Former East Bay Assemblyman Johan Klehs was astonished to learn in a recent edition of the San Francisco Chronicle that he was a candidate for Don Perata’s Oakland-centered Senate seat.
“I have myself on permanent Google alert for Germany and the United States. I was driving to Sacramento in the morning and there it was,” Klehs said in recent interview at the Esquire Grill near the Capitol.
When Klehs, 55, lost the Senate Democratic primary to his old friend Ellen Corbett in 2006 he considered a possible run for Perata’s neighboring seat but decided he didn’t want to enter a bruising primary that already included Assemblywoman Loni Hancock of Berkeley and former Assemblywoman Wilma Chan.
“My view was: I’ve been 26 years in public office. I started when I was 25. There are plenty of people who start careers when they’re 25 and then do something else later in life. I can always run for office again when I want to, if I want to.”
In February 2007, Klehs registered as a lobbyist, representing only clients with issues that didn’t touch the Legislature. Lawmakers are forbidden from lobbying their former colleagues for at least one year after leaving office. No such prohibition exists on lobbying the executive branch.
Among his first clients were the Livermore Area Recreation and Park District and the Pleasant Hills Recreation and Park District. He represents an Alameda-based firm, ERTEC Environmental Systems, which builds a variety of structures to stabilize eroding land and reduce sedimentation.
A Lodi-based company specializing in multi-family residential, senior citizen and commercial property management and development and a Los Angeles law firm eager to contract with the state to improve collections are some of his other clients.
Strategic and detail-oriented, Klehs – who can now bring issues before the Legislature – has a unique background for lobbying.
As an Assemblyman from 1982 to 1994 and 2004 to 2006, Klehs became an expert in tax policy, chairing the Assembly Revenue and Taxation Committee for nine of those 14 years.
From 1994 to 2002, he was a member of the obscure-but-powerful Board of Equalization, which resolves tax disputes and assesses utilities, among other things. When he served as the board’s chair in 1995, 1996 and 1999, Klehs also sat on the Franchise Tax Board.
Klehs’ pal, John Burton, joked that Klehs was the highest-ranking German American public official in the country.
“Johan understands that tax policy has an enormous impact on people,” said State Treasurer Bill Lockyer, a friend of nearly 40 years and Kleh’s political patron. “It can be a source for fairness or unfairness in society and Johan believes tax policy should reflect one’s ability to pay.”
Klehs carried California’s 1987 tax overhaul, which is still state law today.
In 1986, the federal government approved a major tax measure – one of the most controversial legislative events of the time. Federal lawmakers ignored the pleas of various special interests and reduced the number of tax breaks, simplified the code and lowered rates.
As with other federal tax changes, states could decide whether to conform or not.
Klehs, the new chair of Assembly Revenue and Taxation, was given plenty of advice. The most common was: Don’t conform on this issue (which benefits or harms my client or constituency) because the feds will just change it back.
“If I listened to every single person, there wouldn’t have been a tax bill.”
So Klehs decided to go to the source. He had the late Rep. Bob Matsui, a Sacramento Democrat, schedule a meeting with Dan Rostenkowski, one of the architects of the federal tax package.
Klehs prepared for the meeting: He studied what Congress had done and boned up on tax policy. He read Showdown at Gucci Gulch, a book about how federal lawmakers bucked the special interest on the tax bill. He read David Stockman’s book, The Triumph of Politics.
“At the end of my 45 minutes meeting with Rostenkowski on the intricacies of the federal tax bill, I said, So what are you going to change back? And he said, ‘Nothing.’ Eight months later, I sent our bill to him and said, If it wasn’t for you we wouldn’t have a great tax policy in California.”
The legislation Klehs carried lowered the tax burden for 71 percent of California families. Some 278,000 low-income families were removed from the tax rolls. The number of tax brackets was reduced from 14 to six. Tax forms shrunk from 95 lines to 49 lines.
Social security and unemployment insurance became non-taxable at the state level, numerous exemptions and deductions were stricken, the corporate tax rate fell from 9.6 percent to 9.3 percent and, when the dust settled, the state collected more revenue.
“It was the best intellectual, academic experience I went through in my life.”
As a lawmaker, Klehs had a reputation for relentless fund-raising most commonly done by him personally and by phone.
But he also was a skilled committee chair. Klehs created a suspense file for Revenue and Taxation – a smart strategy on several levels.
First, bills impacting the state’s coffers negatively or positively were held until they could be considered in tandem with the budget. Second, as Klehs said, “You control the agenda but you also keep all the crap off the floor.”
Republicans at first disliked the suspense file but then warmed to it when they realized it prevented them from having to vote on controversial bills since it only took a motion from the chair to send measures to suspense.
Under the Assembly rules, the only bills that could be debated on the Assembly floor were those heard in committee and not defeated. That meant every bill on suspense was in play since they had been heard and not defeated.
To maximize the suspense file’s value, Klehs would calendar every tax break, every tax cut and every tax increase regardless of whether there was legislation to enact them.
“I’d go to Willie (Brown) afterwards and say, Well now you can do anything you want in the budget. He’d say, ‘What do you mean?’ We just heard every tax increase, every tax cut and every tax giveaway and the issue was heard and it wasn’t defeated.”
Klehs said the key to being a good chair is to know the policy.
“Have the confidence and the ear of the leadership. Know your members and know every bill that goes through your committee. And make sure you protect your jurisdiction and get every bill that’s out there that should be going to your committee. And, finally, don’t let any trash out onto the floor.”
Klehs began angling for a good chairmanship as soon as he landed in the Assembly in 1982. He set as his goal a “good” committee chair by his third term.
“I knew that Willie Brown cared about a couple of committees: Ways and Means, Judiciary, Rev and Tax and Reapportionment”. Klehs was a member of Rev and Tax from his first day in the state Legislature.
Brown, who has a new book out about himself, was the smartest legislator in the Assembly, Klehs said. Like most leaders, political or otherwise, Brown avoided bearing bad news. That task fell to his majority leader, Tom Hannigan of Fairfield.
Klehs recalls during the 1991 reapportionment, Brown asked if he had talked to Hannigan. Klehs knew something was awry when Brown insisted he talk to Hannigan.
“I know, you’re going to —- me on my seat in reapportionment,” Klehs said. “‘No, no, no, no, no, no,’ Brown said. ‘Go talk to Hannigan.’”
Sure enough, Klehs’ new district boundary was across the street from his Castro Valley home. His former district was now that of (now Rep.) Barbara Lee. The map drawers told Klehs moving wouldn’t be much of a hassle since he was single.
So Klehs ginned up Lee and Delaine Eastin, asking them if they were aware of what terrible things had been done to their districts. The two began fighting and Klehs ended up with what he wanted.
If anyone got the political bug early, it was Klehs. His father, a carpenter who came to the United States from Germany in 1920, suggested his son volunteer at the local Democratic headquarters. The year was 1964.
“So while my parents visited my grandmother in a nursing home, they got free child care for their 12-year old son. I’d ride my bike down every weekend.”
Four years later, Klehs was about to turn 16 – his birthday is June 27 – but that was too late in the year to get a summer job. His Dad, a registered Republican, suggested Johan volunteer for the summer in the office of the local Assemblyman Bob Crown, a Democrat.
Crown, interestingly, was first elected in 1954 in a very close race. That was before recounts. The Legislature’s reapportionment committee resolved the outcome of tight elections. The committee didn’t care for Crown’s politics and handed the race to his opponent. Crown won two years later.
Klehs’ mother, a homemaker, called Crown’s office. The legislator sent his chief of staff to the Klehs’ home to see if the kid would make a halfway decent volunteer.
Crown’s chief of staff was Bill Lockyer.
“He showed up in this gold 1965 Chevelle Malibu with ugly bumper stickers on the back,” Klehs recalled.
Lockyer won Crown’s Assembly seat in a 1973 special election after Crown was hit by a car and killed while jogging. With Lockyer’s help, Klehs was elected to the San Leandro City Council. When Lockyer went to the Senate in 1982, Klehs took Lockyer’s Assembly seat.
The two – along with Elihu Harris until he became mayor of Oakland – were roommates in Sacramento.
The Board of Equalization was a different political challenge than the Legislature.
“The city council skills come back in: There’s five members so you need two friends.”
The two republicans on the board – Dean Andal and Ernie Dronenburg — elected Klehs chair. Klehs and his GOP colleagues brought order to the board meetings, which previously would meander through lunch and late into the evening.
Klehs started at 9:30 am, broke for lunch at noon, reconvened at 1:30 and ended at 5 pm.
“We always gave people a decision that day and in a very short time we cleaned up the complete backlog of the board.”
Andal, a candidate for Congress in the 11th District centered on Stockton, had a reputation of being a prickly legislator but Klehs said Andal and Dronenburg were hard-working board members.
“We agreed on the administration of the agency and we had the fundamental commitment to run a 100 percent honest agency with no scandal. If there was a hint of scandal or a member was doing something inappropriate we together would go and speak with them in the presence of the general counsel and the executive director.”
Klehs also said he enjoyed working with GOP lawmakers Ross Johnson and Chuck Quackenbush on the Revenue and Taxation Committee.
A story Klehs likes to tell is how his family came to America.
Klehs’ grandfather, Frederick, was an officer on a German merchant ship called the Serapis. The ship pulled into San Francisco Bay in 1917, shortly before America entered World War I. All German ships were detained.
Frederick Klehs and the rest of the crew were given the choice of going home or staying. He and most of the crew stayed. Klehs got a job but when war was declared he and some of the crewmembers sneaked back aboard and threw the main parts of the engine in the bay so the Americans couldn’t use the vessel.
Klehs was arrested and incarcerated on Angel Island with the rest of the crew for several months. Released, Klehs switched sides and helped the Americans refurbish the ship, which was used I the war. After Frederick Klehs gained citizenship, he brought his family – including Johan’s father – to America.
Klehs has clips from the Chronicle to back up his grandfather’s story. He insists they are more reliable than the story announcing his Senate bid.
Catch up with Johan Klehs at firstname.lastname@example.org
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