Metropolitan News-Enterprise


Monday, January 14, 2002


Page 8


Gubernatorial Opponents Attack Davis’ Proposed Budget


By NICK YULICO, Staff Writer


Republican gubernatorial candidate Richard Riordan  attacked Gov. Gray Davis Friday for proposing a budget that lacks stimulus components and relies heavily on borrowing to pay off the state’s deficit. 

At a press conference on the steps of the USC Medical Center, the site of Davis’ announcement earlier this month that he would not slash trauma unit funding, Riordan blasted the governor for the recent economic turnaround in the state.

“Two years ago, we had a $12 billion surplus, the largest in the state’s history,” Riordan, a former two-term mayor of Los Angeles, said.  “Now, Davis has left us with what may be the largest deficit [in the state’s history].”

Bill Jones, the secretary of state, has said the state’s estimated $12 billion deficit will reach $20 billion if money taken by Davis from the general fund to buy energy is not repaid in June. Riordan called Davis’ plan to borrow against future revenues “borrowing your way out.”

Riordan stressed the need for “long-term solutions to the budget,” like cost-benefit analyses for all state programs to determine their real need to the state during an economic recession.

“This is an opportunity to cut unnecessary bureaucracy,” Riordan said.  

Bringing more businesses to the state is the real solution to the budget problem, he added.

“More businesses means more revenues,” he said. “You can’t solve this by creating more and more debt.”

He suggested considering some form of tax cuts for businesses and cited one possible cut: eliminating the sales tax on manufacturing equipment, a move that Riordan said 46 other states have made.

Such a cut would lure businesses to the state, Riordan said, and he stressed the importance of creating economic stimulus packages like New York Governor George Pataki has and not measures that rely on borrowing to reduce the deficit.

Riordan ended by questioning what Davis would do if there aren’t enough revenues in the next years to pay off the debts.  

Jones, who is running against Riordan for the Republican nomination and the right to challenge Davis in November, issued a statement saying Davis lacks the courage and leadership to make tough decisions to restore economic health.

“Governor Davis seeks to paper over the $12 billion budget deficit with one-time loans and fund transfers, yet continues to avoid addressing the underlying structural problem that allows expenditures levels to exceed the state’s revenue system,” Jones said in the statement. “This is Gray Davis’ version of deficit spending.”

In the same statement, Jones provided deficit numbers for the past three Davis budgets, which he said show Davis signing unbalanced budgets that would run projected deficits of $752 million in the 1999-2000 budget, just under $5 billion for 2000-2001, and just over $3.5 billion for 2001-2002. 

“Plain and simple, the Gray Davis fiscal crisis is one of excess spending and lack of control and discipline,” Jones said.

He added:

“Unless Governor Davis is able to secure more than $2 billion in tobacco settlement money, he is proposing a budget where, for the fourth consecutive year, his budget expenditures exceed projected revenues.”

If elected, Jones said, he would institute a spending limit that uses population growth and inflation as adjustments to spending.  Jones said he also wants to redefine a “surplus” as taxpayer funds the state receives in excess of the spending limit and revenues received in excess of the Budget Act.

Other highlights include creating a “People’s Fund,” a blueprint for spending the newly defined surplus.  If the surplus exceeds $2 billion, as governor, he will place the blueprint before the voters of California, Jones said.

Rebates directly to taxpayers like the ones former governors Ronald Reagan and George Deukmejian insisted upon will replace expenditures that broaden the expenditure base of government, Jones added.


Copyright 2002, Metropolitan News Company