Hi Jeff.  Good article.  I sent it on to my republican friends in the west.

-----Original Message-----
From: Dasovich, Jeff 
Sent: Sunday, October 07, 2001 10:40 AM
To: Shapiro, Richard; Kean, Steven J.; Denne, Karen; Palmer, Mark A. (PR); Steffes, James D.; Landwehr, Susan M.; Mara, Susan; Kaufman, Paul
Subject: Dan Walters: As California's malaise deepens, Gray Davis' standing plummets



Dan Walters: As California's malaise deepens, Gray Davis' standing plummets 



(Published Oct. 7, 2001) 

A year ago, Gray Davis was riding high -- because Californians were prosperous, confident about their future and thus supportive of the political status quo. 

Davis' high approval ratings had little to do with his actual performance, or any personal affection among Californians for their cool and distant governor. He was just the fortunate beneficiary of good times and good feelings. 

Today, a dark cloud has descended on the state. A sharp decline in the economy, particularly high-tech sectors, a stubborn energy crisis and, most recently, the terrorist hijackings and murderous crashes of California-bound airliners have left Californians worried about their personal safety and economic security, and they're looking for someone to blame. 

Davis' approval ratings began to decline early this year as the energy crisis hit home and it became apparent that he had failed to take the initiative in heading off the worst aspects of the situation. And they have continued to sag, thus presenting the governor with a series of interlocking tests as he begins his campaign for re-election in 13 months. 

The seriousness of Davis' decline was underscored late last month in a statewide Field Poll indicating that, at the moment, most California voters would prefer former Los Angeles Mayor Richard Riordan to Davis. History indicates that Davis should still be favored to win a second term, but if Riordan does become the Republican candidate, he would have at least an outside chance of unseating Davis. 

Davis' chief problem is that he will be running for re-election in what will almost certainly be sharply declining economic circumstances, the product of a slowdown already under way and the plummeting consumer confidence in the wake of the terrorist hijackings. State tax revenues are in a nosedive, running a billion dollars under projections in the first three months of the fiscal year, and Davis will be compelled to make multibillion-dollar slashes in state spending that will irritate important constituent groups. 

How big the state budget hole will become is anyone's guess. There's a distinct tendency for state revenues to plummet far faster and further in an economic downturn than official forecasts, just as they rise faster and higher in a recovery than the bean counters project. Some analysts believe that Davis' problem could rival the $14 billion deficit that predecessor Pete Wilson confronted in 1991. Wilson swallowed hard and agreed to the largest state tax increase in American history. 

However large the state's fiscal problem may be, it will be much, much larger if the state money Davis spent on power purchases this year cannot be recovered from a proposed bond issue. And the $12.5 billion bond issue is on indefinite hold because the Public Utilities Commission, consumer groups and Pacific Gas and Electric are opposing the administration's demand that past and future power purchases be covered by ratepayers without review. 

It's apparent now that the long-term contracts the administration signed are much too expensive, which is why Davis' own appointees to the PUC are balking. Davis could try to renegotiate the contracts, but that would be admitting that he and his advisers erred in the first place. Or he could accept the Legislature's proposal, contained in legislation on his desk, that only past power purchases be guaranteed and that future contracts be subjected to the scrutiny that private utilities' purchases must receive. But Davis is insisting that he'll veto the measure. 

The effect of the current flap over bonds and power contracts, as well as Davis' months-long effort to provide a bailout for financially strapped Southern California Edison, and his lackadaisical performance earlier in the energy game, will undermine the governor's claim for a second term. He comes across as someone who dithered when he should have acted, and signed too-expensive contracts even as the power market was contracting. That, and Californians' increasing apprehension about their future, will make his re-election a much dicier prospect than he had envisioned. 


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The Bee's Dan Walters can be reached at (916) 321-1195 or dwalters@sacbee.com <mailto:dwalters@sacbee.com>.