Policy disputes, miscommunications marred Gov’s. special election effort

When Arnold Schwarzenegger was elected in 2003, Republicans were hopeful he
would restore the credibility of their party. Since Pete Wilson’s reelection
in 1994, the party had been in steady decline for nearly a decade-losing
every single statewide office, and mired hopelessly in the minority in both
legislative houses.

Schwarzenegger built early momentum during his first year in office. But
after the November 2004 election, Schwarzenegger and his advisors hatched an
ambitious agenda, which would be laid out in the State of the State address
in January 2005. The agenda would amount to a declaration of political war
on many core Democratic constituencies including teachers, public employee
unions and Democratic legislative leaders.

But the effort sputtered from the beginning, and things didn’t improve as
the weeks passed.

For starters, his political foes, led by the nurses association and widows
of police and firefighters, demanded policy decisions. That was followed by
the well-funded teachers’ union, which attacked him mercilessly in a
multimillion-dollar TV campaign for a breaking promise to repay $3 billion
to schools. His redistricting-reform initiative was rife with drafting
problems, got rewritten, and then got rewritten again. He was slammed as a
special-interest fund-raiser–and, indeed, he was taking in far more money
than his ousted predecessor Gray Davis ever had.

In the meantime, because of a recent ruling by the Fair Political Practices
Commission, the Schwarzenegger political team was barred from taking control
of the campaign operation, and the rush to meet tight signature-gathering
deadlines led to a harried attempt to get solid ballot initiatives written.

“We did not have the ability to be in absolute control,” said Schwarzenegger
communications director Rob Stutzman, referring to the FPPC ruling. Stutzman
was careful not to lay blame, but acknowledged that some of the initiatives
had drafting errors, calling the initiative writing process a “disjointed

That January speech signaled the political combat to come.

The governor called a special session to address four key issues: a
mechanism to deal with falling budget revenues before the start of the next
fiscal year, changes in the state pension system, merit pay for teachers and
changes in the state’s redistricting process.

The governor planned to use the threat of going to the ballot to pressure
legislators into cutting a deal. But as he talked about wanting a
legislative compromise, Schwarzenegger simultaneously hit the campaign trail
and prepared for a potential special election. It was this dual
track–talking compromise while using his political weapons–that raised the
first danger signals, angering legislative leaders who felt slighted by

This strategy had another flaw: State law effectively prohibited
Schwarzenegger and his political team from overseeing the campaign effort.

The FPPC had ruled that any candidate-controlled committee would be subject
to state fundraising limits outlined in Proposition 34. Schwarzenegger’s
team knew a special election would cost somewhere in the neighborhood of $50
million, and the FPPC ruling would have limited them to raising that money
in $23,000. That was a virtual impossibility.

To get around the fundraising limits a new committee was formed. The
Citizens to Save California brought together a group of the governor’s
political allies, all of whom were seasoned California political hands.

CSC’s board consisted of six initial members: Jonathan Coupal from the
Howard Jarvis Taxpayers Association; Chamber of Commerce President Alan
Zaremberg; Small Business Action Committee President Joel Fox; Rex Hime,
president of the California Business Properties Association; Larry McCarthy
of the California Taxpayers Association; California Business Rountable
President Bill Hauck. Later, Janet Lamkin of the California Bankers
Association joined the board.

The team hired its own fundraiser, and its own political consultant, Rick
Clausen, and began preparing for a possible November election.

“I know that many people think it was really just a technicality, and that
the governor and his team were essentially in charge of CSC, but that
absolutely was not the case,” said Fox.

“We were allowed to talk to the governor, and we did consult him,” said
Zaremberg. “As we developed our plans, we were constantly communicating with
the governor to get a feel for what he would support, and where he wanted to

In essence, Schwarzenegger was preparing for a political war against a
well-financed, and well-organized group of foes, centralized under the
leadership of the teachers union and political consultant Gale Kaufman.

Meanwhile, inside and around his administration, supporters of the governor
were not in total agreement about what a special election package should
look like. His political team was prohibited by state law from taking the
reins of the campaign. And many members of the CSC board did not actually
believe that it would actually come down to a November vote.

Zaremberg and Fox both say they wanted to begin the signature gathering
process on a series of initiatives to give Schwarzenegger leverage in his
negotiations with legislative leaders.

“We thought this would be like workers’ comp,” said Fox. “We wanted to be
able to begin gathering signatures on these initiatives to help give the
governor the leverage to broker a deal in the Legislature. The governor was
very clear from the beginning that was his preference – to work something
out with the Legislature.”

CSC was obligated to put together an initiative package that was sellable to
the public, and real enough to legislators to serve as a threat to get
leaders to the negotiating table.

But there were some disagreements among the committee, and with the
governor’s team. Back in 2004, Coupal had joined with Sen. John Campbell to
propose a state-spending limit. After the state of the state address,
Schwarzenegger introduced his own proposal to limit state spending. The
Schwarzenegger proposal was not a hard spending cap, but did give more
mid-year budget cutting authority to the governor.

“The problem with the [administration’s] spending limit was that it called
for cuts across the board,” said Fox. “There were concerns that a number of
programs, particularly higher education, would be squeezed.”

Another big debate inside the CSC was whether or not to directly take on the
teachers’ union. The governor had shied away from formally endorsing the
so-called paycheck protection initiative. And while teachers unions were
already angry at the governor for his January budget proposal, which did not
pay back any of the $3 billion they say the governor promised public schools
back in 2004, many Republicans were wary of directly taking on Proposition

Ironically, while the Campbell-Coupal measure was viewed as the more
stringent “hard cap” on state spending, it was the Schwarzenegger proposal
that called for rewriting Proposition 98, the constitutional formula which
guarantees that public schools will receive no less than about 40 percent of
the state’s annual budget.

Quickly, there were two camps inside CSC – the Campbell-Coupal camp pushing
for the “hard cap,” and the Hauck-Zaremberg camp, which worked off the model
introduced in the legislature by Gov. Schwarzenegger.

As the two sides went back and forth, the governor, and his finance director
Tom Campbell, were kept in the loop. But ultimately, the governor could not
control the final language of the initiative.

“I sort of came down in the middle,” says Fox. “And ultimately, what we
ended up with was something in between the governor’s plan and the
Campbell plan.”

“Obviously, the governor’s support was going to be critical,” says
Zaremberg. “But no, he was not in a position where he could say, ‘This is
the plan. Take it or leave it.'”

While some in the administration characterized that inability as an
obstacle, Zaremberg says ultimately, it lead to a better piece of
legislation. “I think the process really did help us craft a more effective
measure,” he said. “We all wanted essentially the same thing, we just had
different ideas about how to get there.”

Stutzman said the problem with Prop. 76 was that it was a complicated
initiative that voters may not have completely understood. Stutzman said
running a No campaign against such a measure is “the easiest thing to do.”

Ultimately, CSC decided to go with a plan that tackled Proposition 98
head-on, guaranteeing a massive political reaction from the teachers’
unions. CTA ultimately financed the bulk of the campaign that lead to
Proposition 76’s defeat.

Fox says Proposition 76 was seen as the centerpiece of the special election
package. The six members of the CSC board had their expertise in state
spending issues. On some of the governor’s other issues that became parts of
the governor’s package, CSC was less involved.

In the end, Stutzman said, voters rejected the entire idea of
Schwarzenegger’s special election. He said that the governor would now turn
away from using the ballot initiative as a political weapon, and focus on
incremental change through the legislative process.

“Voters said they wanted their elected officials to solve the state’s
problems,” Stutzman said.

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