LABOR'S WORD ON CRUZ DUE TODAY.

Byline: Harrison Sheppard Staff Writer

Lt. Gov. Cruz Bustamante's gubernatorial campaign faces a moment of truth today when the state's powerful labor federation decides whether to throw its resources behind him - a move that would shatter Gov. Gray Davis' recall-only strategy.

The meeting - with Davis meeting privately with union leaders - comes as Bustamante has won over support from increasing numbers of Democratic groups and emerged as the front-runner if Davis is recalled. Arnold Schwarzenegger took note of that on Monday when he went on talk radio and took his first swipe at Bustamante.

``It's like one newspaper pointed out: Bustamante is Gray Davis with a receding hairline and a mustache,'' Republican Schwarzenegger said on the San Diego-based Roger Hedgecock radio show. ``It's the same person, same philosophy.''

The California Federation of Labor, which meets in Manhattan Beach today, represents some 2.1 million members in 1,300 unions across the state. While labor leaders throughout the state have been solidly opposed to the recall, the federation has yet to take a position on the second question on the ballot - who should succeed Gov. Gray Davis if voters recall him Oct. 7.

An increasing number of Democratic groups have been endorsing Bustamante's ``No on recall, yes on Bustamante'' strategy, a contradictory message that could undermine support for Davis in his fight to keep his job. In contrast to the initial hopes of Davis to keep all the attention on the first question on the ballot, Davis himself, while praising Bustamante, has yet to take a position on the second question.

As Bustamante continues to gain support, some analysts believe he may swing more Democrats to vote in favor of the recall itself, despite the lieutenant governor's stated anti-recall position. The belief, apparently, is that once voters decide they support Bustamante, they would decide they want him as governor more than they want Davis.

``It's a mixed message,'' said Jack Pitney, a professor of government at Claremont McKenna College. ``The more you tout Bustamante, the more attractive a recall becomes. If you go around saying this guy would make a terrific governor, the message is 'vote yes on recall' so he can become that terrific governor.''

The federation plans to spend $5 million on the campaign - half from its own treasury - and it is asking the individual unions to chip in the other half through their own efforts, according to federation spokesman Nathan Ballard. The federation's $2.5 million was raised mostly through a $1 assessment recently paid by every member.

Most of that money will be spent directly by the federation and individual unions, rather than contributed directly to Davis' anti-recall effort, he said.

Davis had reportedly asked national labor leaders to contribute $10 million to his effort, but a Davis spokesman said they had no complaint with the state group spending only $5 million.

``Our friends in the labor movement know best how to deploy resources when it comes to an election,'' said Peter Ragone, spokesman for Davis' anti-recall committee. ``So we have nothing but the utmost trust and respect for them on those matters.''

When asked if they felt shortchanged by the state's biggest labor group contributing only half what Davis asked, Ragone replied, ``Who on Earth can feel shortchanged by $5 million?''

Ballard noted that the national AFL-CIO had also put out a call to its members across the country to contribute.

So far, Davis and his supporters have raised more than the pro-recall forces - not including the amounts raised by the candidates running to replace Davis.

Five major groups fighting the recall have raised a total of $5.9 million, while groups supporting the effort have raised $3.5 million, according to Recall Watch, a Web site that tracks campaign fund raising.

Bustamante has raised more than $500,000 for his candidate campaign and $300,000 for his anti-recall committee, making him the top Democratic fund-raiser.

Still, he is far behind Schwarzenegger and Republican businessman and former baseball commissioner Peter Ueberroth, both of whom have personal fortunes to draw on. Schwarzenegger has raised about $3 million, much of it from his own pocket, while Ueberroth has $2.3 million.

Schwarzenegger is also expected to get a boost from a $1,000-a-plate fund-raiser to be organized by New York Gov. George Pataki in Manhattan, according to the Associated Press.

Davis is expected to address the federation today in a closed session, reminding its members of labor-friendly issues he has supported such as the eight-hour work day and paid family leave and saying that those supporting the recall oppose those issues. Then he will head to San Francisco for the second of his town hall meetings that he is planning throughout the campaign.

Despite increasing pressure, Davis has not endorsed Bustamante in the recall, and that is likely to not change when he speaks to the federation, according to campaign officials.

The federation's influence in state politics should not be underestimated, said Ballard, the group's spokesman.

``It's no secret that every single labor-endorsed candidate swept the statewide ballot last November,'' Ballard said. ``Labor unions give pro-labor candidates the edge in campaigns in California. That's undisputed.''

Pitney said labor's support was ``crucial'' for Democrats in California not just because of their numbers, but because they can run well-organized grass-roots efforts throughout the state.

With conservative businessman Bill Simon dropping out of the race over the weekend, Schwarzenegger used his appearance on talk radio shows Monday to appeal to some of the Simon supporters.

His main competition now for Republican votes is state Sen. Tom McClintock, R-Thousand Oaks, a conservative on fiscal and social issues who has been steadily gaining in polls.

McClintock, although lagging behind Schwarzenegger in fund raising, is expected to hit the airwaves today with his first television ad.

Also, Ueberroth launched his radio campaign Monday with ads that highlight his record leading the 1984 Olympics in Los Angeles to a $220 million surplus and saying his experience could help the state out of its fiscal crisis.

Harrison Sheppard, [phone]

harrison.sheppard(at)dailynews.com