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Deal Breaker

How Arnold Schwarzenegger changed his mind on Prop. 98 and lost the support of the all-powerful teachers union

July 30, 2006|Joe Mathews | Joe Mathews covers labor and politics for The Times. This article is adapted from Joe Mathews' upcoming book "The People's Machine: Arnold Schwarzenegger and the Rise of Blockbuster Democracy" (PublicAffairs), Copyright 2006 by Joe Mathews.

Arnold Schwarzenegger entered the Sheraton conference room with an unlit stogie in his mouth. On this day in November 2004, his concession to the Sacramento hotel's smoking rules was the only one he would make to limits set by others. After a string of victories in his first year in office, the governor believed that he had a once-in-a-generation opportunity to overturn California's political order in 2005.

Although Schwarzenegger often oversold even his modest achievements as historic reforms, in private he talked about his frustration with the slow pace of change in the state, and about how the political reality stymied major progress. He wanted to invest billions in repairing California's infrastructure, but the budget, though far healthier than when he took office, was still unbalanced. As the governor tried to make political history, his own political history boxed him in. He knew it would be a struggle to reconcile his campaign promises to reduce the state budget deficit, avoid a tax increase and protect popular public spending, particularly the school funding guarantee known as Proposition 98.

Much has been said and written about the supposed reasons for the governor's slide in the polls during his second year in office, including his fight with a nurses union and the rhetorical misstep of calling legislators "girlie men." But the real story of his political rise--and the subsequent decline from which he has only partially recovered--centers on his relationship with the 335,000-member California Teachers Assn. and a deal that he and his closest advisor, Bonnie Reiss, negotiated with the union shortly after his election in the waning days of 2003. That agreement reflected his stated desire to protect Prop. 98 and education funding. During an interview at Riverside's historic Mission Inn in the midst of the campaign to recall his predecessor, Gray Davis, I had asked Schwarzenegger if he would suspend the Prop. 98 guarantee to balance the budget. "Not over my dead body," he replied.

But a year later, as he contemplated using ballot measures and a special election to fix the state's stubbornly out-of-balance budget, the governor began to see Prop. 98 as a target. The meeting at the Sheraton in November 2004, a year and a day after his inauguration as governor, was Schwarzenegger's belated attempt to force his team to plan for such an election. More than two dozen advisors showed up, including pollster John McLaughlin, who flew out from New York to give a presentation. There were a few warning signs, particularly the governor's relatively low approval rating on education (43%). But the good news outweighed the bad. Seventy-one percent of the voters surveyed had a favorable opinion of Schwarzenegger. "Enjoy it," McLaughlin said as his client chomped on his cigar. "We have no place to go but down."

Bonnie Reiss got a look at her future boss in action in 1979 when she and her friend Maria Shriver were trying to whip up interest in a Teddy Kennedy for President event at a roller-disco club in Hollywood. The two women coaxed Shriver's bodybuilder boyfriend into taking a stroll along Venice Beach. "He let us walk 20 feet behind him and try to sell fundraiser tickets to the people following him down the beach," Reiss recalled.

In 1994, Schwarzenegger asked Reiss, by then an entertainment lawyer and environmental activist, to lead the national expansion of his foundation, the Inner City Games. The two were a good match in part because they were so different; the Republican Schwarzenegger projected Austro-Californian cool, while the Democrat Reiss talked and moved like a New York express train. Under their guidance, the Inner City Games evolved from a sporting event in L.A. into a collection of after-school programs in 15 cities. It also became Schwarzenegger's springboard into politics when he decided to sponsor a 2002 ballot initiative to fund programs like his.

The star's political consultants advised him then that CTA was the most politically powerful organization in the state, and that the union could sink the initiative by opposing it. To avoid that prospect, he reached out to the CTA's political director, John Hein, and invited a lawyer who did work for the union to help write the after-school initiative, Proposition 49, so that its funding stream would not interfere with Prop. 98.

The CTA knew how to use direct democracy. In 1988, the union had sponsored Prop. 98, which established a three-part formula involving tax revenues, school enrollment and per-capita income growth to determine how much money the schools should receive. As each factor changed, the funding guarantee could go up or down, depending on the day it was calculated.

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