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The Governator and the Business Community

Two days after the special election, the California Chamber of Commerce held its post-election powwow in the former Four Seasons hotel in Newport Beach.

The talk of the two-day affair was the keynote speech from campaign strategist Mike Murphy, who told the room full of business leaders that they were to blame for the governor's defeat.

Numerous sources in attendance said Murphy chided the business community for not matching the spending by labor unions during the election. And because of the governor's defeat, Murphy warned the room that they should prepare for some uncomfortable moments in the year ahead.

"He said the governor is now basically in reelect mode, and that we should prepare for him to sign some things we're not going to like," said one business donor who heard the speech and requested anonymity.

Many in the room, which included executives from high tech firms, energy companies and developers, bristled at Murphy laying the blame at their feet.

They say the governor adopted a piecemeal agenda for the election that embraced a number of measures the business community essentially didn't care about. "Why would we give a sh-t about teacher tenure, or even public employee unions?" said one attendee. "We didn't even know what the governor was going to be pushing until the State of the State."

While Murphy's message did not go over well with some business leaders, some of whom blamed Murphy for the governor's defeat, the chamber is bracing for a new set of post-election political realities. They expect the governor to embrace a political agenda in 2006 that will include curbs on greenhouse gas emissions, an increase in the state's minimum wage (which he vetoed last year), and a host of new fees on everything from water use to state roads.

User fees may wind up as a key funding source for the massive new infrastructure bond the governor is expected to endorse next year. There has also been talk of using the roughly $1.3 billion in transportation money, set aside in Proposition 42, as a guaranteed funding stream for the new bond.

And business leaders privately acknowledge that a discussion of tax increases may be on the table.

After a disastrous campaign season in 2004, and a major setback in the governor's special election, the California business community and the Chamber of Commerce is bracing for the governor to move to the left, and they may be moving along with him, albeit grudgingly.

Republicans say that the specter of the 2006 elections will keep business groups closely aligned with the governor. "The two scariest words in the chamber's vocabulary are 'Governor Angelides'," said GOP strategist Bill
Whalen.

In the meantime, the chamber is looking to tweak their image as a knee-jerk, anti-tax organization. "There's an assumption that we're anti tax," said Dominic DiMare, the chamber's vice president of government relations. "We want to make sure there are sufficient safeguards and accountability for the investments we make."

Ben Austin, spokesman for Rob Reiner, says the universal preschool initiative headed for the ballot was hashed out with members of labor and the business community. Though the measure would implement a new income tax on the wealthiest Californians, the measure has the backing of the Los Angeles Chamber of Commerce as well as chambers in Oakland and San Francisco.

And while the state chamber is not supporting the measure, Austin says they did have a role in crafting it. "There is language in our initiative that the state chamber suggested. As we were draftng this, they gave us suggestions we took seriously and incorporated into the initiative."

Austin said he did not want to talk about specific provisions suggested by the state chamber, since they are not backing the initiative. But he did say the LA Chamber was pivotal in determining how the new preschool programs
should be funded.

"The LA Chamber was very interested in funding stream not being a split roll," he said, referring to a hike in the commercial property tax. "We accommodated that."

While it is far from peaceful between the chamber and labor groups, business leaders are beginning to think about changing their political approach. Internally, there is an ongoing discussion about the community's willingness to fund negative advertising, and to run candidates who may not necessarily be talking primarily about business issues.

Meanwhile, the state chamber's legislative political organization, JobsPAC, has hired Democrat Darry Sragow to help guide their 2006 electoral strategy, and Sragow says part of his pitch will be to convince the chamber, and other business groups to support Democratic candidates next November.

Sragow says the business community has to simultaneously be more cutthroat and less partisan. "You don't get very much in the halls of power without being able to strike fear in the hearts of people who are going against you.
People who are successful in politics aren't just liked or loved --they are also feared," he said.

"The business community, writ large, whether it's the chamber or chamber plus [others] is going to have a tough time until they become respected and feared."

Sragow said he in his work for JobsPAC, he will only work to elect Democratic candidates. "I will certainly never work for a Republican. That's not even remotely possible."

Some rifts still remain in the business community from the 2004 election cycle. Some former members of JobsPAC, including Ed Voice, Southern California Edison and the California Association of Realtors, split from the
organization, mostly over the race in the 53rd Assembly District. JobsPAC supported Republican Greg Hill, while the other groups opted to back Democrat Mike Gordon. But leaders from the organizations that left JobsPAC say there may be some room for cooperation during the next election cycle.

But Sragow was adamant that include supporting some Democrats, not just in the primaries, but in the fall. The chamber says they will be supporting some business-friendly Democrats next November. And he says he is pushing the group to focus on state Senate races.

"When you're dealing with Senate candidates, typically they have some experience under their belts. Most have served at least a term in the Assembly," he said. "They're not better human beings, they're just more experienced. The argument I am making is if Jobs PAC and the business community chooses to play in contested primaries, in the Senate, at least they know what they're getting."