lot of people were not overly joyed about that.”

But Perata also needed something: the speaker’s help in getting his own cause, the expansion of ferry service in the Bay Area, out of the Legislature.

“There were people who said my bill will never get out until his gets out,” Perata said.

Like the speaker’s bill, Perata’s ferry measure, SB 976, was rewritten in the final hours of the session. It was changed to essentially seize several ferry lines from various cities and put all operations under control of a new five-person authority.

Perata’s advocacy of ferry service expansion came at the urging of a major donor to his campaigns, Bay Area developer and former ferry company owner Ron Cowan, who has donated more than $116,000 to Perata since 2001. Questions about the cost-effectiveness of an expansion had long undermined their efforts.

But the idea acquired new life early last year, when Cowan co-chaired a disaster preparedness task force for the Bay Area Council. The committee’s conclusion: Ferry service must be dramatically expanded, at a cost of $1.6 billion, to prepare the region for a major earthquake by providing backup transportation.

Perata’s bill, in its original form, was largely noncontroversial and would have increased spending on ferry service by $250 million. The creation of the new authority to take existing ferry lines away from cities occurred on the last day of the session. The authority would have the power to sell bonds to expand operations and to tap transportation subsidies never before available for ferry service, potentially putting taxpayers on the hook for hundreds of millions of dollars more.

“The bill was more timid until the last minute,” said Stuart Cohen, executive director of the Bay Area Transportation and Land Use Coalition. “The folks behind this probably didn’t want it to be a public debate.”

Some of Perata’s fellow lawmakers agreed. “There was no way to find out,” said Assemblywoman Noreen Evans (D-Santa Rosa), “what was going on behind the scenes.”