Winning over business will tax Angelides.

If Phil Angelides, the self-described anti-Arnold, is going to have a shot at winning many business votes in November's gubernatorialelection, he'll have to counter the widespread perception that he's anti-business,

Business interests are seen as leaning heavily toward Republican Gov. Arnold Schwarzenegger, based largely on the positions staked out by Angelides during the primary campaign and the incumbent's pro-business profile.

In the run-up to the Democratic primary last week, Angelides maintained a steady drumbeat of vows to close tax "loopholes" favoring corporations and raise taxes on the "richest Californians" to fund education. He used the kind of vague references to government regulation that raise the hackles of business advocates. In an April speech, for example, he pledged that he would "take on the big polluters," and "stand up to HMO profiteering."

In the days following his primary victory, Angelides backers sought to portray the State Treasurer as a pro-business politician who understands that an economy thrives best with a well-educated workforce.

"For 15 years, Phil Angelides met a payroll and created jobs in the private sector," said campaign communication director Dan Newman, referencing the candidate's career as chief executive of River West Investments, a real estate development firm in Sacramento.

"He believes in a level playing field," Newman continued. "If a small business in Los Angeles is playing by the rules, it shouldn't be forced to play on an un-level field with corporations that exploit loopholes not available to small companies."

Newman also sought to address concerns that Angelides' policies would harm small businesses, claiming that the tax would only apply to the top 1 percent of taxpayers. Likewise, Newman said, Angelides' call for closing corporate loopholes would only affect a handful of companies.

Angelides will have a difficult time connecting with business backers if the feelings of Alexander Cappello, chief executive of Los Angeles investment bank Cappello Group Inc., are any indication.

"Schwarzenegger has my complete confidence and support. I would say he has almost universal support from business owners that I know." As for Angelides?

"I don't know enough about his experience or specific ideas of how to put our economic house in order or how to attract businesses to the state," said Cappello. "I have a much better feel for the current governor, and I have a higher comfort level with him in office."

The state's business groups see nothing ambiguous in the matchup.

"Both candidates and the propositions will provide clear choices for voters on infrastructure and business issues for California," said Marie Condron, spokeswoman for the Los Angeles Area Chamber of Commerce.

"The voters have a very clear choice," echoed Martyn Hopper, state director for the small-business oriented National Federation of Independent Businesses. "Phil Angelides has it on his platform to increase taxes and make government bigger."

Both Hopper at NFIB and Condron at the Los Angeles Area Chamber said their organization's political action committees would endorse a candidate later in the election cycle. Right now neither organization has taken a position, although Hopper said he is conducting a fax poll of his 35,000 members and so far "the vote is overwhelmingly for the governor."

Whether it's simply perception or based on principles, it's clear the challenger will be fighting an uphill battle to win over business voters.

"California Democrats went with the candidate who was a tittle more liberal and a little less electable," said John Pitney Jr., professor of American politics at Claremont McKenna College. "Apparently they haven't been in the wilderness long enough to develop a sense of pragmatism."

Statewide, Angelides beat the somewhat more business-friendly Democratic State Controller Steve Westly, by a margin of 48 to 44 percent. In Los Angeles County, Angelides won even bigger by a 49 to 43 percent margin.

As treasurer, Angelides became the nation's foremost activist shareholder, working through state pension funds to oppose mergers, demand transparency and interfere in executive compensation matters. He appears to have a chance to score with voters on the state budget issue, which NFIB polls show ranks near the top of business-owners' priority list.

Although a poll by the Public Policy Institute of California (PPIC) released in May found 57 percent of voters approve of Schwarzenegger's latest budget, "the fact is the governor came into office campaigning to cut up the state's credit card and then borrowed billions. Angelides is the fiscally responsible candidate," Newman argued.

So far, Angelides has followed the conventional Democratic strategy of appealing to liberal voters during the primary; now the challenge lies in becoming a moderate by November.

"I can't see him doing that because he has carved out a platform that government knows best, that government should run the health care system and that government should tax the rich," said Hopper at NFIB. "I don't know how to moderate his positions when he has carved them in stone."

Looking forward to November, the PPIC poll found Angelides and Schwarzenegger tied in a hypothetical election with 38 percent each. Schwarzenegger has incumbency and nearly universal name recognition on his side, but the poll found voters split 45 to 47 percent on the favorable/unfavorable question. Angelides had a much lower unfavorable rating (26 percent), but 45 percent of the electorate didn't know him.

The difference in November may come down to Angelides turning too far left to win a primary, while the governor has quietly worked to claim the political middle in Sacramento.

"Schwarzenegger has an edge," opined Pitney at Claremont McKenna College. "Westly's ads may have had a lasting effect. Millions of Californians know Angelides as an ethically challenged tax increaser."

Business issues

Besides the governor's race, some significant business-related propositions and candidates were voted on last week:

* Bob Foster, former president of Southern California Edison, won the mayoral election in Long Beach. The fact that the former head of a major corporation is now the leader of the county's second-largest city bodes well for business interests.

* proposition 82, which would have raised taxes on wealthy Californians to pay for preschool, was defeated by a 59 to 41 percent margin. The California Chamber of Commerce and other business lobbies strongly opposed it.

* Proposition 81, designed to issue $600 million in bonds for public libraries, also went down in defeat: 53 percent no, 47 percent yes. The split electorate calls into question the fate of $47 billion in infrastructure bonds on the November ballot. "We'll be very active in lobbying for the infrastructure bonds," said Condron of the Los Angeles Area Chamber. "It was our top priority to get that on the ballot, so we have a special interest in getting it passed."