Sign or veto? Gov. Jerry Brown faces a stack of dilemmas

SACRAMENTO — Gov. Jerry Brown has spent months persuading some of California’s most powerful interests to invest millions of dollars in his November tax initiative. Now, that drive for campaign cash looms over the Capitol as he considers bills that could profoundly affect his donors.

In picking winners and losers among those with stakes in the slew of proposals sent to him in the legislative session that ended Friday, Brown risks alienating key allies with big checkbooks. With each signature or veto, he also puts at risk his image as an independent, above-the-fray operator dedicated to restoring public confidence in Sacramento.

“His desk is going to be piled high with dilemmas,” said Jack Pitney, a government professor at Claremont McKenna College.

The awkward dance between campaigning and governing comes as Brown ramps up efforts to sell voters on his ballot measure — a proposition crucial to fulfilling the promise he made to repair California’s finances. Moreover, the success of his campaign hinges on the continuing support of opposite interests: business and labor.

Deep-pocketed unions, which spent millions of dollars to help get the tax measure, Proposition 30, on the ballot, are backing bids to expand labor rights for housekeepers and create a state-run retirement plan for private-sector workers. Business interests, which have given millions to Brown’s campaign fund and stand to give more, want a $200-million tax credit for film and television productions to be extended.

Brown spokesman Gil Duran said neither Proposition 30 nor the money Brown needs to campaign is a consideration for the governor.

“Each bill is evaluated on its merits,” Duran said. “There is no other factor that enters into it.”

On his biggest priorities, Brown has sought to placate all parties.

Last week he quickly embraced a proposed overhaul of the state’s overburdened public pension system that fell significantly short of his own plan. It promises to save tens of billions of dollars — but won’t eliminate the impending debt, according to pension experts.

Unions cast the proposal as a punishing rollback, but in fact it spared them from some elements they had decried in Brown’s plan, including a requirement that new employees squirrel away a substantial portion of their retirement money in 401(k)-style accounts. Business groups said the plan the Legislature ultimately passed did not go far enough, but they called it “a good first step” toward getting runaway public retirement costs under control.

A decision not to change benefits for workers already on the payroll still leaves the state hundreds of billions of dollars short of what it needs to pay its retirees in coming decades, analysts said. Brown and other Democratic leaders have said they could not break existing union contracts.

On some issues, Brown, who typically doesn’t signal his position on a bill while it’s in the legislative grinder, took a rare step into policy debates. On Friday he publicly pressured lawmakers to pass a bill that would revamp the state’s workers’ compensation system.

In a statement, he said that proposal, like the pension overhaul, deserved “extra special attention.” Brown said the legislation was necessary to “avert an imminent crisis where workers suffer and rates will skyrocket.”

The workers’ compensation bill passed. The major players in that effort, including Safeway, Disney and Zenith Insurance, have contributed at least $235,000 to the governor’s tax campaign.

In the final hours of the legislative session, Brown and his aides revived a proposal for a new tax on out-of-state lumber and limits on timber companies’ legal liability in wildfires. The measure, backed by timber companies that have contributed to Brown’s campaigns, had been left for dead minutes earlier. Brown’s staff pulled lawmakers into the halls outside the Assembly chambers to pin down their votes.

Earlier, Brown had privately asked for changes in a labor-backed proposal to start a state-run retirement plan for low-income workers. State Sen. Kevin de Leon (D-Los Angeles) accommodated him, altering the bill in ways that eliminated fierce opposition from the securities industry and the California Chamber of Commerce.

De Leon’s colleagues in the Democratic-controlled Legislature limited in other ways the number of tough choices Brown would have to make.

They sent fewer “job killer” bills — measures that are anathema to business interests — to the governor than they usually forwarded to his Republican predecessor. According to the California Chamber of Commerce, which tracks such proposals, the Legislature passed six this year, compared with an annual average of 10 during the Schwarzenegger administration.

A controversial bid to overhaul teacher evaluations in California was shelved. The proposal, which had been a priority for the state’s powerful teachers unions, was condemned by education activists, parent groups and other organizations that called it a giveaway to labor. Passage would have placed the thorny measure before Brown as he was asking voters to pay more taxes to avoid steep cuts in school funds.

Legislative leaders also killed a last-minute push by business groups to ease California’s landmark environmental law, which requires developers to study and mitigate their projects’ possible effect on the environment. Opposed by environmentalists and labor unions, the proposal would have forced the governor to take sides.

Despite his repeated calls all year for changes to the law, Brown did not enter the fray.

Some Capitol insiders likened Brown’s situation to that of former Gov. Gray Davis, who in 2003 signed a raft of measures that pleased the liberal wing of his party while he was raising money to fight an expensive recall campaign.

Brown is “encumbered from being able to show leadership,” said Rob Stutzman, a GOP strategist who was a senior advisor to former Gov. Arnold Schwarzenegger. “He’s being consumed by the Sacramento political system instead of redefining it.”

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Times staff writer Anthony York contributed to this report.