Election Section

Davis: State facing $8 billion to $14 billion deficit

By Alexa Haussler Associated Press Writer
Friday October 26, 2001

SACRAMENTO – California faces between an $8 billion and $14 billion budget deficit next year, Gov. Gray Davis said Wednesday after meeting with the state’s top four legislative leaders. 

“The focus now is on reducing expenditures and balancing the budget. That’s the direction we’re heading,” Davis said, following a 45-minute conference with the Democratic and Republican leaders of both chambers of the Legislature. 

The group, dubbed the “Big Five” within the State Capitol, agreed the state may need a special legislative session to fix the growing budget problem, Davis said. 

On Tuesday, Davis imposed an immediate statewide hiring freeze and asked his appointed Cabinet to identify $150 million in cuts to current state spending. 

He also asked state agency heads to prepare plans to cut 15 percent from their budgets next years. 

Attaching a potential price tag to the problem for the first time, Davis said the state could face an $8 billion to $14 billion deficit if revenues continue to lag. His current estimate assumes $12.5 billion in revenue bonds will be issued to repay the state treasury for power purchases. 

Davis said his office and legislative staff must find more cuts to close the gap caused by an already weakening economy and the fiscal fallout from the Sept. 11 terrorist attacks. 

He said he asked Democratic U.S. Sen. Dianne Feinstein Wednesday for federal financial help, adding that lawmakers must consider ways to boost California’s economy, such as by providing incentives for the movie industry. 

Senate Minority Leader Jim Brulte, R-Rancho Cucamonga, said he told Davis he should call a special legislative session immediately. 

“We need to act now,” Brulte said. 

Davis, however, said he would only call a special session if lawmakers had specific cost-cutting plans to consider. 

Brulte and other Republicans have criticized Davis, saying the state’s general fund has grown by 37 percent since he took office. “We sounded the alarm last year that we had problem,” said Assembly Minority Leader Dave Cox, R-Fair Oaks. 

Davis press secretary Steve Maviglio sent a note to reporters Wednesday noting that other governors have increased the state budget at a higher rate than Davis. 

Throughout the nation, states are conducting special legislative sessions to handle falling revenues and the costs of increased security measures since Sept. 11. 

“This is not just California asking for help,” Davis said.