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The San Diego Union-Tribune
Oct 22, 2004 - 01:00 AM

by Ed Mendel, STAFF WRITER

Two business measures get little attention from governor

SACRAMENTO -- Gov. Arnold Schwarzenegger has made improving the state's business climate a top priority, but he has not done the same for two business-related measures on the Nov. 2 ballot.

The governor has been putting most of his effort into defeating two Indian gaming initiatives that are far behind in the polls, while the business community is hoping for come-from-behind victories on two other measures.

One of the measures would curb certain kinds of lawsuits filed against small businesses, and the other would require some businesses to provide health insurance for their employees.

A consumer advocate whose group has been on the losing side of several major initiative battles in the past 15 years said a pair of setbacks for the business community could be the sign of a political sea change.

Jamie Court, president of the Foundation for Consumer and Taxpayer Rights, said consumer groups might be encouraged to launch initiatives on prescription drugs, health insurance and other issues in 2006.

"I think the defeat of Proposition 64 and the success of Proposition 72 will embolden the public-interest community," Court said.

Backers say Proposition 64 curbs the use of the unfair competition law to "shake down" small businesses with frivolous lawsuits, filed by lawyers who offer a settlement that is cheaper and less risky than going to trial.

Opponents say the ability to file suits under the unfair competition law is a broad tool needed to enforce environmental and consumer regulations, even if there's no claim of personal injury or loss.

Proposition 72 would require businesses with 50 or more employees to provide at least 80 percent of the cost of health insurance for their employees or pay into a state pool that provides coverage.

Businesses say it would be a $7 billion expense that would cost jobs. Supporters say the measure gives coverage to 1.1 million people currently uninsured and exempts most restaurants and retailers.

In hard-fought campaigns, businesses are spending millions of dollars on campaigns for Proposition 64, which is opposed by trial lawyers, and against Proposition 72, which is supported by labor and health groups.

But in public polling, most voters are not agreeing with the business point of view on the two measures.

The poll taken late last month showed Proposition 64 trailing, with 26 percent in favor, 38 percent opposed and 36 percent undecided. Proposition 72 was leading 45 percent to 29 percent, with 26 percent undecided.

At this point, said Mark DiCamillo, the Field Poll research director, Proposition 64 does not appear likely to pass. He said of Proposition 72: "If I had to guess, I would say it is likely to pass."

DiCamillo said support for the measures, both the subject of statewide pro-and-con television ads, could change by the time Field releases its next survey on the weekend before the election.

Since his campaign last year, Schwarzenegger has talked about improving the business climate and making California more competitive with other states. He often cites the creation or protection of jobs as a guiding principle.

Taking care of business was the theme as he called himself the "jobs czar," opposed tax increases, reformed workers' compensation, vetoed bills opposed by business groups. He is planning trips to Japan and China to promote trade.

Faced with 16 measures on the crowded November ballot, Schwarzenegger chose to sign four ballot arguments in the state's official election pamphlet -- two on Indian gaming and two on crime issues.

Schwarzenegger opposes Proposition 66, which would weaken the three-strikes sentencing law, and supports Proposition 69, which would create a database of DNA from felons.

But his campaign war chest and appearances are aimed at defeating the two Indian gaming initiatives supported by card rooms and horse tracks, Proposition 68, and some wealthy tribes, Proposition 70.

Facing dismal poll numbers, the campaign for Proposition 68 was halted after supporters spent $24 million. The measure could allow card rooms and horse racetracks to have slot machines.

But tribes are still spending on Proposition 70, which was supported by only a third of voters in the Field Poll last month. That measure would allow unlimited gaming by tribes, who in return would pay the state corporate tax of 8.84 percent.

The governor is continuing to pour money into his campaign against Propositions 68 and 70, spending what a spokesman estimated will be "less than $10 million" by Election Day.

Some of the major casino-owning tribes have emerged as perhaps Schwarzenegger's main political adversaries, funding his opponents in last year's recall election and refusing to renegotiate their state compacts.

The governor said during his campaign that he would get a "fair share" from Indian-owned casinos that pay no state taxes. The battle over the initiatives is part of a power struggle.

"We don't just want to beat (Propositions) 68 and 70, we want to bury them," said Todd Harris, a No on 68 and 70 spokesman. "We need to send a message loud and clear to the special interests who are behind them."

The business groups are not publicly urging Schwarzenegger to shift his campaign time and money into their drives for Proposition 64 and against Proposition 72.

"Our polls show us trending in the right direction," said Allan Zaremberg, president of the California Chamber of Commerce. "Our message is effective."

He said it's only natural that Schwarzenegger would deal first with the two Indian gaming initiatives that might be regarded as a challenge to his authority.

"We understand those have to be his first priority," Zaremberg said.

Some polls have shown little change among voters when they are told of Schwarzenegger's position on a ballot measure. But his support or opposition is often prominently featured by other campaigns.

"He is a very popular governor because he is doing a good job," Zaremberg said. "I think (voters) value his opinion."

The two business-related initiatives are among the 10 ballot measures for which Schwarzenegger makes a recommendation in a 12-page "voter guide" campaign mailer he sent to 5 million voters at a cost of about $2 million. He urges a "yes" vote on the lawsuit limit, Proposition 64, and a "no" vote on mandatory health coverage, Proposition 72.

But other measures, particularly the gambling initiatives, get far more attention in the mailer.

What might happen in the final days before the election, when many of the undecided voters will be making their choices? The governor's communications director, Rob Stutzman, seemed ready to suggest Schwarzenegger would campaign on the business-related measures, but then caught himself.

Stutzman said if the gambling initiatives "become cold lifeless forms, shifting some resources and attention... Frankly, I probably wouldn't say, for tactical reasons, what we would do."

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