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The San Francisco Chronicle
Aug 06, 2004 - 01:00 AM

by David Lazarus

Governor playing to business

There was Gov. Arnold Schwarzenegger the other day, cruising the Las Vegas Strip in an 18-wheel truck emblazoned with his picture and the motto "California Wants Your Business."

"Come back," he told companies that have moved to Nevada and elsewhere because of what they see as the high cost of doing business in the Golden State. "Come back home."

It's no secret that Schwarzenegger brings a pro-business mind-set to policy making. But California consumers may want to ask whether their interests have taken a backseat to the governor's corporate cheerleading.

The 2,500-page report on overhauling state government that landed with a whump on Schwarzenegger's desk this week is a good case in point.

Among other things, it proposes merging the Department of Consumer Affairs, the state's leading watchdog agency, with a host of commerce-related divisions concerned primarily with industrial practices.

The consumer agency's new bedfellows would include the Department of Corporations, which regulates financial firms, and the Department of Financial Institutions, which does pretty much the same.

According to the report, the new entity, to be called the Department of Commerce and Consumer Protection, would help businesses and consumers by cutting through bureaucratic red tape.

Charlene Zettel, director of the Consumer Affairs Department and a Schwarzenegger appointee, told me that consumers have no reason to worry about the proposed restructuring of her office.

"Because the department is organized differently, that doesn't mean the mission will change," she said. "The mission is consumer protection. That will stay the same."

Zettel added that consumers would benefit as well from placing all business licensing under a single department, as the Schwarzenegger report proposes.

"This is critical for consumer protection," she said. "Licensing is a key part of regulating businesses and professions."

But Doug Heller, executive director of the Foundation for Taxpayer and Consumer Rights, said there's an inherent conflict when consumer protection is overseen by the same agency charged with business oversight.

"Industry and consumers have an adversarial relationship," he said. "It's vital to have consumer protection as a separate entity."

The foundation is a Santa Monica advocacy group that seeks more openness in government. It runs a Web site called ArnoldWatch.org.

Heller and other consumer advocates noted that the proposed shake-up of the Consumer Affairs Department includes elimination of about a third of the 26 boards that oversee the business licensing process.

The department's Zettel said this would streamline the licensing system without reducing accountability. But consumer advocates note that the boards are required to meet in public, ensuring a measure of transparency in the licensing process.

"If you eliminate these boards, you eliminate the public forum," said Julianne D'Angelo Fellmeth, administrative director of the Center for Public Interest Law at the University of San Diego Law School.

The report doesn't address the matter of public forums. It says only that cutting the number of boards would reduce the risk of board members being influenced by the industry they monitor.

But D'Angelo Fellmeth said fewer boards would mean responsibilities being parceled out among people who may have little or no expertise in a given profession or industry.

"We've been looking at these boards for 25 years," she said. "Specialization is good."

Meanwhile, nearly 60 companies and trade associations are credited at the end of the Schwarzenegger report with having provided input on how the state can be run differently.

None of the major general-interest consumer groups statewide is listed. The only advocacy group receiving a prominent mention is The Utility Reform Network in San Francisco.

"They came and spoke with us," acknowledged Mindy Spatt, a TURN spokeswoman. "But it doesn't look like anything we said was included in the final draft."

On the other hand, PG&E, which, according to public records, has donated about $200,000 to Schwarzenegger and his various political committees, says it told the report's compilers that the permit process for new energy infrastructure is too cumbersome.

Chevron, which has donated about $122,000 to Schwarzenegger and his committees, made a similar complaint, said K.C. Bishop, a lobbyist for the San Ramon oil giant.

The report outlines steps for a more streamlined permit process for energy projects.

Other companies cited in the report include Cisco Systems (which has donated about $50,000 to the governor), Hewlett-Packard ($270,000), Oracle ($10,000), Pfizer ($100,000), SBC ($15,000) and Southern California Edison ($50,000).

"It's certainly very disappointing that the commission was doing outreach to the business community but didn't reach out to consumer groups," said Michael McCauley, a spokesman for Consumers Union in San Francisco.

The report isn't a done deal. Hearings will now be held and considerable haggling is expected between the governor and the Legislature.

In Vegas this week, Schwarzenegger took his come-home pitch to a local shopping mall.

"We have the most diversified economy, the most innovative businesses," he told a cheering crowd. "We have everything that we need in order to be successful in our state."

If consumers aren't careful, though, they might soon have less.
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David Lazarus' column appears Wednesdays, Fridays and Sundays. He also can be seen regularly on KTVU's "Mornings on 2." Send tips or feedback to dlazarus@sfchronicle.com




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