By HOWARD FINE

Staff Reporter

His term may be coming to an end, but Gov. Pete Wilson is making it clear he won’t go quietly.

That point was brought home last week with Wilson’s signature on an executive order to abolish mandatory set-asides for women- and minority-owned businesses in state contracts. Combined, both groups now get about 20 percent of the nearly $3 billion in state contracts annually.

The governor is also pushing an initiative for the June 2 ballot, Proposition 226, that would bar unions from spending member dues on political campaigns and contributions without getting member approval. If approved, the measure could cripple powerful labor groups like the California Teachers Association.

“It is simply not fair to take people’s money against their will and spend it for purposes with which they disagree,” Wilson said in an interview with the Business Journal last week. “What’s happened is that special interests take that money and then use it to kill reform in the Legislature. Education reform has been killed in this way by the teachers union.”

Taking office in 1990 following stints as San Diego mayor and U.S. Senator, Wilson can take credit for far-reaching changes in California government.

In his first term, he pushed through a cost-cutting and tax-increase package to close a $14 billion deficit and lobbied hard for changes to workers comp and other state regulations that businesses complained bitterly about.

All but written off for a second term, Wilson rode back into office on the wave of a budding economic recovery, his tough-on-crime stance and his support of Proposition 187 to deny non-emergency public services to illegal immigrants. That same year saw the passage of “three-strikes” legislation designed to put repeat felony criminal offenders behind bars.

Despite promising to serve out his full term, Wilson briefly entered the presidential race in 1996, but his campaign was short-lived as he was hampered by throat surgery, organizational problems and lack of funding.

He is once again eyeing the White House in the year 2000, although he acknowledges that his ability to raise funds for another bid is an open question.

Last week, Business Journal reporters and editors met with Wilson to discuss his legacy and his plans for the remaining months of his governorship.

Question: You have been governor from the depths of the recession to its recovery. You’ve seen California and Los Angeles come back strong again. To what degree has government played a role in that? How much of a role has your administration played?

Answer: The reason for California’s great resurgence is that we have been blessed with remarkably creative, innovative, energetic and entrepreneurial people. They have invented new products and services and that is what has created the new jobs.

The role for government is to create for those people the kind of business environment and climate that will attract them and retain them. Part of that is projecting an image that says we are interested in wooing investors and jobs here.

In 1993, there was a marked change in attitude in the Legislature. The fraud-ridden workers’ compensation system was reformed and significant tax credits targeting business start-ups were passed. In short, the state became energetically business-friendly and was actively seeking investment.

Q: What portion of the credit for the recovery goes to the natural economic cycle and what portion goes to actions of your administration?

A: I don’t know that I could even put a number on that. I think it is simply better to frame it as I did. Government can have a very pronounced impact on the business climate, and God knows, government had. When I came into office, I found that we had created a miserable climate. My predecessor (George Deukmejian) had tried mightily, to no avail, in the state Legislature.

Q: But the Legislature has changed in your term. Democrats were seen as becoming more pro-business. Do they deserve more credit for the state’s economic turnaround?

A: I’ll give the Democrats the credit for following the lead, finally. But we had to drag them kicking and screaming.

Q: When Mayor Riordan was considering whether to run for governor, he remarked that, if he were elected, his top priority would be to fix the state’s education system. What was your reaction to that?

A: Mayor Riordan is one of a swelling chorus of critics of the public school system in California. This is a key issue for California’s workforce; without a good educational system, there will be no employers to create jobs, and the people we educate will not have the skills to compete and win in the increasingly competitive global marketplace.

It’s appalling, what has happened to our education system. What was once a really first-rate public school system has fallen to a low ebb. I think it has to do with the absence of any kind of accountability.

Q: Who needs to be held accountable?

A: When I came into office, we were spending billions of dollars in what historically had been viewed as a good investment. But the return on the investment has been appalling. If you want to make an analogy to manufacturing, we produce a product, yet we’re doing so with no standards and with no testing. If you were a manufacturer, you wouldn’t dare bring a product to market without having first tested the standards for quality control and then applied rigorous testing to ensure that you are meeting your own expectations.

Not only is there no testing, but, to the contrary, there has been vehement opposition and resistance to testing based upon the resistance to imposing any kind of accountability. And for that I lay the blame squarely at the door of the teachers’ union.

Q: But can the governor really fix what’s wrong with the schools?

A: The governor can impose standards and requirements, but only with the approval of the state Legislature. Look at class-size reduction. We essentially made teachers an offer they couldn’t refuse. The Democrats and the teachers’ union wanted the money to go out unearmarked for class-size reduction; they said the schools couldn’t afford to create new classrooms. I suspect they also wanted to use the money as a bargaining chip. But the individual schools and teachers told us that if given the money for class-size reduction, they would find a way to make it work.

(Then Senate President-pro-tempore Bill) Lockyer even burst into a news conference we were holding and made his arguments about being unable to accommodate the class-size reduction mandate. I then said, “Well, the only people who are telling me that are in Sacramento. It isn’t teachers, it isn’t principals and it’s not superintendents.” So, after about a day and a half, he went back to the 15 or so lobbyists of the education coalition encamped in his office and said, “The hell with it. It’s a loser. We’re not going to fight the governor, we’re going to join him.”

Q: What is your unfinished business?

A: There is a big item left on my agenda and that’s public safety. Without safe communities, employers will take their jobs elsewhere. The “three-strikes” law has been very effective in driving down violent crime rates by getting the repeat offenders off the streets and behind bars. We pushed further with the one-strike provision for rapists and child molesters. That got people’s attention.

Now, we need to deal with the juvenile side. We must deal with the problems of gangs. The juvenile justice system needs to be totally reformed. The way it works now, gang youths believe they can get away with murder, and many of them do. Kids never suffer the full consequences for their actions; then they grow up and go on to commit even more serious crimes. It even has gone so far that gang members will purposely hand the gun to the youngest member, who is often only 12 or 13 years old, and make them the designated shooter. They believe the law can do nothing to them. That needs to change.

Q: And the governor’s race: how would you handicap it?

A: I wouldn’t.

Q: How do you see the Democratic primary unfolding?

A: I would say that (Al) Checchi enjoys the advantage of a huge wallet, but he has a lot to learn about government. It’s going to be a very free-spending contest. I assume that the unions will see that the lieutenant governor (Gray Davis) has adequate funding. And Jane Harman has adequate funding. So the question is not whether we’re going to hear a lot about these candidates. The question is, what are we going to hear, and what kind of campaign it will be. I’ve noticed that it’s starting to heat up. The shots being taken by Checchi at Harman for having missed congressional votes talk about a man in a glass house.

Q: How about your future plans once you leave office?

A: I haven’t been coy about the fact that I have considerable interest in a national effort. Whether that interest materializes is going to depend on whether I can find the financial support it’s an immense undertaking that requires very substantial support.

If I didn’t do that, would I go into the private sector? I can’t at this point tell you where I will land. I’ve had a number of people say, “I know it’s too early for us to talk to you, but don’t make any decisions until we’ve talked.”

Q: Who has approached you?

A: Well, law firms, investment banking opportunities some things may materialize. Some people have suggested that after running a government this size, perhaps I could try my hand at running a company in the private sector. And, to keep my hand in public affairs if I do go into the private sector, I would also want to be affiliated with a think tank. I’d want to do a little writing and continue to raise as much hell as I can in politics.