Critics say Gray Davis, Democratic governor of California, should be recalled for several reasons. Most important, perhaps, they contend he mismanaged the state budget from a $12 billion surplus when he entered office into a record deficit as high as $38 billion. Then, they say, Davis misled Californians about the severity of the problem.
When Davis tripled the automobile tax for state residents as one means of closing the deficit, voters screamed for his head. Such a terrible idea was further proof of his insensitive and incompetent leadership, they said, first glimpsed when he signed a horribly expensive deal to keep lights on in the state in 2001 when the electricity crisis hit the West.
According to some, Davis also has been a spendthrift. “In the first four years of his term, the budget went up 37 percent,” says Cato Institute scholar Stephen Moore, who tracks state spending. “Now the chickens have come home to roost.”
Moore concedes that California suffered more than other states from the stock market's drop and the economy's slowdown: A sizable portion of its tax revenues had been coming from the tech industry — which has a heavy presence in the state — and from residents who were realizing substantial capital gains from investments in the industry.
But industry may not be able to help the state recover. “California has developed a litany of policies hostile to business,” Moore says. “The whole culture in Sacramento is going to have to change” if businesses are to remain there.
But is Davis completely responsible for California's budget mess? Not according to Los Angeles Times columnist Robert Scheer, who has said that President George W. Bush is more to blame than Davis. “Davis is being used as a fall guy for problems that are beyond his control,” Scheer wrote recently. The electricity deal, for example, “was not the normal workings of the market but the result of market manipulation by officials of Enron and other energy companies, some of whom are on their way to trial.”
Nursing-home caregivers oppose proposed state budget cuts during a protest at the Country Villa East Health Center in Los Angeles in July 2003. (Getty Images/Hector Mata)
Enron, which unraveled from corporate malfeasance that bankrupted company employees' retirement savings, was able to gouge California, Scheer wrote, precisely because Bush essentially allowed it to happen as payback to Enron chief executive Kenneth Lay, who made the single, largest contribution to Bush's 2000 presidential campaign.
Scheer contends Bush stacked the Federal Energy Regulatory Commission with appointees who would look favorably on Enron. When California's lights started to blink and go out, he wrote, these same appointees blamed Davis, presumably, for signing $12 billion worth of long-term commitments, and insisted that California's problems “were of its own making and would have to be solved without the imposition of the wholesale energy-price caps that would have saved taxpayers from a crushing burden.”
Davis has claimed he is the target of state Republicans who want to steal his election, but Davis has yet to offer proof. It is true, though, that many conservatives see the states' fiscal crisis as an opportunity to force spending cuts and reductions in the size of government, or at least to attack politicians who aren't willing to rule out increasing taxes to close the deficits.
Is Davis a victim of anti-tax devolutionists exploiting California's energy crisis and red ink to advance their agenda? “Definitely,” says Raymond C. Scheppach, executive director of the National Governors Association. Scheppach compares Davis' situation to that of Republican Gov. Bob Riley of Alabama, who was vilified by right-wing conservatives for trying to raise taxes by $1.2 billion.
But Grover Norquist, president of Americans for Tax Reform, says Davis is “completely and totally” a victim of only his own mismanagement. “He's been there for the last five years. He did this. Any spending [problems] could've been fixed in five years.”
As for Scheer's claim that lax federal regulators allowed Enron to gouge California, he says, “They didn't deregulate in California. They just regulated poorly. They didn't allow you to have a free market, and they specifically didn't allow you to do the things a free market would. Scheer wouldn't know what a free market looks like if it bit him in the backside.”