Last week's election results left California's business community beaming, but some Los Angeles County setbacks reined in the euphoria here.


A $1 billion affordable housing bond for Los Angeles that was backed by business fell just short of passage. Also, measures to increase taxes passed in Inglewood, San Marino and Santa Monica.


The overall mood for business, however, was jubilation over Republican Governor Arnold Schwarzenegger's landslide re-election victory over Democrat and state Treasurer Phil Angelides. Additionally, approval of more than $40 billion in bonds to boost the state's infrastructure is expected to improve the movement of goods while also providing thousands of construction jobs. And business interests were largely successful in thwarting the imposition of new taxes on industries.


"The message that voters sent this week is that California is open for businesses to start and to grow," said Michael Shaw, assistant state director for the National Federation of Independent Business.


Locally, the picture was mixed.


Los Angeles' affordable housing bond fell just short of the two-thirds majority it needed for approval. (It received 62 percent support.)


"It's just so difficult to get two-thirds support, especially when there were so many other bond measures before it on the ballot," said Los Angeles Area Chamber of Commerce President and Chief Executive Gary Toebben.


Business groups had coalesced with housing advocates and city elected officials around the bond as an alternative to a controversial proposal to require residential and multifamily developers to set aside a certain percentage of units for tenants and residents that meet federal housing subsidy guidelines.


Last week, one of the chief sponsors of that "inclusionary zoning" proposal, City Council President Eric Garcetti, indicated no firm decisions had been made on how to proceed in the wake of the bond measure's defeat. Given the closeness of the vote, there will likely be a call to try again, but next time on a ballot with fewer bond measures. However, there's also a possibility that the inclusionary zoning proposal could re-emerge.


A controversial L.A. Chamber-backed measure to extend term limits and impose restrictions on lobbying won passage, but faces the possibility of a legal challenge.


Meanwhile, measures impacting business were on the ballot in several other cities. Voters in Inglewood and San Marino approved sales tax increases to fund more public safety services. In Arcadia, voters passed a measure to prohibit paid parking in major retail centers and narrowly approved restricting the posting of signs at the Santa Anita Racetrack.


In Pasadena, voters rejected a measure that would have allowed the National Football League to lease the Rose Bowl and renovate the stadium for a football team. And voters in Santa Monica approved a parcel tax to pay for cleaning up the city's beaches.

Arnold fans

The re-election of Schwarzenegger was especially sweet for California's business community, which had invested heavily in its relationship with the actor-turned-governor. Also, with Angelides pledging to "close corporate tax loopholes" and raise taxes on high-income Californians (including many small business owners), rarely has such a stark choice on business policy been presented to California voters.


"Governor Arnold Schwarzenegger has held the line on taxes and improved the state's business climate by stopping 'job-killer' bills from becoming law," said Allan Zaremberg, president of the California Chamber of Commerce. "He has pledged to continue these policies in a second term."


Toebben added that Schwarzenegger's being governor is important to business in three ways: he has used a bipartisan approach to "get things done," he has taken a "business approach" to running state government and he has stopped legislation not friendly to business.


Just as important in the eyes of business was the passage of five bond measures totaling $40.1 billion to fund highway and goods movement projects, build schools, repair damaged levees and build affordable housing.


The largest of these bonds would provide $19.9 billion for transportation and goods movement-related projects, including more than $1 billion to reduce congestion at the Ports of Long Beach and Los Angeles.


The bonds have a double benefit: not only reducing congestion and providing much-needed maintenance of highways and bridges and transit systems, but also creating tens of thousands of construction-related jobs. The timing of these bonds is crucial: by the time they clear the bureaucratic hurdles and actually hit the street, they will likely take up the slack that's building on the private construction front.


"Firms like ours are quite busy right now working with public sector clients in trying to get their projects positioned for funding," said Tim Psomas, chairman of West Los Angeles-based Psomas, an engineering firm. "This is a positive development, since most firms are in the process of figuring out how to move some of their activity over to the public sector now that the housing market has cooled."

State tax measures fail

Meanwhile, a series of ballot measures largely or entirely opposed by business went down to defeat last week.


Topping the hit lists of major business groups was Proposition 87, which would have levied a tax on oil extracted from the ground in California. Oil companies and their business allies spent a whopping $95 million to defeat the measure, almost double the $57 million raised by supporters, including $50 million from multimillionaire Stephen Bing. Major business groups had argued that some of the tax would eventually make its way back to consumers in the form of higher prices at the gas pump.


The measure did win some business support, especially from Silicon Valley investors with investments in alternative energy projects.


The other major target of business was Proposition 89, which would have used a $200 million increase in the bank and corporation tax to fund a system of public campaign financing. The measure, which was authored by the California Nurses Association, would also have limited the ability of corporations to donate to initiative campaigns.


"We were elated with the results on Proposition 89; that proposal was so absurd and unfair that by a 3 to 1 margin, everyone in the state agreed," Toebben said.


Most business groups also opposed Proposition 86, which would have raised the tobacco tax by more than $2 per pack of cigarettes. The money would have been used to fund hospitals and other health programs.


Likewise, most business groups opposed Proposition 90, which would have restricted the ability of local governments to use eminent domain to acquire land from unwilling sellers for redevelopment projects. They cited a portion of the measure that could have made it much more expensive for local governments to change zoning laws by requiring compensation to existing landowners.


However, the state chapter of the National Federation of Independent Business, which is comprised of small businesses, supported the measure. "We were disappointed, since so many of our members have themselves been the target of eminent domain proceedings," the NFIB's Shaw said.

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