Davis Signs $103-Billion State Budget

Gov. Gray Davis, who for three years has presided over California’s healthy economy, on Thursday signed a $103.3-billion budget that acknowledges the state’s softening fiscal strength while still dedicating more than $32 billion to public schools.

In a year of diminishing revenues triggered in part by the burst of the Silicon Valley high-technology bubble, Davis wielded his line-item veto to cut $554 million from the spending plan.

The budget he signed into law also reduced general-fund spending on the environment and borrowed $1.3 billion in transportation money. The governor and Democrat-controlled Legislature made those cuts and transfers in part to adjust to projected drops in tax revenue and in part to build a $2.6-billion reserve intended to guard California against future hardships.

At the same time, state representatives managed to set aside more money for higher education and health care for the poor, two areas that leading Democratic officials strongly backed. A new park in downtown Los Angeles got the money its advocates had sought, and a long-sought program for cleaning up California beaches will be launched as well.

“It’s responsible, it’s reliable, it hopes for the best but prepares for the worst,” Davis said of the state’s 2001-02 spending plan.

Davis signed the document 26 days past the state’s constitutional deadline--a delay fueled by a partisan battle over a quarter-cent cut of the state sales tax that Republicans fought unsuccessfully to extend.

The partisan divide was palpably obvious Thursday at the signing ceremony. The crowded auditorium stage at Sacramento’s Charles Mack Elementary School, where Davis held the event, was filled with children and Democratic lawmakers, but not a single Republican legislator attended.

GOP lawmakers opposed the document on the grounds that it raises taxes and is out of balance because it spends close to $4 billion more in general funds than it takes in. Contending Democrats failed to cut deep enough, Assembly Republican Leader Dave Cox of Fair Oaks described the situation as an “enormous problem.”

“If the Democratic governor and lawmakers were not prepared to cut this year,” Cox said, “my guess is they’ll have an even bigger problem next year because of their inability to face reality.”

As California’s governor, Davis has the power to veto individual items in the state budget, which allows him to punish and reward individual lawmakers and state officials.

Acting under his self-imposed mandate to boost the reserve fund, Davis trimmed millions of dollars in so-called members’ requests, which are submitted by lawmakers each year. The requests typically seek funding for district-specific projects as opposed to ones of statewide significance.

Thanks to consistent criticism from Republicans, one pork project came to symbolize legislative excess in 2001: the request by Assemblywoman Virginia Strom-Martin for $100,000 to fund an Aleutian Goose Festival in her rural Northern California district.

Not surprisingly, it was one of the members’ requests that fell victim to Davis’ blue pencil--a fate that disappointed Strom-Martin (D-Duncans Mills). Her chief of staff described it as an earnest effort to boost eco-tourism that became politicized and misconstrued.

It was Republicans, however, who saw Davis’ pencil scrawled most heavily on their budget requests. Assemblyman Ken Maddox (R-Garden Grove), who lampooned the Aleutian Goose Festival on the Assembly floor, on Thursday saw his own $25,000 request for a new marquee for Garden Grove’s Gem Theater slashed.

“The Gem Theater has a certain amount of emotional attachment for me. I would certainly have liked to get it in there,” Maddox said. But given his refusal to vote for the budget, he was not surprised he did not benefit from its perks.

“Considering this budget was a dog,” he said, “I didn’t think my constituents should get up with fleas.”

Davis also eliminated a $1-million request made by Secretary of State Bill Jones, the leading announced Republican candidate for governor. The money would have been used to fund voter outreach and education efforts in the wake of the Florida butterfly ballot debacle.

“My guess is he assumed that Bill Jones was in the ads and maybe that is why he vetoed the item,” Jones’ spokesman Alfie Charles said of Davis. “But the reality is he would not have been in them and the money for the program is critical.”

As Republicans accused Davis of partisan politics, environmentalists took issue with a $1.4-million cut made by the governor for 14 new positions at the California Coastal Commission. Davis explained that the trim was needed “for a prudent reserve for economic uncertainties,” a mantra repeated throughout an 85-page summary of the spending plan and his vetoes.

“It is inexplicable to me that when the Bush administration is pushing for more offshore oil development, the governor would slash the positions needed to review new drilling proposals,” said Susan Jordan, a board member of the League for Coastal Protection.

Despite line-item vetoes in the area of education, the budget plan finalized Thursday provides for substantial growth in that area. California will spend $32.4 billion on schools, compared with $29.9 billion the prior fiscal year. The increase will push spending per pupil to $7,002, a 5% increase over last year, while also helping low-performing schools and after-school programs.

“That’s something that’s really going to help our neediest neighborhoods throughout California,” said Assemblyman Tony Cardenas, the Sylmar Democrat who chaired the Assembly Budget Committee. “Southern California has . . . a lot of tough neighborhoods and these programs are essential for keeping our kids out of trouble.”

The spending plan dedicated more than $400 million to help schools and colleges cover energy costs and conservation programs. It also set aside $820 million to provide poor children with health care and, for the first time, extended care to their parents.

Howard Lawrence of the Pacific Institute for Community Organization, the group that had pushed hardest for an expansion of the Healthy Families program for Californians without health insurance, estimated that the program would cover 518,000 working parents once it is fully implemented. The vast majority of those families live in Southern California.

Although advocates did not get all they wanted, they hailed the new budget as progress. “We feel like we opened the door, and given this budget year, the fact we could get through the door is progress,” Lawrence said.

In Los Angeles, one of the most closely watched items in the spending blueprint was one setting aside money to create a state park near downtown. When that $36-million item survived Davis’ vetoes, advocates of the park rejoiced.

“There will be a park there now,” said Larry Kaplan, of the Trust for Public Land.

The old rail yard near Chinatown became a point of controversy between a developer who sought to use the 40-acre parcel for industry and those who saw it as needed open space, as well as a possible centerpiece for the movement to revive the Los Angeles River.

For the first time, Davis and the Legislature provided nearly $34 million for his clean-beaches initiative to clean up polluted runoff and prevent sewage spills that force embarrassing beach closures.

The money will fund 39 projects from San Diego to Bodega Bay.

“This is a huge step forward for the coast,” said Mark Gold, executive director of Heal the Bay. “It’s the first time there has been significant money for cleaning up the beaches.”

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

2001-02 State Budget

The $103.3-billion budget that Gov. Gray Davis signed Thursday is almost 2.5% larger than the spending plan for the fiscal year just ended. The largest portion of the budget, the general fund expenditures, declined by almost 2% to $78.8 billion. The general fund contains general taxes, primarily state income taxes, sales taxes and taxes on business and banks. The state will have a reserve of $2.6 billion.

*--*

Category 2001-02 2000-01 Growth Kindergarten-12th grade $32.4 billion $30.0 billion 8% Health & Human Services $21.9 billion $20.1 billion 9% UC, State University, community colleges $9.9 billion $9.3 billion 6% Corrections $5.2 billion $5.2 billion -% Tax relief $4.4 billion $3.5 billion 26% Legislative, judicial and executive branches $2.6 billion $2.7 billion -4% Environment, natural resources $1.7 billion $3.0 billion -43% Business, transportation and housing $700 million $2.6 billion -73% Sources: Department of Finance; state budget

*--*

General Fund Spending: $78.8 billion

Education: 53.8%

Health and Human Services: 27.8%

Corrections: 6.7%

Tax relief: 3.8%

Environment, natural resources: 2.1%

Courts: 2.0%

Other*: 3.8%

* Includes business, transportation, housing, state and consumer services and other government programs.

*

Times staff writers Miguel Bustillo, Joe Mozingo and Kenneth R. Weiss contributed to this story.

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