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Bill Macfadyen: California Businesses Get Glimpse of State’s Lack of Leadership

Annual CalChamber summit provides insight on budget debacle, legislative dysfunction and a possible solution

SACRAMENTO — Is California ungovernable? The California Chamber of Commerce convened two distinguished panels at its annual business legislative summit Monday to answer the question.

The panelists — among them former Gov. Pete Wilson, the last governor to balance a budget, way back in 1998 — didn’t sugarcoat their answers. To the 300 or so business leaders at the 24th annual California Business Legislative Summit, the bitter reality is that they weren’t hearing anything they didn’t already know.

In fact, CalChamber executive vice president Dave Kilby opened the proceedings by reporting that a pre-conference poll found 89 percent of the attendees believes California is on the wrong track — a point driven home by Gov. Arnold Schwarzenegger’s admission last week that the state is facing yet another $19 billion budget shortfall.

Add to that a dreary day outside and a Sacramento Convention Center ballroom that had all the ambience of a dungeon, without the lighting, and the audience’s distinct listlessness was not surprising.

It should be cause for alarm, however, because these are people who usually brim with optimism, and certainly have the kind of drive and entrepreneurial spirit that once made the Golden State the envy of the world.

What happened?

The unintended consequences of terms limits was one common theme among both panels. The first group included former state Senate Minority Leader Jim Brulte, R-Rancho Cucamonga; Gale Kaufman, president of Kaufman Campaign Consultants; and political consultant Garry South, principal of California Strategies. The second panel featured Wilson and Russ Gould, a Wilson protégé who is president of Gould Financial Consulting and chairman of the UC Board of Regents. Both discussions were led by Allan Zaremberg, the CalChamber’s longtime president and CEO.

To emphasize the point, South invoked the name of former Assembly Speaker Willie Brown, D-San Francisco, who arrived in the Assembly in 1964 and spent a record 15 years as speaker, until he was term-limited out in 1994 and was elected mayor of San Francisco. Three successive governors knew only Brown as speaker.

Contrast that, South said, with beleaguered Gov. Gray Davis, who in his five years faced — and fought with — three speakers, all fellow Democrats, before he lost the 2003 recall election to Schwarzenegger. He noted that Davis was the first governor to have to work with a fully term-limited Legislature.

South explained that governors today have no idea who most legislators are. State Attorney General Jerry Brown, hopeful of being elected anew to the state’s top spot after his first two-term stint in the 1970s and ‘80s, had to negotiate with legislators who actually served with his father, legendary Gov. Pat Brown. Both Wilson and Gov. George Deukmejian, who preceded Wilson, had been legislators and many of their former colleagues were still in office 20 years later. Those kinds of bonds, South said, are long gone.

Complicating matters, Brulte said, are the traditional, but increasingly ideological, political parties that are losing members to Decline to State, California’s fastest-growing political designation. According to Brulte, these disaffected voters are most likely moderates who can’t abide the “whack jobs” on the extremes of both parties. He said the problem is that the parties’ most extreme elements are effectively driving the process via California’s closed primaries, where nearly all of the November races are now won.

“Gray Davis, an instinctively moderate Democrat, was foiled by the legislative leaders of his party, the Democrats,” Brulte said. “The same thing happened to Arnold Schwarzenegger, an instinctively moderate Republican who was foiled by the legislative leadership of his party, the Republicans.

“And the same thing will most likely happen to the new governor, whether it’s Jerry Brown, Steve Poizner or Meg Whitman.”

An added challenge, Kaufman said, is the Legislature’s lack of planning and disinclination to tackle budget issues, which just makes the state’s problem worse.

“All that happens is that the governor stakes out leverage points so legislators can figure out how few structural changes they can get away with,” she said. “Twenty years ago, the leadership of both parties could sit in a room and have substantive negotiations.”

Is there a solution? Brulte pointed to the example set by the Republican Wilson — and his fellow panelists, who work almost exclusively with Democrats, seemed to agree.

“Strong chief executives can compensate for dysfunction in the Legislature,” Brulte said. “And Pete Wilson was the best there is.

“If you say one thing one day and something else the next, you just confuse them,” he explained. “When Pete said, ‘I’m never going to do that,’ everyone involved knew they could take that to the bank.”

In the second panel session, Wilson thanked Brulte for complimenting his negotiating skills but sought to explain how he approached the job.

“Governors must be clear on what they mean, and then they must follow through,” he said. “Look, this isn’t the first time there’s been an irresponsible Legislature; they often are. But this is the first period that, with a governor’s consent, an irresponsible Legislature has engaged in illegal — constitutionally prohibited — deficit spending. We’re getting dangerously near to factual, if not legal, bankruptcy.”

As a solution, Wilson said Californians must demand that state political leaders use as a benchmark the era of the last balanced budgets, when there was reasonable performance of the state’s basic, historic priorities: education and health and welfare.

“Look at where the spending increases have occurred and figure out how to get them back to the original Gann limits,” he said, referring to the Gann spending limit, a ballot measure approved in 1979 with 74 percent of the vote and later enacted as a constitutional amendment. The law limits state spending increases to inflation and population increase and requires the state to return surplus taxes to the people.

Gould noted that spending limits are helpful even to the Legislature, which faces a blizzard of special-interest pressures every day. He added that Wilson had another advantage because he was working with legislative leaders whom he could trust. At first they didn’t always agree, he said, but once they realized Wilson was serious, they still didn’t always agree but things started to change — to the benefit of all Californians.

It wasn’t easy, Wilson said, but with the help of Willie Brown, “we turned it around, got our economy humming, instituted the largest tax cut in history and had a $12 billion surplus when we left office. And that was before the dot-com revenue started rolling in.”

Wilson recounted his first couple of years in office and the deplorable economic situation confronting California’s business community — a mirror image of today’s conditions in which companies are being recruited to relocate to states with friendlier business climates.

“My fellow governors were always coming to California, telling me they were visiting their grandchildren,” he deadpanned. “I knew exactly who they were visiting.”

Coinciding with the CalChamber conference, the Chambers of Commerce Alliance of Ventura & Santa Barbara Counties is holding its annual legislative summit. On hand are alliance president Kristen Amyx, president and CEO of the Goleta Valley Chamber of Commerce, and Goleta Valley board members Mark Dispenza, an associate at Holmes & Holmes Insurance Agency Inc.; Steve Fedde, vice president of Sares-Regis Group; and Steve Greig, government relations manager of Venoco Inc.

Representing the alliance are executive director Brendan Huffman and alliance board member Bill Macfadyen, publisher of Noozhawk and a former Goleta Valley chamber board chairman.

Rounding out the alliance delegation are the Camarillo Chamber of Commerce — represented by Gary Cushing, owner of Marie Callender’s; Tom Kelley, Camarillo chamber president and CEO; and Michael Lavenant, a partner at Landegger Baron Lavenant Ingber — and the Oxnard Chamber of Commerce, including Claudia Classen of General Pacific Properties; Nancy Lindholm, Oxnard chamber president and CEO; and Suzanne Scar, owner of Central Coast Imaging Solutions.

The Camarillo and Oxnard chambers were honored by the CalChamber with President’s Circle awards for chamber leadership and public advocacy on behalf of local business.

Huffman, founder of Huffman Public Affairs and a presenter at the conference’s Legislative Advocacy Boot Camp session, said alliance members, like the conference participants in general, are understandably frustrated with Sacramento.

“There are so many problems needed to be addressed in California that require independence from special interests and commitment to problem solving,” he said. “Many participants are under the impression that political ambitions among our state officeholders and their collective lack of legislative skills are steering the state toward long-term budget deficits and unrestrained spending on nonessential services.”

The Chamber Alliance’s summit continues Tuesday, following the 84th annual Sacramento Host Breakfast featuring Schwarzenegger as keynote speaker. Schwarzenegger skipped the event last year, the first time a governor had done so.

Noozhawk publisher Bill Macfadyen can be reached at .(JavaScript must be enabled to view this email address). Follow Noozhawk on Twitter: @noozhawk. Become a fan of Noozhawk on Facebook.

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