SACRAMENTO — He has used his celebrity to flatter lawmakers into reaching deals, but Gov. Arnold Schwarzenegger deployed a new tactic in pushing through an overhaul of the state's costly workers' compensation system: muscle.
Over the six weeks that talks unfolded, the governor set tight deadlines for lawmakers to act, used the prospect of a November ballot initiative as a weapon to keep negotiations moving, and mused about curbing the Legislature's clout by pushing for a part-time body.
In the end, it worked. Schwarzenegger is to sign a bill in Long Beach on Monday that is expected to wring billions in savings from an insurance system often blamed for causing businesses to flee the state.
Yet even some friendly Republican lawmakers were rattled by the governor's methods. During his campaign, Schwarzenegger promised to end closed-door dealing in the capital.
Yet, the workers' comp revamp "has not been done in an open and transparent manner where the public is going to have the opportunity to provide input," said Assemblyman Keith Richman (R-Northridge).
The legislative conference committee that approved the bill did not receive it until 3:35 a.m. Thursday. Three minutes later, the six-member panel approved the 77-page bill unanimously, with no analysis presented and no copy of the bill given to anyone but the committee chair.
Schwarzenegger conceded the proceedings were murkier than he would have liked, but said he would sacrifice openness if it meant keeping the Legislature from missing deadlines.
"I like the idea of using the stick," he said at a news conference Friday. "And I like the idea of using deadlines. Because why would we hang here for the next two years and negotiate and debate over this issue?"
The governor said he was not about to relent, signaling that he may use the same intimidating practices as he turns to the toughest challenge of his young administration: wiping out a $14-billion budget shortfall.
It's not a new technique, said Elizabeth Garrett, a law professor at USC.
"It reminds me of other instances where people come in from outside an institution and are able -- through changing the dynamics -- to start the process of negotiation, compromise and action where those activities were not present or possible before," Garrett said. "You have to know how to flatter, cajole and also to have threats that aren't too heavy-handed, but are credible -- the threat of the [ballot] initiative and the threat of his popularity."
In his last major skirmish -- winning legislative support in December for a balanced-budget measure and a $15-billion bond issue -- the governor's approach was more conciliatory. He was quick to compromise.
With this deal, Schwarzenegger tested the limits of his power and stood his ground more firmly than in previous negotiations with lawmakers. In part, that was because he faced a problem within his own party. During the debate over a proposed government spending cap four months ago, Republican lawmakers said Schwarzenegger gave too much to Democrats and compromised his fiscally conservative values. The hard-nosed spending restrictions that Republicans had wanted morphed into a more porous balanced-budget amendment to the state Constitution, approved by voters in March.
This time, Schwarzenegger would not compromise when it came to a central Republican tenet: a free market for the workers' comp insurance industry, without caps on premiums.
Assembly Speaker Fabian Nunez, a Los Angeles Democrat, said he believed Schwarzenegger would have been willing to accept rate regulation but the governor knew GOP lawmakers would balk, and he would have looked again like he was bending to Democrats.
"We had a heart-to-heart and he said, 'Look, I can't sell it. I want this, but I can't sell it,' " Nunez said.
Schwarzenegger remembered the conversation differently. In his news conference, he said, "The reality of it is that I have been interested, very much interested, in insurance companies passing on the cost savings. And I told that to Fabian. But I never said that I'm very much interested in rate regulations. So it could easily be that he took that as me supporting rate regulations. I am not going to say that he stretched his imagination, but all I can tell you is that I would never say that I support rate regulation. I only said that I will look at it."
Political analysts say that as a Republican governor who faces a Democratic-controlled Legislature and who is occasionally at odds with conservative voices within his own party, Schwarzenegger can achieve only so much through persuasion. His strength in the Capitol rests with his popularity with voters. So he repeatedly warned lawmakers throughout the workers' comp debate that if they defied him, he would marshal his celebrity in a well-financed campaign to reform the workers' comp system at the ballot box.
"The people are my partner," he said at Friday's news conference.
The messages were not subtle.
