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Contra Costa Times (California)
Sep 11, 2004 - 01:00 AM


Schwarzenegger takes sides on 2 initiatives

SACRAMENTO -- A week after mingling with California business leaders at New York City parties during the Republican National convention, Gov. Arnold Schwarzenegger sided with them on two key November ballot measures, angering consumer groups, environmentalists and labor unions.

Friday, Schwarzenegger came out against Proposition 72, a referendum on a controversial health care law that would require more employers to provide medical benefits to their workers.

Widespread perception in the Capitol was that Schwarzenegger would stay on the sidelines because of an alleged deal with the law's author, Sen. John Burton, the Legislature's top Democrat. Although Burton denied the existence of such a deal he was nevertheless steamed at Schwarzenegger's announcement.

Affordable health care is a "positive goal," Schwarzenegger said in a news release. "However, we must find a better way than doing so at the cost of putting employers out of business."

Schwarzenegger also announced his support for Proposition 64, a business-backed initiative designed to curb frivolous lawsuits.

The governor's formal opposition to Proposition 72 surprised Burton, who has developed a close relationship with Schwarzenegger.

"I'm very disappointed that he decides to play girlie man for the Chamber of Commerce and go against providing health insurance for the working people of California," said the San Francisco state senator, invoking Schwarzenegger's now famous taunt.

The governor's decisions come on the heels of his visit to the GOP convention in New York, where the California Chamber of Commerce raised at least $300,000 from 19 companies to throw parties in his honor.

During a luncheon the chamber hosted for him at Planet Hollywood, Schwarzenegger thanked Chamber President Allan Zaremberg -- who is also the co-chair of the campaign against Proposition 72 -- for organizing the party.

Friday, Zaremberg welcomed news of the governor's help, calling it a huge boost for the campaign.

"By opposing the multi-billion dollar healthcare mandate, the governor continues to highlight his commitment to the state's jobs climate," Zaremberg said.

Schwarzenegger's opposition is not surprising. As a recall candidate, he said California businesses could not afford it.

But it was the governor's official announcement and its timing that rattled the measure's supporters. Just a day earlier, Burton treated Schwarzenegger to lunch at the governor's favorite Sacramento restaurant, the Esquire Grill, and Schwarzenegger did not mention his decision.

"I would think I deserve the common courtesy when you're eating lunch together the day before he decides to (expletive) you on a piece of legislation you've worked hard on," said Burton, who is forced to retire in December by term limits and considers the health care legislation a legacy.

Burton insisted Friday that the governor never promised to stay out of the business-backed campaign to repeal the law, which Gov. Gray Davis signed just before the recall.

But people close to the Senate leader thought there was a deal that went like this: Burton would get the state Democratic Party to support the governor's $15 billion bond and balanced budget initiative last March -- Propositions 57 and 58 -- and the governor would not get involved in the effort to repeal the outgoing senator's pet project.

The health care law requires employers to provide health insurance for employees or pay into a state fund that would provide it, starting in 2006. Businesses with fewer than 20 workers would be exempt.

Schwarzenegger's involvement could cause trouble for the measure that already faces stiff opposition from business groups, which consider it a $5.3 billion tax on employers. A coalition, including fast-food chains and large retailers, plans to raise $25 million, with $7 million already in the bank.

On the other side are consumer groups, labor unions, hospitals and other health care professionals. Labor has raised roughly $1.4 million. A recent Field Poll found that 48 percent of likely voters favor the law, while 31 percent oppose it.

Schwarzenegger's chief fund-raiser, Marty Wilson, said Friday that the governor has not decided whether to actively campaign against Prop. 72 or appear in commercials, because his top priority is defeating two gambling initiatives.

"No request has been made," Wilson said. "But I can say his time is going to be limited."

Schwarzenegger also announced his support Friday for Prop. 64, which he and supporters say will stop current law from being used to coerce businesses to pay substantial settlements to avoid costly court battles.

Opponents argue that the measure would limit enforcement of laws that protect the environment and consumers. An analysis by the nonprofit consumer group, Election Watchdog, found that Schwarzenegger has accepted $2.4 million from companies, including Safeway, Pfizer and Exxon Mobil, that also gave $2.8 million to Prop. 64.

"He is basically the dream team for the Fortune 500 companies," said Jamie Court, president of the Foundation for Taxpayer and Consumer Rights.

San Jose Mercury News staff writer Laura Kurtzman contributed to this story.


Gov. Arnold Schwarzenegger announced his position Friday on two November ballot initiatives. He opposes Proposition 72 and supports Proposition 64.


Prop. 72 is a referendum on a law enacted last year that would require employers to provide health insurance for employees or pay into a state fund that would provide it. Companies with 200 or more workers would have to provide benefits to employees and their families by 2006.

Businesses with more than 50 workers would have to provide insurance for employees by 2007. Companies with 20 to 49 workers would be required to provide insurance only if they are given a tax credit to defray costs. The law exempts businesses with fewer than 20 workers.

A "Yes" vote would reaffirm the law known as SB-2 that was passed and signed in the waning days of the Gray Davis administration. It is supported by a coalition of consumers groups, labor unions, and health care providers, including doctors and nurses.

A "No" vote would repeal the law. It is opposed by Schwarzenegger, the Chamber of Commerce, California Restaurant Association and major retailers, including Macy's and Sears.


Prop. 64 would limit suits brought under the state's 71-year-old unfair-business competition law, which lets people sue companies for alleged misbehavior, even if no one has been harmed. It would require attorneys filing such suits to represent actual victims, and only let the Attorney General or local prosecutors sue on behalf of the general public.

A "Yes" vote would impose new limits. It is supported by Schwarzenegger, the Chamber of Commerce, Alliance of Automobile Manufacturers, Intel and Oracle.

A "No" vote would defeat the measure. It is opposed by consumer groups, the Sierra Club, League of Conservation Voters and California Nurses Association.

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