Response to Drought Will Be Watershed for Wilson : Crises: The record deficit can be resolved, observers say. But divvying up the state’s water is more difficult.

Gov. Pete Wilson recently looked out his office window into the lush landscape of Capitol Park, a peaceful panorama of manicured gardens and magnificent trees, and remarked to his chief of staff, “Ya know, Bob, it’s a beautiful day out there. Damn it!”

“Every day,” reports aide Bob White, “he stands there and says, ‘I wish it would rain, I wish it would rain.’ ”

For weeks, Wilson had hoped for rain, not yet ready to confront both a drought and a record budget deficit. But he began planning for the worst. Now the worst seems inevitable, despite the first major rainstorms in a month. And the new governor is facing a crisis, with the decisions he makes likely to shape the public’s crucial first impressions of his Administration.

Although he had wanted to avoid it, Wilson in recent days apparently has been moving toward a delicate decision to invoke a governor’s emergency powers and usurp local authority over dwindling water supplies. “That’s the train we’re on,” acknowledged an Administration official who did not want to be identified.

“Generally, a governor gets defined in his first year by the crises that confront him,” said Steven A. Merksamer, Gov. George Deukmejian’s first chief of staff. “The crises defining Wilson will be the budget and water. And water could be the most defining. The budget ultimately will be resolved. Water is infinitely more complex and difficult. It is a quicksand and has been a quicksand for other governors.”

Beyond the immediate crisis of the drought, Wilson’s legacy as governor probably will be influenced by how well he displays leadership in working with the Legislature and competing special interests--business, agriculture, environmentalists, the state’s varied regions--to plan for California’s water needs into the next century.

Wilson seems to have two golden opportunities: The calamity of the drought could bring together long-warring factions to forge a landmark compromise on water--just as the deficit squeeze could pressure the governor and Legislature into negotiating a comprehensive budget reform.

The governor last week described his situation as “a double-barreled crisis--a drought caused by nature and a deficit caused by man” and added, “political gamesmanship just won’t cut it.” His press secretary, Bill Livingstone, said: “As if the budget weren’t bad enough, now here’s the drought. Two of the horsemen (of the apocalypse) are on our doorstep.”

Wilson can blame the budget deficit on many things: a recession, Democrats, even his predecessor, Deukmejian. The solution probably will be the product of political consensus, a mix of tax increases and spending cuts with ample players to share in the credit and condemnation. But the lack of rain, while the fault of nature, ultimately places sole responsibility on the governor to decide how to divvy up the state’s remaining scarce water.

Does he follow his philosophical bent, his Republican-bred skepticism of strong central authority, bolstered by a decade as mayor of San Diego, and allow local governments to parcel out the meager shares of water? Or does he assess the situation to be so desperate that he must step in personally and redistribute the water among what ultimately are political constituencies?

“It appears that may be necessary,” said a gubernatorial adviser, referring to the latter course. A decision is expected this week.

If so, does Wilson lean toward the farmers who were especially crucial to his election or the city dwellers who cast so many votes? Does he send a little extra water to his home region of Southern California or keep back more for the Northerners who always have resented the South’s “water grab?”

This is risky business for the new governor. He could let others decide and possibly be accused of lacking leadership. Or he can try to show leadership and possibly make decisions that leave him vulnerable to charges of being unfair.

“There’s no way to make friends with water management,” said Assemblyman Phillip Isenberg (D-Sacramento), a pro-environment water activist who contends that the governor would be wise politically to try to distance himself from decisions that could cause people pain. “He has only so much political energy and capital. And he’s going to have to go to the well a lot--no pun intended.”

But Republican political consultant Sal Russo, a veteran of water wars who was an early adviser to Deukmejian, predicted that Californians will give Wilson “a lot of latitude” to deal with the drought, as if he were “commanding a war.”

And Mervin D. Field, director of the California Poll, said that because Wilson is in the embryonic stage of his governorship and cannot be blamed for past water polices, “he’s got a real opportunity. It’s the kind of thing where there’ll be lots of grumbling, but he could come out of this looking like a forward-looking governor.”

So far, Wilson has been too occupied with the urgencies of the drought and the deficit to ruminate much about California’s water future, aides say.

“There’s an awful lot on the table (for Wilson) this year, so whether there’ll be an interest in pulling together a coalition for a long-term water solution is problematic,” said Loren Kaye, the governor’s Cabinet secretary and drought trouble-shooter. “We can’t let any long-term ambitions interfere with handling the drought.”

Kaye recounted Wilson’s shocked reaction upon first hearing state officials describe California’s bleak water picture last December, shortly after he had been elected governor: “After the meeting he sort of looked up, bittersweet, and said, ‘I’m glad I’m here--but oh my God!’ ”

And at that time, there still was hope for a wet winter.

Recently, recalled Chief of Staff White, he found Wilson standing at his office window “looking at the top of this evergreen tree. ‘That’s turning brown,’ he tells me. Now he’s looking all around town at the tops of trees. He says, ‘Bob, we’ve got to water trees, not lawns.’ And he’s got some arborist coming in . . .

“Gradually he has physically seen the drought coming at him.”

The governor, of course, also has been seeing the drought come at him in much bigger ways. His Administration is being forced to virtually turn off the spigot of the State Water Project. The federal government has reduced deliveries to farmers from the Central Valley Project by 75% of normal and also sharply cut water to municipalities. Some local supplies, especially along the Central Coast, essentially are down to a trickle. Many wells are at extremely low levels and drying up.

Wilson is approaching his water decisions “very deliberately,” White said. But he added that his boss of 22 years “is a ‘process’ person who probably sees this as an opportunity for the state to rally. And he sees himself leading the rally . . . utilizing his talents, his ability to lead.”

A drought is one of those afflictions--like an earthquake, a riot or a flood--that governors do not really anticipate when they run for the office. Wilson spent his first few weeks in Sacramento concentrating on the budget deficit, forming his Cabinet and setting his initial agenda. It was late January before the new governor, prodded by nearly four weeks of dry weather, could clear his desk enough to focus on the drought.

His first step was to form a Drought Action Team and name State Water Resources Department Director David N. Kennedy, a holdover Deukmejian appointee, as “drought administrator.”

There was more to this than might have met the eye. It meant that Wilson had decided to take the lead in handling the drought, shoving aside the independent State Water Resources Control Board, which had been assuming the principal role. The board suddenly became just a member of Wilson’s “action team.”

“The governor realized that the best way to operate in a crisis was for all state agencies to speak with one voice,” Cabinet Secretary Kaye said, making it clear that the microphone for this voice would be controlled by Wilson. “He could have been hurt (politically) by not doing anything,” Kaye added.

Soon afterward, the governor’s new drought administrator cut off all state water for agriculture. And a few days later, Wilson directed local communities to plan for cutting normal water usage by half. If they resisted or if the drought got worse, he cautioned, he “would not hesitate to assume emergency powers” and reallocate the state’s scarce water himself. He established a “water bank” to buy surplus water from the haves--mostly farmers with long-established riparian rights--and sell it to the have-nots. And he proposed a $100-million fund for local loans, reclamation, wildlife protection and fire fighting.

“This drought will change the way we live. . . . It will cause some pain,” Wilson said.

And after that, the drought got even worse. So he cut all state deliveries of water for municipal and industrial use to 10% of requests and announced that by mid-March the huge Metropolitan Water District already will have used up its share for the entire year, forcing it to rely almost exclusively on the Colorado River.

Wilson still must decide whether to take the supreme step of invoking his emergency powers, which he equates with declaring martial law. He then, among other things, could temporarily suspend contracts--state and local, perhaps even federal--and condemn people’s water for others to use.

“If he starts talking about abrogating water rights, farmers will become nervous and a lot more critical,” said Mary-Ann Warmerdam, a lobbyist for the California Farm Bureau Federation.

Kaye describes the drought as “a moving target” that shifts with local rationing efforts, water bank deposits, well levels and the weather. “The solution is rain and that’s out of our control,” he said.

For this year, but not for the long term. So several groups representing business, the environment and agriculture--not waiting for the governor and the Legislature--have been meeting to probe one another’s thoughts about a long-range solution to California’s ceaseless water problems, which also periodically include devastating floods.

Any realistic compromise would be complex, probably involving increased water storage, larger water transfer facilities in the Sacramento-San Joaquin Delta vastly improved conservation and environmental protection for the San Francisco Bay and Delta.

“We’ve almost reached the stage where major state policy issues--like water--have to be resolved before they reach the political arena,” said former Assembly Speaker Robert T. Monagan, president of a new group called “Californians for Water” that is trying to develop a coalition of traditional water adversaries.

“Interest groups are so divided that politicians are not in a position to bring them together,” Monagan said. “They’d get a lot of political heat they don’t want to take. . . . In this case, I don’t fault the Legislature because the interest groups are so potent it almost freezes them.”

The political polarization becomes evident with one walk through the state Capitol.

Assemblyman Isenberg said of Monagan’s group: “My hunch is that’s the same quest of old white guys for dams.”

Sen. Ruben S. Ayala (D-Chino), chairman of the Senate Water Committee who sponsored an unsuccessful Peripheral Canal ballot measure in 1982, lamented that “Northerners from the day they are born are told to ‘watch out for Southern Californians; they’re out to steal your water.’ They just don’t trust us.”

But Assemblyman Jim Costa (D-Fresno), a former Water Committee chairman and strong advocate for agriculture, said: “There is a heightened awareness that could bring on greater cooperation between farmers and environmentalists, urban and rural. . . .

“I told the governor he should take the lead decisively, but also said that depending on what his political ambitions are, he may decide not to take a chance; just deal with the short-term crisis and walk away. He smiled and made no comment.”

Later, White said, “We definitely can’t leave (Sacramento) without coming up with something long-term. But right now, we’re just trying to address what we have to address.”