Old Worries, New Issues Face Returning Legislators

SACRAMENTO —  Legislators will open their 1989 session Tuesday in an unusual atmosphere of anxiety, with the two biggest issues of the moment in the Capitol out of their control.

Will Gov. George Deukmejian seek a third term? And what happens next in the FBI’s investigation of suspected corruption in the Legislature?

Adding to the concern are substantial new issues facing legislators and Deukmejian, as well as some unfinished business from last session. For example:

--Devising a way to pay for some existing or expanded government services under a new set of school finance rules enacted by the voters Nov. 8 will test the political creativity of a Republican governor and a Democratic Legislature.

--Clearly on the minds of legislators in the wake of narrow voter approval of the Proposition 103 insurance overhaul will be renewed attempts at “insurance reform.” Proposals aimed at bracing up Proposition 103 already have been offered, even though the California Supreme Court has not yet ruled on the ballot initiative’s constitutionality.

--Political office seekers, ranging from the governor and lawmakers to local officials, will be operating for the first time under a new set of restrictions passed by the voters in June that limits individual and political action committee contributions to candidates and prohibits candidates from transferring campaign money to each other, a technique heavily used by legislative leaders to keep themselves in power by doling out money to favored candidates.

--For the second time, Deukmejian will ask the Democratic-controlled Legislature to confirm his nominee for a new state treasurer to succeed the late Jesse M. Unruh, a Democrat. Although the Senate rejected his first choice early in 1988, former Rep. Daniel Lungren (R-Long Beach), the lawmakers are expected to approve state Auditor Gen. Thomas W. Hayes, a long-time employee of the Legislature. He probably will face some opposition in the Assembly.

Other issues facing the Legislature range from demands for more money to fight AIDS to expanded state subsidies to financially hard-hit local governments to finding a remedy for restoring the state’s ailing highway and transportation systems.

“The world of California with its 26 million or 27 million people is crying for leadership to solve these problems and we ought to be about doing that,” Assembly Speaker Willie Brown (D-San Francisco) told his colleagues recently.

Draws Fire From GOP

In the same address, Brown, whose image as a politically powerful wheeler-dealer has served as a lightning rod for Republican attacks, recast himself as a born-again leader in shaping state policy on health care, transportation and insurance.

“Over the past several years, yes, I’ve spent more time on the politics of running this house,” he told his colleagues. “I accept the challenge to come back and be the symbol of policy.”

Deukmejian, who is trying to decide whether to seek a third term or to retire after 26 years as an elected state official, will deliver his annual State of the State address to the Assembly and Senate on Jan. 9, and will send his $44-billion proposed budget to the lawmakers the next day.

Already he has warned that the spending document will “contain inadequate funding levels in many programs” because, he maintains, the Proposition 98 school finance measure forces him to take money from other areas to provide additional support for schools, from kindergarten through the community colleges.

Cutbacks Planned

Administration officials have identified as targets of potential cuts the University of California, the California State University system, local mental health programs and state aid to county governments.

Proposition 98 basically mandates that about 40% of the state general fund, which finances most government operations, must go to the public schools. “The process this year is the most difficult one I have faced except for my first year, when I inherited a $1.5-billion deficit,” the governor said.

Deukmejian has also promised proposals to “reform” the budget-writing process, including possible amendments to Proposition 98 and to a law enacted by the voters in 1979 that clamped limits on spending by governmental entities.

But State Supt. of Public Instruction Bill Honig, one of the chief backers of Proposition 98, has accused the governor of making the new law a “scapegoat” for budget cuts. He asserted that the real culprits in the money squeeze are tax breaks given over the last few years to major foreign corporations and wealthy Californians.

Third-Term Question

High on virtually every political watch list is whether Deukmejian will seek a third term, an accomplishment achieved only by Republican Gov. Earl Warren in 1950. Deukmejian has sent mixed signals but is expected to make up his mind soon. A decision to retire would make him, in effect, a lame-duck governor for two years.

Many influential Republicans, including President Reagan, have encouraged Deukmejian to seek reelection, if for no other reason to give the GOP important leverage in the early 1990s when legislative and congressional districts are redrawn by what many politicians believe will be a Democratic Legislature.

“I’ve given careful thought to whether I’ll be running,” a coy Deukmejian said Saturday in his regular weekly radio speech. But he added, “There’s no decision yet.”

Casting a shadow of apprehension over the Legislature is the federal government’s investigation of suspected corruption that exploded into public view Aug. 25, hours after 30 agents searched the Capitol offices of four lawmakers and legislative aides.

No Arrests Made

Although no indictments have been returned by a federal grand jury and no arrests have been made, sources close to the investigation have indicated that prosecutions will be forthcoming.

Federal investigators are known to be looking into the acceptance by legislators of campaign contributions, gifts from special interests and lavish fees for speeches that, on occasion, may not have been made.

The FBI, which conducted a “sting” operation that spanned almost three years, raided the offices of Sen. Joseph Montoya (D-Whittier), Assembly members Pat Nolan (R-Glendale), the former GOP floor leader, Gwen Moore (D-Los Angeles) and Frank Hill (R-Whittier). Former Sen. Paul Carpenter (D-Cypress), now a member of the State Board of Equalization, also is a target.

Since the probe began, legislative leaders, including Brown and Senate President Pro Tem David A. Roberti (D-Los Angeles), have promised “reforms” aimed at restoring the luster to what is widely regarded as a legislative body tarnished by greed.

Ethics Panel Proposed

Brown, who was barely reelected to a fifth term as Speaker on Dec. 5 and who appears to have the votes to quell possible ouster attempts, has proposed a special Assembly ethics committee composed equally of Republicans and Democrats “to deal with people who create problems.”

The Legislature’s atrophied Senate-Assembly Ethics Committee seldom meets and has rarely punished an offending legislator. Against this backdrop, critics in the Capitol are skeptical that substantive reforms will occur this year.

Among the proposals are these: Creation of an independent special prosecutor to handle cases involving legislators or other top level officials; a prohibition against accepting fees for speeches; a ban on the use of “volunteer” legislative employees to perform campaign tasks, and--perhaps the most far-reaching of all--outlawing the raising of campaign funds during a legislative session.

Committee hearings are expected soon on bills aimed at assuring that insurance companies neither cancel policies nor boost premiums while the Supreme Court is deciding the constitutionality of Proposition 103.

Consumer Advocate

Another bill would establish in the attorney general’s office a special consumer advocate on insurance matters, while other legislation would lower the cost of automobile insurance claims, an action that insurers say is necessary to keep them from leaving California or going broke.

Most of these efforts, though, are expected to remain on a back burner until the court rules and super-heated anti-insurance industry rhetoric cools off.

Certain to receive fast-track treatment is treasurer nominee Hayes. He is expected to win easy approval in the Senate, but some Assembly Democrats want him defeated, largely because they want the office out of Republican hands until a Democrat can run in 1990.

Acting Treasurer Elizabeth Whitney, an assistant to Unruh, has waged a behind-the-scenes effort to derail Hayes.

Hayes’ chances appeared to improve a couple of weeks ago when Deukmejian agreed to advance the date for a special election to fill the Assembly seat left vacant by the death of Curtis Tucker (D-Inglewood). The action was a special favor to Speaker Brown, who expects to gain another loyalist when the Inglewood race is over. If Hayes is not rejected by Jan. 9, he will automatically take office.