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Governor to reveal his plan to close $20 billion budget gap on Tuesday 

SACRAMENTO – “Smoking gun” memos that show energy giant Enron manipulated California’s power market help validate Gov. Gray Davis’ persistent claims that greedy, out-of-state power firms fueled last year’s energy crisis. 

But Davis has little time to bask in the bliss of vindication. 

Tuesday, the Democratic governor facing re-election in November must reveal his plan to close a more than $20 billion budget gap. He also is coping with an investigation into a costly state contract with the Oracle Corp. amid questions whether he has mingled state business with his thirst for campaign contributions. 

Still, the most recent Enron revelations signify a major victory for Davis, whose approval ratings plunged to an all-time low in the middle of the statewide energy crisis last year. 

“If it turns out the electricity crisis was in part created by outsiders, or at least can be blamed on outsiders, that’s one tremendous big eraser to clean up his record,” said Stephen Hess, a senior fellow of government studies at the Washington-based Brookings Institution. 

While conducting “I told you so” interviews with national media on Enron, Davis is struggling to cut billions from state spending without raising taxes six months before Election Day. 

Davis also has been dogged by a controversy surrounding a $95 million, no-bid contract signed between the state and Oracle last year to provide the state with database software. The deal was initially touted as a way for the state to save at least $16 million through volume purchases. 

But a state audit says the contract could actually waste up to $41 million. 

The agreement has also come under fire because Oracle gave Davis a $25,000 contribution a few days after the contract was signed last year. 

Davis’ GOP challenger Bill Simon has held near-daily press briefings to call for federal probes into the Oracle deal and to blast Davis’ handling of the budget. 

“I encourage the governor to apply the same standard of scrutiny to himself and to his administration that he is applying to Enron,” Simon said Thursday during a press conference in Monterey. 

Davis already has countered the Simon attacks by referring to the political newcomer, who once called himself “an oil and gas man going way back,” as a partner in the Enron debacle. Simon is a major investor and former board member of Houston-based Hanover Compressor Co., which entered one of Enron’s complicated partnership deals while Simon was on the board. 

Davis also is seeking to tie the Enron situation to Bush, who helped Simon raise $4.5 million during a two-day fund-raising swing earlier this month. A Simon victory over Davis in November could help Bush — who lost California to Al Gore by 12 percentage points in 2000 — in his re-election efforts in 2004. 

“I think we can envision a fall campaign where we are going to have dueling charges, the Oracle scandal versus the Enron scandal,” said Bruce Cain, a political scientist at the University of California, Berkeley. 

As for the budget, Cain said, Simon and California Republicans have to tread lightly when criticizing Davis for the surplus-turned-deficit under his watch. 

“Bush is stepping on Simon’s message because George Bush is running huge deficits at the national level,” he said. “If Simon thinks that Gray Davis is fiscally irresponsible, does he think that George Bush is fiscally irresponsible for running deficits as well?” 

Still, GOP lawmakers have the power to withhold their votes — which are needed to pass a budget by the required two-thirds majority — and force a drawn-out deadlock. 

Lengthy budget showdowns “don’t bring positive evaluations for the Legislature or the Governor,” Cain said. “People tend to get disgusted and impatient.”