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A Bold To-Do List for the State

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Times Staff Writers

As lawmakers return to the Capitol today for the final month of the 2006 session, Gov. Arnold Schwarzenegger and Democratic leaders are negotiating deals on measures that could make California a leader in the fight against global warming, break the near-monopolies of cable companies, cut prescription drug prices and boost the minimum wage.

Lawmakers also are grappling with how to fix two of the most complicated institutions in California, the state’s prison system and Los Angeles’ public schools.

After two years in which August ended with the Republican governor and Democratic-led Legislature at loggerheads, both sides say this year’s session represents the most substantial agenda since the 2003 recall upended the Capitol’s balance of power.

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Already, Schwarzenegger and legislators agreed on a $131-billion spending plan before the fiscal year began in July -- a feat not achieved since 2000 -- and devised a $116-billion public works improvement package to place before the voters in November.

Though Democrats remain ambivalent about handing Schwarzenegger any more victories that would bolster his reelection bid, they hope that his election-year flexibility will offer their best chance to enact several long-desired goals, including boosting the pay of menial laborers and placing limits on pollutants.

Such achievements also would aid incumbent legislators’ own campaigns, as the terms of all of the Assembly and half the Senate are near their end. But political experts say too much success could undermine the Democratic gubernatorial bid of state Treasurer Phil Angelides.

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“There’s no question that I have to be very careful,” said Assembly Speaker Fabian Nunez (D-Los Angeles), co-chairman of Angelides’ campaign. “If I do too much with the governor, then it doesn’t help set us apart from the Republicans. But I’ve always believed that political ideology comes second to real results.”

Chastened by his special-election rout last year, Schwarzenegger is eager to show he can transcend partisanship as he asks the electorate in November to ratify their choice of him in the recall. On several major pieces of pending legislation, he has broken ranks with some of his chief corporate backers.

Schwarzenegger has split with the California Chamber of Commerce over global warming legislation. A proposal by Assembly Democrats would set limits on the amount of carbon dioxide and other gases that can be emitted in California, starting in 2012. It would require major changes at power plants, refineries and in heavy industries such as steel mills and cement factories, which now face no regulations in their greenhouse gas emissions.

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The chamber is opposed to California unilaterally limiting emissions, saying that would put the state’s industry at a disadvantage. But Schwarzenegger has shown his interest in a deal with Democrats by offering amendments on how the limits would be devised and enforced.

A key provision of Schwarzenegger’s plan calls for future administrations to set enforceable limits on polluters, while the Democrats prefer the quasi-autonomous state Air Resources Board to do so.

There also are signs that both sides could agree on raising California’s $6.75 minimum wage, something Democrats have been trying to do throughout Schwarzenegger’s term.

The governor vetoed their proposals in the last two years, saying the increases were too high. But in May, he proposed raising the minimum wage by $1 an hour to a state commission, which is still evaluating it.

Democrats are pressing for future increases to be automatically linked to inflation -- an arrangement called indexing. But they are in talks to drop that demand in exchange for a larger increase than the governor has offered.

“I would trade indexing for a buck and a half” an hour increase, said Senate President Pro Tem Don Perata (D-Oakland).

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In an indication that another Sacramento impasse may be forded, Schwarzenegger also has broken from the pharmaceutical industry over measures to lower the prices of prescription drugs.

Efforts to allow the state to negotiate lower prices with the pharmaceutical industry have been mired in a dispute over whether companies that refuse to participate should be penalized. Because the governor opposed such punishments, there was a standoff in the Legislature. Consumer groups and the drug industry battled it out over two rival initiatives last fall. Both lost amid more than $76 million in campaign spending by the industry.

Last month, however, Schwarzenegger embraced the Democrats’ penalty method, which would make it difficult for recalcitrant drug companies to have their medicines prescribed for Medi-Cal patients -- pushing them out of a lucrative part of the market.

“We oppose the price-control elements of this proposal and any attempt to use the Medi-Cal patient population as a negotiating tool,” Ken Johnson, senior vice president of the Pharmaceutical Research and Manufacturers of America, said in a statement.

Schwarzenegger’s counterproposal calls for discounted drugs to be available to people and families earning no more than three times the federal poverty level. A family of four, for instance, could earn up to $60,000 a year. Companies that don’t comply within five years would be penalized.

Although Democrats are pushing for more families to be included and for companies to have less time to comply, the differences are now fairly narrow.

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A more nettlesome topic is what to do about California’s severely overcrowded prisons, which are under a federal judge’s oversight because of persistent problems with inmate healthcare, employee discipline and the treatment of juveniles and the mentally ill. California currently incarcerates about 172,000 inmates. Corrections officials expect they will need nearly 44,000 extra beds by 2012.

Schwarzenegger has proposed building two prisons, and a court-appointed receiver wants to build two prison hospitals. The governor also wants to pay other states to take as many as 5,000 illegal immigrant inmates awaiting deportation upon completion of their sentences, and borrow $6 billion to upgrade and expand the prison system. The Legislature has not yet evaluated his plan.

One contested piece of legislation that now appears headed for easy passage would allow telephone companies to provide television service to homeowners through phone lines.

After a fierce fight between the telephone and cable industries that has involved many of the lobbyists in town -- the measure is flippantly referred to around the Capitol as the “Full Lobbyist Employment Act” -- a compromise was reached that pleases both sides.

Among other things, the compromise would allow cable companies to opt out of local regulation when faced with imminent video competition from phone companies.

Cities and towns that stand to lose much of their power to regulate these valuable concessions remain opposed, but the bill passed the Assembly unanimously and Perata said he expected it would get through the Senate.

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For all the buoyancy, a number of proposals still remain tough lifts. One of those is Los Angeles Mayor Antonio Villaraigosa’s legislative priority, to get more power over the city’s schools.

His proposal, negotiated by lawmakers and the teachers unions, would give the mayor a say over the school district budget and the school board’s choice of superintendent, and allow him to take control of the worst-performing schools. But the Los Angeles Unified School District is campaigning intensely against it, and its fate is uncertain.

Legislative leaders and their advisors are pessimistic about the prospects for tax credits to encourage film companies to shoot in California, even though Schwarzenegger has campaigned strongly for it. There is little appetite in either party to single out Hollywood for tax breaks when other industries, such as airlines, are also seeking fiscal relief.

A number of legislative leaders, including Nunez, are pressing hard for changes to California’s term limits law, while Assembly Republicans and the governor want to change the way legislative districts are drawn. But the politics have become complex.

“We’re not there yet,” said Dick Ackerman, the Senate Republican leader from Irvine.

A number of smaller bills would have a direct and obvious impact on Californians if approved. Those include bills that would require that the historical contributions of homosexuals in the United States be taught in California schools, prohibit dogs from being chained for long periods of time and ban drivers from using hand-held cellphones. All three have passed the Senate and are pending before the Assembly.

One area in which there is no sign of compromise concerns the workers’ compensation changes that Schwarzenegger pressed through the Legislature in 2004 and calls a major achievement of his term.

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Unions and laborers complain that injured workers are getting shortchanged while insurers profit. Perata said Democrats would pass legislation boosting benefits for those with permanent injuries.

But Adam Mendelsohn, a Schwarzenegger spokesman, said: “The governor is opposed to any rollbacks to his workers’ compensation reforms.”

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