By Howard Fine
Business supporters of Gov. Arnold Schwarzenegger are showing some concern about his re-election bid as his approval rating has taken a stunning drop this year.
While Schwarzenegger’s campaign will not begin in earnest for another year,a lifetime in California politics,and there is no dominant opponent in sight, the governor has expended much of the goodwill he accumulated quickly in his first few months in office.
“While no one is counting him out yet, the word I hear most from businesspeople is ‘surprise’ that he has squandered so much of his political capital and their money,” said Republican political strategist Arnold Steinberg.
“There is real concern that his inability to steer a steady course could spell disaster next year,” Steinberg said.
Schwarzenegger’s standing in the polls,34% in the most recent California Field Poll,has sunk to nearly the level of former Gov. Gray Davis before he was recalled.
That’s some cause for concern for Republicans ahead of the Nov. 8 special election. Schwarzenegger and his allies likely will be outspent for the November election by a margin of 3-1 or more.
Public employee unions, which have been airing a series of hard-hitting ads opposing the governor’s special ballot initiatives, already have raised more than $50 million and are likely to collect millions more.
At this point, November’s election is being viewed as a referendum on the governor’s performance.
That’s unsettling news for supporters given polls that show many Californians consider the vote to be unnecessary and costly.
Indeed, some of Schwarzenegger’s business allies contributed more than $10 million to his major initiative fund this year and,so far at least,have seen little in return.
“Businesspeople have stayed away in droves from contributing to the initiative fund because they have watched the money raised so far being squandered,” said Tony Quinn, a Sacramento-based political analyst who used to consult for business groups and lobbyists.
There’s little expectation that Schwarz-enegger can guide all four of the ballot initiatives he’s backing to victory.
Two of the measures,one to change the redistricting process and another to give him more power to make budget cuts,have trailed badly in recent polls.
A third proposition that would lengthen the eligibility period for teacher tenure was barely garnering majority support.
Only the measure requiring union member consent for their dues to be used for political purposes had a substantial lead in the polls. Schwarzenegger gave his official support to that initiative last week.
“Everyone underestimated how strong the forces of the status quo are,” said Frank Baxter, former chief executive of brokerage house Jefferies & Company Inc. Baxter has contributed at least $75,000 to ballot funds or organizations allied with Schwarzenegger.
The state’s business community has made a major investment in Schwarzenegger, not only in money but in formal ties and commitments.
Several business lobbyists have key posts in the governor’s political apparatus, including California Chamber of Commerce president Allan Zaremberg, who co-chairs Schwarzenegger’s main initiative campaign fund.
In return, Schwarzenegger has pushed workers’ compensation reform through a reluctant state Legislature and has vetoed a stream of bills that business groups have labeled as job killers.
And early in his term, a good relationship with moderate Democrats helped kill potential bills that were considered anti-business.
For all his recent troubles, Schwarzenegger has several key advantages,starting with the dearth of potential candidates in either party.
The only other announced candidates so far are both Democrats: state Treasurer Phil Angelides and state Controller Steve Westly.
Angelides, in particular, is being branded as anti-business given his heated comments about corporate greed.
“You’ve heard Angelides talk,that’s Armageddon for the business community,” said Michael Shaw, assistant state director for the National Federation of Independent Business. “If he wins the Democratic nomination, no way will you see business abandon the governor next November.”
Schwarzenegger’s supporters are quick to point out similarities to the predicament faced by Pete Wilson, another Republican governor who trailed badly in the polls a year before he was up for re-election.
But Wilson had a weak opponent in Kathleen Brown and as the campaign wound down, he latched onto the popular issue of restricting state aid for illegal immigrants. He ended up trouncing Brown.
For his deep-pockets backers, perhaps the biggest benefit Schwarzenegger brings is to deflect the efforts of a Legislature that generally has been tough on business.
“It means a lot to us to have somebody in the governor’s office to bring some balance to the governing structure in Sacramento,” said Jack Stewart, president of the California Manufacturers and Technology Association.
Still, there are noticeable rifts.
In an interview with the Sacramento newsletter Capitol Weekly, Schwarzenegger said he was open to supporting an initiative that would require companies to obtain the consent of shareholders before making political contributions.
Public employee unions have vowed to qualify such a measure for the June 2006 ballot if the union dues consent initiative passes in November.
Stewart downplayed the impact of this measure, saying that if it were to pass, many of the major manufacturers in his association would probably abandon traditional corporate donations and set up political action committees to which employees could contribute voluntarily.
“He is still the best alternative out there for business in the gubernatorial election,” Quinn said.
Fine is a staff writer with the Los Angeles Business Journal.
