Power woes, economy force tough state budget choices

The Associated Press
Saturday May 12, 2001

SACRAMENTO — With a sagging economy and billions of state dollars flowing to buy power, Gov. Gray Davis is facing tough budget choices and possible cuts for the first time since he took office. 

Davis is making final changes this weekend to his “May revise” budget, which is to be released Monday after months of building concern about the state’s financial health. 

The governor’s aides have declined to give any hints about the revised budget despite their past practice of leaking details in the days leading up to its release. 

Lawmakers and state Legislative Analyst Elizabeth Hill have warned that lawmakers will need to shave billions from Davis’ 2001-02 budget proposal made in January. 

“Since the early 1990s, we haven’t had to contemplate a downturn of this magnitude,” said Assemblyman Tony Cardenas, an Arleta Democrat who chairs the joint committee writing the state’s budget. “We will have to shift some dollars or, unfortunately, cut some dollars.” 

In January, Davis proposed a $104.7 billion budget for the fiscal year that starts July 1. It included $5.5 billion in new spending. 

Under Davis’ original proposal, at least part of the sales tax would be suspended for the last weekend in August this year to let consumers save up to 8 1/4 percent on clothes and computer equipment. 

He also proposed lengthening the middle school academic year and dedicating $335 million to start a three-year, $875 million effort to improve training of reading and math teachers and school principals. 

To keep the state from slipping into the red, lawmakers will be forced to trim at least $1.5 billion from the initial budget proposals made by Davis in January, said Hill, the Legislature’s budget analyst. 

The shortfall could reach nearly $6 billion in 2002-03, Hill said. 

The Senate’s Budget Committee chairman, Sen. Steve Peace, D-El Cajon, predicted an even gloomier picture and said cuts of $2 billion to $4 billion will be needed in this year’s budget. 

Once Davis releases his revised budget, a joint legislative committee will approve its own version of the budget that will be subject to approval by the full Legislature and the governor. 

Meanwhile, Davis has spent the week leading up to the revise blaming Republicans for budget uncertainty. Specifically, he criticized Republican lawmakers for opposing a $13.4 billion bond package to reimburse the state treasury for power buys. 

This week, all but one of the 44 Republican state legislators voted against the measure. It passed, but not by the two-thirds majority it needed to go into effect immediately, leaving Davis and Democrats borrowing from other state programs to pay for power until at least August. 

“We’re going to have to pare back important programs in our budget since we won’t have the cash July 1,” Davis said Thursday. “Running away and playing politics does not serve anyone’s interest, in fact it further complicates the budget and could well do damage to the economy.” 

Republicans, however, have criticized Davis’ budget. 

“The governor has given a green light to tax increases and runaway spending increases,” said Assemblyman George Runner, R-Lancaster, vice chairman of the Assembly Budget Committee, during a press conference Tuesday.