Davis Urged to Consider Economic Measures

Business and labor leaders Friday urged Gov. Gray Davis to consider a wide-ranging array of tactics to spur the state’s slumping economy by boosting tourism, home building and other sluggish industries.

The proposals were raised at the governor’s first “economic summit,” featuring a powerhouse roster of business executives that included co-hosts Michael Eisner, chairman of Walt Disney Co., and San Francisco real estate magnate Walter Shorenstein. The session took place at Walt Disney Studios in Burbank, on a giant sound stage where the movie classic “Mary Poppins” was filmed.

Although Davis is under pressure to plug a state budget deficit estimated to be as high as $14 billion, he did not rule out the various tax cut ideas advanced by industry executives and lobbyists. Those proposals included one from the California Manufacturers & Technology Assn., a major lobbying group, to grant a sales tax exemption on spending on manufacturing and telecommunications gear.

Still, Davis, at the close of the 41/2-hour meeting and during a news conference that followed, signaled that he was especially interested in aiding businesses that might be able to turn around quickly. In particular, he declared a willingness to help the travel and hospitality industries, whose slump was deepened by the Sept. 11 terrorist attacks.

The governor said he would consider working with industry groups to develop and share the cost of a marketing campaign to stimulate more travel by Californians within the state, as well as to draw more travelers from other Western states, Asia and Mexico. “If we can agree on what the message is, I’m willing to put up more money,” he said.

Davis said he also is interested in possible incentives for the motion picture and television industry to bring more production back to California. He said the same about the “Buy California” campaign to boost sales of the state’s agricultural goods.

The governor also expressed support for putting bond measures on future state ballots to step up public works construction around the state, including proposals for school construction bond measures totaling more than $20 billion.

However, Davis for the most part was general in his comments, saying he came to hear the ideas of the business and labor leaders and economists invited to the session.

Speakers at the conference included chief executives such as Carly Fiorina of Hewlett-Packard, Larry Kurzweil of Universal Studios Hollywood, Bruce Karatz of KB Homes and John Bryson of Edison International.

Disney’s Eisner, for his part, urged a tourism campaign that treats the state as a brand that needs to be sold to consumers. He cited spending by other tourism-dependent states, including Florida, that devote more money to tourism promotion.

“We have to go back and compete, because people are competing against us,” Eisner said.

Several leading California economists also spoke at the conference, with some urging the state to aim its efforts toward providing quick stimulus while avoiding doing any long-term damage to the economy, ostensibly by raising taxes.

One of those economists, Ross C. DeVol, director of regional studies for the Milken Institute, threw his support behind efforts to promote affordable housing. “I can think of nothing that can do more to help this economy in the short term and promote the state’s growth in the long term than promoting affordable housing,” he said.

DeVol called for reducing red tape and providing financing for reduced-rate mortgages to encourage more construction of so-called affordable homes. He said that n the absence of significant home building, prices of houses have risen to a level that “harm our ability to attract workers. It also forces workers to live farther from their place of business because they can’t afford to live close to urban areas.”

Davis’ decision to call the conference raised speculation that it was intended as a political move to placate recession-wary voters, inasmuch as he faces a reelection campaign next year. But Garry South, Davis’ chief political advisor, dismissed the talk, saying the session was intended to address the state’s economic concerns.

Attendees also defended Davis’ decision to hold the conference. “There’s a problem out there. It needs to be focused on,” said Chuck Mack, vice president of the Western region of the Teamsters Union, which has thousands of members in California in such travel-related businesses as theme parks, car rental agencies and airline catering.

But Bill Dombrowksi, president of the California Retailers Assn., said the state’s budget crisis limits what it can do to spur the economy. His main proposal was for state officials to throw their support behind proposed federal legislation to provide a “sales-tax holiday” to boost sales at the beginning of this year’s holiday shopping season.

State government, Dombrowksi said, “is in a real tough situation. There’s no surplus to spend. We have to be realistic about that.

“Maybe you can shift some state dollars around, but you can’t do anything massive. It’s going to take some creativity.”

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Times staff writer Dan Morain contributed to this report.