NEW CAL. GOV. BRINGS HOPE, QUESTIONS TO REGULATION FOES
Business and deregulation advocates looked hopefully to Cal. Gov.-elect Arnold Schwarzenegger (R) to support light- handed, anti-tax policies favorable to the Internet and telecom industries. But they said they couldn’t be certain about his direction after replacing recalled Gov. Gray Davis (D) because Schwarzenegger and his campaign hadn’t mentioned the issues. Before he turns to the Internet and telecom, the new gov. should have his hands full for some time with the state’s huge budget shortfall and a push for major changes in worker’s compensation, observers agreed.
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Schwarzenegger could choose a new pres. for the state PUC, but only from among the 5 current members, all appointed by Davis. The presidency gained new power in the legislation that took selection away from the comrs. themselves. The new gov. might want to replace Pres. Michael Peevey with the more-conservative Comr. Susan Kennedy, said technology studies Dir. Sonia Arrison of the libertarian Pacific Research Institute. But former PUC Pres. Mitchell Wilk said the switch wouldn’t be worthwhile because Peevey is “business-savvy and business-sensitive.”
Schwarzenegger can’t depose any PUC member, but he can replace the 2 most activist members, Loretta Lynch and Carl Wood, when their terms expire in winter 2004-5. The other members’ 6-year terms run out after the end of the gubernatorial term Schwarzenegger is elected to.
Schwarzenegger probably would veto legislation promoting e-commerce taxation, Arrison said. That would be in line with his strongly pro-business, anti-taxation themes, she said. “Internet and telecommunications tend not to be partisan,” said state Sen. Kevin Murray (D-L.A.). “It’s not like taxes or abortion, which are great ideological dividers. He seems to be moderate, but the people around him are straight conservatives; so we'll see. The most salient thing about Arnold is that we have no idea what he thinks about anything.”
Communications and information technology interests were significant but not dominant contributors to the Schwarzenegger and recall campaigns, according to preliminary Cal. Common Cause totals Wed. Those industries, and affiliated executives and relatives, placed 3rd in aggregate behind real estate and development, and finance and banking.
The biggest giver in the category appeared to be network-storage company Emulex, whose executives and a spouse gave at least $205,000 to the winning campaigns, Common Cause said. Univision’s Jerry Perenchio and his wife each gave $21,200, the maximum to a candidate. Siebel Systems’ chmn. gave $21,200, as did a Stacy Siebel who listed the same city as the company hq. Venture capitalist Tim Draper, who has libertarian views, hosted a Schwarzenegger benefit that raised $800,000, Arrison said.
Though Schwarzenegger’s specific policies are largely a blank slate, his campaign was run largely by associates of former Gov. Pete Wilson (R). Wilson’s administration was regarded as solidly pro-business and deregulatory. But his PUC appointees bedeviled incumbent telcos with strongly pro- competitive policies, Goldberg said. Wilson, who left office just as the Internet was about to take off, had ordered a report on development of Cal.’s next-generation telecom network, Arrison noted. He supported and signed an Internet service tax moratorium, said Cal. Chamber of Commerce Senior Vp Fred Main. “Tech had a very good relationship with that administration,” said AeA Dir. of Cal. Govt. Public Affairs Roxanne Gould. But times have changed and Schwarzenegger is independent enough for his administration to be much less predictable than a Wilson rerun, Murray and others said.
SBC and Verizon placed losing bets on the recall opposition. SBC affiliates gave at least $150,000, Common Cause said, and Verizon $50,000, its Pacific Region Pres. Tim McCallion said in an interview. If the companies were trying to curry favor with the Davis-appointed PUC on the pending Telecom Bill of Rights or other issues, they wasted their money, said Lenny Goldberg, a Sacramento lobbyist for consumer advocates and the Cal. Tax Reform Assn., which supports e-commerce sales taxation.
Verizon will urge the Schwarzenegger administration to make broadband investment a priority, McCallion said. This dovetails with the new gov.’s promise to promote creation of high-paying jobs, he said.