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Will the real Schwarzenegger please stand up?

Gov. Arnold Schwarzenegger pleased his allies, confounded his critics and surprised many as he signed and vetoed hundreds of bills. His actions included abolishing the state Dental Board next year, requiring new state buildings to use water-saving toilets, refusing to require businesses to protect their customers’ privacy and rejecting efforts to get chain restaurants to tell the public about their food’s nutrition.

Many of the governor’s vetoes and signings were expected–such as his veto of the Assembly’s health care proposal, or of Senate Leader Don Perata’s water-development plan.

But other actions weren’t, and caught many in the Capitol in surprise.

For example, the governor twice before vetoed legislation requiring employers to notify their workers about filing for the earned income-tax credit, which benefits low-income individuals and families. The credit has been on the books since 1975 and was partly intended to offset the burden on low-income workers of Social Security costs.

But this time around, Schwarzenegger signed the bill without comment. Earlier in the year, the governor’s wife, Maria Shriver, publicly urged people to take advantage of the earned-income-tax credit. One person familiar with the issue said the surprise signing may have been prompted by his wife’s role.

Congress originally approved the tax-credit legislation in 1975 in part to offset the burden of Social Security taxes and to provide an incentive to work.

In the traditional struggle of consumers vs. business, business wound up far happier with the governor’s actions. But not always.

The governor, to the surprise of insiders, signed legislation to remove Social Security numbers from public records, despite an aggressive, last-minute lobbying push by data brokers, private investigators and others. Many following the legislation, AB 1168 by Assemblyman Dave Jones, D-Sacramento, said the measure had appeared likely to be vetoed.

The governor enthusiastically endorsed the state Chamber of Commerce’s public-relations campaign against so-called “job killer” bills, vetoing the dozen bills that made it to his desk. He also vetoed a number of measures opposed by business interests that did not receive wide public attention.

For example, the governor rejected AB 969 by Assemblyman Mike Eng, D-Monterey Park, that would have resolved an ambiguity in California tax law about buying out-of-state goods. The bill would have required an instruction on the state income-tax form advising people that they are required to pay use taxes–essentially a California sales tax–on items purchased outside the state.

The bill was opposed by the California Taxpayers Association, and Schwarzenegger agreed, adding that it was “too soon for taxpayers to compile adequate records of their purchases.” By one estimate, the bill would have brought in $6 million to the state treasury. Supporters included the state Board of Equalization, consumer groups and an array of local governments and organized labor.
Schwarzenegger also vetoed an important measure opposed by business property owners. The bill, AB 843 also by Eng, would have tightened the requirements for reporting a change of ownership of business property. Unlike residential property transfers, which generally are simple, business property ownership can be complex.

“A homeowner owns the home, and if you own the home, you get the homeowner’s exemption,” said lobbyist Lenny Goldberg, a consumer-tax activist. “But with business property, it’s more complex. You’ve got general partnerships, limited partnerships, limited law corporations, Subchapter S companies, publicly traded companies, cooperatives, real-estate investment trusts. The bill would have streamlined the whole thing and increased the penalties for failing to report.”

Schwarzenegger vetoed a bill, AB 1673 by Assemblyman Mike Feuer, D-Los Angeles, involving retail mail-in rebates. Currently, a consumer purchases a product and, in some cases, can obtain a refund after submitting a mailed request. The bill was prompted by consumers’ complaints that the rebates weren’t being received. Feuer’s bill would have allowed the consumer to get the rebate instantly, leaving it to the store to submit the mail-in request on its own.

But the governor said that “although the author of this bill has put forth an interesting proposal,” there are “still outstanding issues related to practical consequences that still need to be resolved.” Schwarzenegger said a “California retailer should not have to be held to the responsibilities triggered in this bill, if it does not have control over the manner in which a manufacturer’s national rebate advertising campaign is structured.”

He also vetoed an important consumer privacy bill, opposed by the Chamber, that would have required retailers to encrypt the transmission of payment-related data. Consumer groups favored the bill, AB 779 by Jones, as a privacy and security safeguard, but the governor said the bill could leave retailers vulnerable to unnecessary lawsuits and raises businesses’ costs. Jones said he was “shocked and disappointed that out governor thinks our personal information should be left out in the open for identity thieves and hackers to pilfer.”

One veto that caught observers by surprise was his rejection of SB 886 by Senate Leader Don Perata, D-Oakland. Perata’s bill would have a created a regulatory scheme with some autonomy for dental hygienists and would have extended the existence of the state dental board, which licenses and regulates California dentists, until 2011. Absent the extension, the board is scheduled to expire next year. The bill was the result of extensive negotiations and a compromise between the dentists and the dental hygienists, two groups that have been at odds for years in the Capitol.

Schwarzenegger said he vetoed the bill because he was “concerned that this measure will lead to increased licensure fees for dental hygienists and dental assistants without providing additional consumer protections.” In his veto message, the governor did not mention the elimination of the dental board. “[The dental board] ‘sunsets’ next year unless another bill gets introduced to replace it,” one Capitol staffer said.

Perata, not surprisingly, disagreed with the governor’s action.

“There is no evidence whatsoever to support an assumption that this bill would result in increased fees. I am concerned that a potential fee increase was a ruse and that the truth may be a trend of deregulation and an intentional move to eliminate all consumer boards by this administration.”

“The governor has vetoed legislation to continue the oversight of for-profit vocational schools, to subject the regulation of chiropractors to basic oversight and accountability, and now to continue the oversight of dentists by the Dental Board,” Perata added. “These vetoes are anti-consumer plain and simple.”

Several other regulatory boards involving court reporting, v
ocational nursing and psychiatric technicians, barbering and cosmetology and language pathology also were not extended due to confusion in the last hours of this year’s session, but they are all but certain to be extended starting next year, sources said.

Environmentalists generally were pleased by the governor’s actions, favoring environmentalists on three out of every four bills they identified as significant. He signed AB 1470, a first-in-the-nation move to expand the use of solar technologies through an aggressive $250 million rebate program. Environmental backers of the bill said it would cut millions of tons annually in greenhouse gas pollution.

Schwarzenegger also signed AB 1108 by Assemblywoman Fiona Ma, D-San Francisco, that bars the use of toxic compounds called phthalates in toy manufacturing. The bill was opposed by manufacturers, but Schwarzenegger rejected their position.

Dan Jacobson of Environment California lauded Ma, the governor and legislative leaders “for standing up to the powerful chemical industry and passing legislation to protect our kids from chemicals in the environment.”


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