California’s business climate, so central a theme in Gov. Arnold Schwarzenegger’s first State of the State speech, got barely a mention the second time around.
The governor’s 30-minute address scarcely included initiatives to streamline the regulatory process,nor did he say anything about daily overtime pay, regulatory review of regulations for their business impact or reducing healthcare mandates on businesses and insurers.
Still, business groups heaped praise on Schwarzenegger. Both the California Chamber of Commerce and the California Manufacturers & Technology Association issued press releases saying they would support the governor’s reform agenda.
“We’re not at all disappointed with the governor’s speech,” said Michael Shaw, assistant director of the National Federation of Independent Business. “He did reaffirm his pledge not to raise taxes and he did promise some regulatory reform.”
Shaw and other business representatives say that Schwarzenegger’s focus on budget and pension reform, merit pay for teachers, redistricting reform, and consolidation of state boards and commissions are worthy goals that will indirectly benefit the state’s business climate.
“Like any small business, the state needs to bring spending in line with revenues it takes in. Otherwise, it can’t provide the services and build the infrastructure that all residents and businesses need,” Shaw said.
No doubt the good will toward Schwarzenegger is a reflection of his actions last year, when he vetoed virtually every measure regarded as anti-business. Many of those measures have been reintroduced this year,including raising the minimum wage and expanding health insurance mandates,but business groups believe that Schwarzenegger will take out his veto pen once more.
They also may be positioning themselves for what is looking increasingly like a free-for-all at the ballot box later this year. The governor has promised to take his reforms to the voters if the Legislature doesn’t act on them. And Democrats have said they intend to put their own measures on the ballot, including the minimum wage increase.
“Given his track record with the voters, you want the governor on your side on the issues that matter to you,” Shaw said.
War Against Unions
If there was one “enemy” in the governor’s State of the State speech last week, it was public employee unions. His proposals for merit pay for teachers and public pension reform prompted a virtual declaration of war from union leaders.
Since it’s unlikely that Democrats in the Legislature will pass these proposals, Schwarzenegger might need to go directly to the ballot box with a special election, probably in late summer or early fall.
In doing so, he not only is betting that his popularity will carry the day, but apparently is crafting a way to put many of the proposals in a single package.
“If you did these things one by one, the impacted public employee unions would be able to do an effective job in mobilizing against them,” said John Ellwood, professor of public policy at the University of California Berkeley. “But if this is set up as an entire package, where it’s ‘Me vs. all the special interests in Sacramento,’ it may stand a better chance of passing.”
Fine is a staff writer with the Los Angeles Business Journal.
