Davis Should Play It Smart on Budget, Extend a Hand to GOP

SACRAMENTO

Gov. Gray Davis decided two Mondays ago that he really did have to advocate a tax increase, even if he had promised not to.

You may recall this gubernatorial pronouncement last January: “I will not advocate raising taxes.... I don’t think it makes good economic sense to penalize individuals during a recession by raising their taxes.”

Guess the recession is over. But the state’s budget deficit is almost twice as big, growing from $12.5 billion then to $23.6 billion now.

Davis told reporters Tuesday he was prepared to fill a $20-billion hole “without a tax increase, but $24 billion crosses the line.”

So he offered a revised budget of $99 billion for the fiscal year starting July 1, including $76.5 billion for the crucial general fund. And he proposed socking it to motorists, cigarette smokers and some businesses for about $3 billion.

But that’s just for openers. The most important announcement Tuesday was not that Davis is proposing to raise specific taxes, but that he is ready to raise taxes at all. He opened the door to a buffet of tax hikes.

“In for a penny, in for a pound,” observed liberal Senate leader John Burton (D-San Francisco). Burton long ago proposed raising income taxes by $2.5 billion on the wealthiest--couples with taxable incomes exceeding $260,000.

It’s not tax increases that Burton and other liberal lawmakers object to, but the onerous program cuts. While protecting popular school programs, Davis targeted the poor, who tend not to vote. He proposed, for example, reducing dental exams for children on Medi-Cal and eliminating them entirely for adults.

Davis’ staff drilled home the fiscal realities at a final budget meeting May 6, explaining the consequences of not raising taxes. “He wasn’t ready to dismantle state government and that was the alternative,” says spokesman Steven Maviglio.

“Like, close down the Department of Aging, things like that,” recalls political strategist Garry South. “You just can’t ravage the services on which people depend in order to meet some self-imposed goal of not raising taxes.”

It was a Wilsonesque problem that called for a Wilsonesque solution. When Republican Gov. Pete Wilson faced a comparable general fund deficit in 1991, he raised taxes even higher than Davis is proposing. But, of course, Davis isn’t through with this exercise yet.

And while the governor earned some credit for courage, it wasn’t much. He really had no choice but to increase taxes. And it doesn’t take much courage in California to slap a higher tax on nicotine addicts.

Senate Republican leader Jim Brulte of Rancho Cucamonga has a point when he says: “If the governor really had political courage, he’d be proposing taxes that kick in before voters go to the polls in November. This is just political cowardice.”

Davis’ hikes wouldn’t go into effect until January. Aides say it would take DMV computers that long to crank up for the stiffer vehicle license fees.

Meanwhile, demagoguery expands with the deficit.

Anti-tax Republicans shout it’s all Davis’ fault; he created this crisis by overspending.

Nevermind that Davis’ spending increases have been less, by percentage, than Wilson’s in his second term and Ronald Reagan’s in both terms. But the stock market did tumble and the dot-com economy crumbled.

Davis claims that Republicans have a duty to propose their own balanced budget. His strategists are “throwing down the gauntlet.”

Sorry. Republicans--and especially GOP gubernatorial candidate Bill Simon--have absolutely no responsibility to develop a budget. There’s only one governor and one party running the Legislature. This is a Davis-Democrat problem.

And their main problem is that while Democrats dominate the Capitol, they’re still four votes short in the Assembly and one in the Senate of being able to pass a budget by the required two-thirds majority vote. They can either buy off some Republicans with pork, as they did last year, or play it smart.

Davis instinctively is a loner, but this is a time when he needs to be gregarious. He can’t afford to allow budget squabbling to drag into midsummer, making the Republicans’ case for failed leadership. Davis needs to do something he hasn’t done since his rookie year: invite in Republicans--and Democrats--to seriously negotiate.

Why would Republicans do that and help Davis? Because what matters in any Capitol is to matter--be relevant, contribute, be in the real game and not just jeering on the sidelines. That’s more important to Republicans, you can bet, than just scoring points for Simon.

“I’m always willing to do the good government thing if they give us the opportunity,” says Brulte.

“Basic Politics 101,” notes Assembly GOP leader Dave Cox of Fair Oaks.

Wilson dealt with Democrats. Davis should deal with Republicans. But that may take more courage than raising taxes.