Davis Learns to Struggle

It’s the political season in California once again. You can tell by the increasingly partisan rhetoric, mostly over how well Gov. Gray Davis is doing his job.

Is Davis reacting to Republican attacks? He seems to be more conciliatory on some energy issues, especially the renegotiation of bad power contracts the state signed, and is moving rapidly to deal with a deepening budget crisis.

Did politics affect his action on legislation this fall? Davis seemed to be shoring up his Democratic base by approving a flurry of environmental bills and signing some major measures sought by organized labor. Davis then gave business a victory by vetoing an increase in workers’ compensation benefits.

The larger question is this: Is Davis’ cautious centrist approach serving the state well? It did until the energy crisis, when Davis was far too slow in acting to halt the escalation of power costs. It is still too early to ask whether Davis is moving fast enough to control the budget deficit.

When Republican Pete Wilson took office 10 years ago he was assaulted by a series of disasters, including a recession that plunged the state budget into a $14-billion deficit.

By comparison, life was soft for Davis in his first two years. The booming economy spawned unprecedented budget surpluses. But Davis has now been stung by the twin calamities of energy and the deficit. His poll figures have plummeted, and his reelection is no longer considered a sure thing.

The deficit could run from $8 billion to $14 billion, not counting the $6 billion borrowed to buy electric power. Davis’ first priority must be to forge a compromise solution to legal problems blocking the sale of more than $12 billion in revenue bonds. The money is needed in part to repay the $6 billion. Either that or the deficit becomes even larger.

The governor has ordered $150 million cut from current spending, imposed a hiring freeze and called for a 15% cut in next year’s budget. Republicans accuse him of having bloated the budget the past three years and now acting too little and too late. In fact, Davis budgeted conservatively during the big surplus years, spending most of the extra money on one-time projects. And the severity of the state’s fiscal situation wasn’t evident until September.

The GOP holds up Wilson as an example of how to cut a deficit but fails to mention he raised taxes $7 billion to do it. The Republicans now insist there be no tax increases. Raising taxes surely is the last thing Davis wants to do, but nothing should be ruled out until the full impact of the economic downturn is known.

Pundits attribute Davis’ centrism to the canoe theory of governance propounded by his former boss, Jerry Brown: Paddle a bit on the left, paddle a bit on the right and you wind up in the center. In these times, the focus must be on keeping the state fiscally afloat and on throwing a lifeline to the unemployed and others set adrift by economic shock.