Hot Temper, Cool Skills

Gov. Gray Davis, famously averse to risk, tossed caution aside this month in choosing termed-out state Sen. Steve Peace as his finance director. Speaking of risk, it is now Peace’s thankless job to find a path out of the state’s $35-billion budget deficit, a fiscal hole that dwarfs anything any state has experienced.

The mercurial Peace, a 49-year-old veteran of two decades in the Assembly and Senate, was most recently the workaholic chairman of the Senate Budget Committee. He built a reputation as one of the Legislature’s most creative thinkers, able to master complex issues and not afraid to let mere mortals know of his mastery. He is known for his short temper, sarcastic wit and inability to suffer fools gladly -- not necessarily assets in forging legislative compromises.

Peace is remembered outside Sacramento, however, for the one thing he can’t live down. He was an engineer of the electric power deregulation scheme that led the state to rolling blackouts and billions of dollars in crisis purchases of overpriced power.

Peace got something of a bum rap on power. The flaw was more in the implementation of the program than in the concept. And the Legislature’s plan was better than the original, developed by the state Public Utilities Commission.

The power debacle still haunts him, but in fact Peace may be the right state finance director for the times. For all his legislative activism, he is a fiscal conservative amenable to sharp budget cuts in areas including the state prisons, a fact that may help him negotiate with Republicans. Also, Peace has long promoted basic fiscal and bureaucratic reforms to control the wide revenue swings that, along with overeager spending, made this mess.

Peace has advocated stabilizing the tax base and stimulating the state’s manufacturing economy. He has said he favors a modest change in Proposition 13, the 1978 property-tax-limiting initiative, to allow adjustment of business property taxes to reflect market values. Those would usually be fighting words for the GOP, but if modifying Proposition 13 could eliminate the need for sharp increases in more volatile revenue sources, such as the top income tax rate, who knows what might start to look acceptable?

One of Peace’s strengths is the ability to advocate change as a matter of good public policy, not just to satisfy a political agenda. To get from idea to legislative passage, though, he’ll have to learn to cajole rather than berate his former colleagues, even his favorite “fools.”