SACRAMENTO -- California Gov. Gray Davis, seeking re-election in November, is on the hot seat again.
A year after grappling with his state's electricity blackout crisis, the Democrat is under fire this time over a state budget deficit of $23.6 billion that has forced him to propose, among other things, auto license and cigarette tax increases.
The latter is likely to cause him less trouble with the voters than the former. Gale Kaufman, a top Democratic consultant in the state, says the new cigarette levy of 50 cents should go down easily in this health-conscious state. But the car tax is another matter here, where everybody drives, often in luxury vehicles.
What has the nation's most populous state in a huge financial hole is the flagging economy and stock market plunge. Like almost everyone else, Mr. Davis failed to foresee the skid in the dot-com economy and the tax revenue consequences.
With stock prices going through the roof earlier, countless Californians cashed in stock options, flooding the state treasury with capital gains tax revenues, only to see the bottom fall out over the last year.
From $2.6 billion in revenue from capital gains and stock option revenue to the state in 1995, the figure soared to $17.6 billion in 2000, then plunged to $8.2 billion last year and $7.2 billion for 2002. The slide is expected to leave California with a budget shortfall of $19.2 billion.
The governor defends his call for what he labels a "vehicle license fee," not a tax, on grounds that it is a necessary restructuring of a reduction granted in better economic times.
"I think everyone understands," he says, "you have to fill this $23 billion hole with a mix of cuts and revenue increases." Even with it, he says, people will still be paying 25 percent less to register their car than they did under his predecessor, Republican Gov. Pete Wilson.
For all the political peril in the higher car tax, Mr. Davis says he prefers that step to a proposal by a fellow Democrat, Senate President pro tem John Burton, to raise income tax rates on the highest-income taxpayers. Mr. Davis notes that the top 5 percent already pay 70 percent of all such taxes. Notably, many have been heavy contributors to his reported $30-million-plus re-election campaign treasury.
Mr. Davis blames Republican state legislators for not responding to earlier warnings about the deficit, noting they have failed to offer an alternative balanced budget, which is required by state law. He scoffs at proposed cuts of $1 billion by state Senate Minority Leader Jim Brulte, the acknowledged GOP political leader in the state.
Mr. Brulte and other Republican leaders profess dismay -- but radiate glee -- at the prospect of a beleaguered Mr. Davis seeking re-election under such circumstances. Sal Russo, a longtime consultant here running the campaign of Republican gubernatorial nominee Bill Simon, says Mr. Davis' handling of the earlier dot-com revenue windfall was "like they win the lottery one year and act like they're going to win it every year."
Mr. Simon says Mr. Davis needs to come up with more cuts in what he calls bloated state government, but begs off giving specifics on grounds he lacks the staff Mr. Davis has to perform the surgery.
In the end, Mr. Davis says, the Republicans will have to accept his budget plan, having failed to come up with one of their own. Fears of a government shutdown of the sort that came out of a similar budget showdown between President Bill Clinton and the Republicans in Congress in 1995 and 1996 aren't credible, Mr. Davis and Mr. Brulte agree. Courts have ruled that state employees must be paid no matter what, but their pay could be reduced to minimum wage if no budget is passed and signed.
Through all this, Mr. Davis professes confidence that, as in the electricity crisis, he will not only survive but be re-elected comfortably in the fall. But he is already running critical television ads against Mr. Simon, heralding another of the most expensive and negative statewide campaigns for which California is already famous, or infamous.
Jules Witcover generally writes from The Sun's Washington bureau. His column appears Mondays, Wednesdays and Fridays.