The Wait-And-See State

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Sworn in the same week as the California Credit Union League was holding its annual meeting, the Golden State's new, high-profile governor is expected to have an effect upon the state's credit unions. But perhaps not in the way many would expect.

Arnold Schwarzenegger has now taken up the office previously held by the recalled Gray Davis, and could appoint a new commissioner of the Department of Financial Institutions and others who regulate businesses in which credit unions are involved. But California league lobbyists expect Schwarzenegger's election will be felt elsewhere.

"As far as his policies, credit unions are more likely to be impacted by overall business issues than credit union-specific issues," said Bob Arnould, VP-state governmental affairs. "This includes things like workman's comp and the vehicle license plate fee. Schwarzenegger wants to reduce the costs on business."

Hours after Arnold Schwarzenegger was sworn in as the new governor, CCUL President Dave Chatfield said early indications are the new administration will be CU-friendly. "I have not met him yet, but I hope to soon," said Chatfield. "League representatives met with Schwarzenegger and his people over the weekend at an event in Palm Springs. They seemed receptive to how important credit unions are to their many members in California."

Chatfield said he also was pleased with the appointments Gov. Schwarzenegger has made so far. "There are a lot of people who care about credit unions. I am encouraged, and I hope for good reason."

One of Davis' last acts as governor was to sign privacy legislation known as SB 1. But CCUL VP-Federal Government Affairs Chris Kerecman noted federal privacy legislation is in the final stages in Congress and could be approved at any time. "Federal privacy law will be stronger than it is today," he said. "The new law deals with information sharing with affiliates. SB 1's third-party language will live on."

And while most of the world media's attention has been on the new governor in Sacramento, where the California league sees real reason for concern is the legislature. Pete Mitchell, a political consultant to the league, told The Credit Union Journal the key word is "change."

According to Mitchell, half of the state senate -10 of 20 members-will turn over next year due to term limits, as well as 23 of 80 in the assembly. "In addition, 11 assembly members face potential medium to tough election challenges," he said.

Arnould said the state's term limits law has had significant consequences on the league's lobbying efforts.

"Term limits make things change so quickly," he said. "Rapid turnover is status quo in Sacramento. We must go out and build new relationships with legislators and their staff. It is a huge game of musical chairs."

Changing Election Format

Even the manner in which California's lawmakers are elected is changing. The state is switching back to a closed primary system in spring 2004-meaning registered Republicans only will be able to vote for Republicans, and Democrats will vote for Democrats. Mitchell said a system similar to that used in Louisiana and Washington state has been proposed. This would allow the two top overall vote getters to face off after the primary, regardless of party.

"Many people feel this would be better for the state because moderates would have a better chance of getting elected," said Mitchell. "Under the current system, a lot of very liberal Democrats and very conservative Republicans are winning, and that is polarizing state politics."

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