California Governor Wilson Tries to End a Losing Streak

AS he steps to the podium Jan. 6 for his third annual state-of-the-state address, California Gov. Pete Wilson (R) is in the fight of his political life.

Halfway through his term as chief executive of the nation's most-populous state, he carries the lowest approval rating of any California governor since poll-taking began.

Governor Wilson has been hobbled by what he calls "a litany of Biblical plagues" - drought, freezing weather, fires, earthquakes, and riots - as well as by a budget morass that has stymied an ambitious plan to revamp the state's schools, business regulations, taxes, and legal system.

The governor is coming off a year of devastating defeats that includes voters' rejection in November of Wilson's hand-picked successor to the United States Senate, John Seymour. Voters also rejected an initiative sponsored by Wilson that would have given him greater powers in future budget battles.

To add to the governor's woes, California remains mired deep in recession.

"If you are Pete Wilson, you are faced with an impossible problem," says Richard Zeiger, editor of California Journal, a Sacramento-based political magazine. "How do you meet this state's growing demands for education, health care ... jails, and drastically pare the budget at the same time?"

"He's alienated the right, the liberal left, and center over the past two years," notes Joe Scott, a Democratic political consultant. "He has very little room to maneuver."

In an effort to turn his administration around, Wilson's state-of-the-state address will be more conciliatory than in previous years, says the governor's chief of communications, Daniel Schnur. The Jan. 6 speech, he says, will acknowledge that "both sides of the aisle need to work together better...."

"Everybody agrees that economic development and job development is the largest issue facing the state," Mr. Schnur says. "Specific proposals to encourage jobs and the economy will be the centerpiece of his address." Four areas of change

Though Schnur says Wilson will forward "a long list of things we haven't yet tried," he adds that many of the ideas have already been put on the table by Wilson's Council on Competitiveness. Formed in December 1991, this blue-ribbon panel was headed by Peter Ueberroth, the organizer of the 1984 Los Angeles Olympics. Among the commission's ideas that are expected to be revived by the governor:

* Replace the state's current workers' compensation system with a more-competitive system that gives employers more discretion to control the costs of medical care. This might be accomplished by revising standards for disability claims and repealing a law that limits competition among insurers.

* Require that state environmental standards not exceed federal ones. The panel also urged the state to create a one-stop center for environmental regulation and to give tax credits to businesses that invest in pollution-control machinery.

* Create a state Office of Management and Budget, similar to the federal agency, to oversee state finances. In addition, the panel said Wilson should appoint a commission to redesign state government to make it more responsive to business.

* Encourage arbitration of disputes and impose sanctions on lawyers who file frivolous lawsuits.

Beyond those specific ideas, state political watchers say Wilson must set a new tone of conciliation. The governor has been criticized in state newspapers for using immigrants as scapegoats for the state's fiscal crisis, for calling the state a "bad product" for businesses, and for reforms that seemed designed to protect his own supporters in the insurance and medical industries.

"It seems clear that Wilson is going to move away from using his profoundly negative tone to get regulatory reform," says David Friedman, who was formerly an economist with the RAND Corporation in Santa Monica, Calif., and is now an L.A. lawyer. "He has gotten nearly unanimous criticism for that." Wilson takes a softer line

One sign that Wilson may be getting more conciliatory is that he publicly announced his willingness to attend a February economic summit called by Assembly Speaker Willie Brown (D) of San Francisco - long a Wilson nemesis.

"That's evidence that Wilson is willing to extend himself in new ways," says Alan Heslop, director of the Rose Institute at Claremont McKenna College in Claremont, Calif. That change of direction is needed, analysts say, to break a crippling series of fiscal crises that dominated Wilson's first two years in office.

In 1991, California faced a budget deficit of $10.7 billion and last year it was $14.5 billion - the two largest state deficits in US history. This year, Wilson faces a $7.5 billion shortfall between estimated tax income and the revenues needed to keep funding state programs at current levels.

"Wilson came here wanting to be an activist with lots of plans for a preventive agenda," Mr. Zeiger says. "But he has had absolutely no resources and they continue to diminish."