CA budget crisis Davis’ latest test

By Alexa Haussler The Associated Press
Thursday November 22, 2001

SACRAMENTO — In a flash this fall, California’s power woes fizzled and a budget crunch took hold as the new crisis — and with that change came a new political challenge for Democratic Gov. Gray Davis. 

After sailing through his first two years in office with massive state surpluses and firm voter support, Davis has faced one crisis after another the past year. 

Now, a year before he seeks a second term, Davis is trying to steer the state out of a fiscal nightmare while running a re-election campaign. 

“The way the governor handles the budget deficit could very well be the key to his re-election next year,” said Mark Baldassare, a pollster for the Public Policy Institute of California. 

Davis is not the only governor facing re-election and budget troubles. From Florida to Ohio, Republican and Democratic governors seeking new terms are trying to close budget gaps in the face of an already weak economy and the fiscal fallout of the Sept. 11 terrorist attacks. 

The difference is that Davis has spent the past year dealing with a power crisis that brought six days of rolling blackouts and his lowest-ever popularity ratings. 

Now, California faces its steepest revenue decline since World War II and a $12.4 billion deficit this budget year and next, according to analyst reports. 

Davis will convene an emergency session of the Legislature in January to deal with the fiscal crisis. He already froze $2.24 billion in spending he proposes to cut from the current budget and imposed an immediate statewide hiring freeze. 

So far, Davis’ aides have said he is not considering tax hikes. Former Republican Gov. Pete Wilson was forced to raise taxes to deal with a $14 billion budget shortfall in the recession of the early 1990s. 

“Obviously in a re-election year, it’ll be fraught with politics all the way through,” said Gale Kaufman, a Sacramento-based Democratic political consultant. 

In the midst of the power crisis in the late spring and summer, Davis’ approval rating dipped to its lowest point. However, a recent statewide poll by Baldassare showed Davis’ popularity has climbed since the terrorist strikes, and that voters’ top concerns had shifted from electricity to the economy and security. 

Meanwhile, Republicans already have started to shape a message they will hammer until next November. They say Davis has increased government spending by more than a third since he took office and has little to show for it. 

“He’s not going to be able to escape having to explain that,” said Rob Stutzman, a consultant for the California Republican Party. 

Three candidates for the Republican nomination to challenge Davis next year have joined Senate Republican Leader Jim Brulte, of Rancho Cucamonga, and repeatedly accused Davis of failing to act soon enough. Some Democrats fear that a Republican-led standoff in the Legislature next summer could force Davis to sign a late budget in the months before voters go to the polls. 

Although Democrats dominate the Legislature, Republican votes are needed to approve a state budget by the required two-thirds margin. This year, Davis signed the budget a month late after GOP lawmakers held back their votes over a quarter-cent sales tax increase. 

Davis supporters say the governor has seized on the economic good times to funnel money into schools and social services. They say he has increased school spending by around a third, focused on one-time spending to avoid long-term obligations and this year built a $2.6 billion reserve into the budget. 

“This is not someone who the Republicans are going to be able to caricature as an overspending liberal Democrat who got us into this mess,” said Garry South, Davis’ senior campaign adviser. 

While South conceded the budget cuts will be painful, he said analysts predict the economy may rebound in the second half of next year. 

“Unlike what the Republicans fervently hope, I’m not sure we are going to be in an economic downturn by the time Election Day 2002 finally rolls around,” South said. 

No matter how Republicans paint the past three years, voters — and key supporters from workers’ unions to business giants — will best remember how Davis handles the next 11 months, political observers said. 

“Instead of being able to provide more money for people’s favorite issues,” Baldassare said, “politically he’s in the more vulnerable position of having to take away things that matter to people.” 


On the Net: See http://www.ncsl.org for a report on state fiscal conditions.