Siege at Budget’s Middle Ground

SACRAMENTO -- As he struggles to forge a budget consensus between dug-in Republicans and Democrats, Gov. Gray Davis says he must not “stick it in the eye” of either party.

But in a tense private gathering with Davis, fellow Democrats in the Legislature told him late last week that he had -- in essence -- stuck it in their eye by spurning their initial plan to raise taxes and cut spending.

“It was a colorful couple of hours,” said state Assembly Speaker Herb Wesson (D-Culver City). Without doubt, he said, “there was frustration, a level of disappointment” in Davis. The rancor -- within the governor’s own party -- illustrates the difficulty that Davis faces in trying to chart a centrist course between Republicans who refuse to raise taxes and Democrats who insist on doing so to reduce cuts to existing programs.

As Davis tries to move on a budget that is sure to inflict political damage on lawmakers of both parties, he is hobbled by his dearth of allies -- among Democrats as well as Republicans. Coming off a narrow November reelection against a weak Republican opponent, the governor also suffers from a lack of the political clout he needs to wrench members of the sharply polarized Legislature into painful budget deals.

For weeks, Davis has tried to build closer ties to state lawmakers. That effort was underscored dramatically by his willingness to take a drubbing from Assembly Democrats during his extraordinary appearance at their private caucus lunch on Thursday in the Capitol. Assembly Majority Leader Marco Firebaugh of Los Angeles said the Democratic lawmakers had sensed “a growing gap between our position and the governor’s, and it need not be so.”

But even Firebaugh’s somewhat optimistic post-meeting assessment reflected the remaining gulf between Davis and lawmakers of his own party: “I don’t think we’re at a place where we have irreparable harm,” he said.

Assemblyman Mark Ridley-Thomas (D-Los Angeles) said Democrats “passionately communicated” to Davis their insistence on steps that “spread pain in a defensible way.” Davis set off the Democrats’ grumbling last week by rejecting their plan to start closing a budget shortfall projected to reach at least $26 billion by June 2004 -- or, by the governor’s account, billions higher.

Davis, in a budget proposed last month, had called on the state to raise taxes by $8 billion and slash about $20 billion in spending. The Democrats’ doomed legislation, a partial salve to the state’s fiscal woes, would have cut $3 billion in spending, a move welcomed by Republicans.

But it would also have raised $4 billion by tripling the so-called car tax -- without the Republicans’ consent. The tax is technically the vehicle license fee Californians pay when registering their cars.

Democrats control both houses of the Legislature, and thus were able to push through the car fee measure on a majority vote. But it takes a two-thirds vote to pass the budget. So Davis ultimately needs the support of at least six Republicans in the Assembly and two in the Senate. In an interview, Davis said he has valid policy reasons for rejecting the Democrats’ effort to raise the car tax. He said the move would be vulnerable to legal challenge. And because of the way the law is written, he argued, the increase might kick into effect automatically.

Fear of Offending GOP

But he also acknowledged his rough political straits, arguing that it was too soon to ram a tax hike through the Legislature over GOP objections. “It gratuitously offends Republicans,” he said in the interview at his state Capitol office.

GOP strategists offered another motive, saying that the governor’s personal political standing appeared to them to dictate his rejection of the fee increase. Private polls have found that it’s one of the most unpopular steps under consideration by the Legislature as it seeks to balance the budget. “It would have been the equivalent of whacking a hornet’s nest with a great big stick,” said Republican analyst Tony Quinn.

Yet there was no immediate benefit to Davis’ rejection. Even as he angered members of his own party, Davis found little in the way of concessions among the Republicans he needs to court for his budget. Senate Republican Leader Jim Brulte of Rancho Cucamonga said Davis “did the right thing” on the car fee. But Republicans also refused to soften their opposition to tax increases.

“I don’t believe there are Senate Republicans who are going to vote to raise taxes,” Brulte said. “This is not posturing. I don’t see it.”

As tellingly, Republicans persisted in publicly casting Davis as a fiscal profligate who drove California into its budget morass -- the same line of attack they used last year in fighting his reelection campaign.

“He has ignored repeated warnings over the past four years and so badly mismanaged the state’s finances as to turn a record surplus into an unprecedented deficit in the span of just 18 months,” said Sen. Tom McClintock (R-Thousand Oaks). Party leaders were also assaulting Davis on another front. A petition drive aimed at recalling the governor was launched last week by state Republican Party Chairman Shawn Steel, Assemblyman Dennis Mountjoy (R-Monrovia) and anti-tax crusader Ted Costa. Strategists from both parties are doubtful about its prospects. But given Davis’ low ratings in public opinion surveys, nervous Democratic Party operatives have begun researching the law on recalls.

Tactics Could Change

Davis indicated in the interview that his olive-branch approach to legislators could give way to more aggressive tactics if a budget stalemate drags on for months. “I don’t want to get too far ahead of myself, but I would remind you last year -- and I think past is prologue -- there were television commercials, there were lots of people visiting Republican and Democratic members; there were lots of calls to people’s offices,” Davis said.

Strong-arming aside, the state’s political realities complicate the governor’s chances of forcing a bipartisan compromise on the budget. Elected under a new map of legislative districts that divided California sharply between Democratic and Republican strongholds last year, many lawmakers have little incentive to stray from party orthodoxy and strike compromises, strategists say. As a practical matter, many of them are focused on avoiding primary challenges in their bids for reelection. Some Republicans who might otherwise agree to raise taxes, for example, face the threat of a GOP primary challenger on that issue. Democrats inclined to accept steeper program cuts than party leaders have embraced could also face trouble in a primary.

“These people are responsible only to the hard-core ideologues in their districts,” GOP analyst Quinn said. “To get out of this kind of mess takes a much broader consensus-building than either side shows any inclination to do at this point.” Davis insisted, however, that ultimately a consensus will be reached.

“I’m going to take good ideas from the right and the left, and avoid trying to stick it in the eye to either party, because I need both parties to adopt a responsible budget for this state,” Davis said. “Neither party can do it by itself.”

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Times staff writers Virginia Ellis, Gregg Jones and Nancy Vogel contributed to this report.