Gavin Newsom’ and his staff have quietly talked to the champion of a controversial wealth tax proposal seeking an off-ramp to defuse a looming ballot measure fight.

The conversations, reported here for the first time, have occurred intermittently for months as SEIU-UHW’s ballot initiative targeting billionaires migrated from the backrooms of California politics to the center of a raging debate about Silicon Valley and income inequality, sparking tech titans’ wrath and vows to move out of state.

“We’ve been at this for four months,” Newsom said in an interview with POLITICO, describing an “all-hands” effort that has included him meeting one-on-one with SEIU-UHW’s leader, Dave Regan.

A compromise does not appear imminent. A union official cast doubt on the possibility of a deal, saying the two sides do not currently have another meeting scheduled and framing a ballot fight as an inevitability.

“Healthcare workers are going to the ballot to prevent California hospitals and emergency rooms from closing,” the union’s chief of staff, Suzanne Jimenez, said in a statement. “Congress created a $100 billion crisis for California through HR1 last July — and California voters will solve that problem when they pass the billionaire tax act this November.”

Newsom has staunchly opposed both the current proposal and earlier versions that surfaced in Sacramento, arguing they would hamstring California’s tentpole industries and topple a pillar of the state’s tax base. Proponents with SEIU-UHW, a major union representing more than 100,000 workers, argue the measure is the only idea commensurate with the scale of federal cuts that could lead to widespread health care job losses and hospital closures.

Officials with SEIU-UHW have said they are confident Newsom will come around — an unlikely proposition given Newsom’s adamant rejection of such measures.

Yet despite the gulf between them, both Newsom and Regan have ample experience forging deals to clear labor initiatives off the ballot — including with each other. In 2022, the Newsom administration and a labor coalition that included Regan struck an agreement to raise the state’s minimum wage for health care workers to $25 an hour.

Regan is one of Sacramento’s most prolific practitioners of ballot measure politics, regularly filing initiatives that force affected industries to the negotiating table in hopes of averting a costly and uncertain campaign. The wealth tax proposal is one of three state initiatives SEIU-UHW has filed this cycle.

The union is still collecting signatures to qualify it for the November ballot, where it would face a fierce and well-funded opposition campaign. Nevertheless, Newsom is highly motivated to halt the initiative.

Beyond his belief that such a tax would harm California’s finances, sidelining the idea could help Newsom avert a home-state backlash ahead of an expected 2028 presidential run while bolstering his credibility in Silicon Valley. The governor has deep industry ties that stretch back to his days as an innovation-touting mayor of San Francisco.

In his interview with POLITICO, Newsom said the drumbeat of wealthy tech players making moves to exit California vindicated his warnings about the ballot measure’s downsides.

“This is my fear. It’s just what I warned against. It’s happening,” Newsom said.

Opponents of the wealth tax include Ron Conway, an investor and prominent San Francisco political figure who is close with Newsom. Conway has donated $100,000 to an opposition campaign run by political consultants who have previously worked for Newsom.

At the same time, the governor is under mounting pressure from labor unions and other Democratic allies to find more revenue sources as California braces for the full impact of federal cuts.