The State of California: Former California Governor Gray Davis Weighs In On The Budget

Doug Sovern
May 21, 2020 - 7:30 pm

California faces the largest budget deficit in its history, a staggering 54 billion dollars, triggered by the coronavirus pandemic. Governor Newsom is proposing some deep budget cuts and leaning heavily on the Trump administration for help, even as he marshals state resources to cope with the human toll of COVID-19.

This is not California’s first budget crisis, of course, Governor Schwarzenegger faced one, Governor Brown inherited one, and 18 years ago, Governor Gray Davis had to deal with one of mammoth proportions, in that case triggered by the .com bubble bursting. 

Today, all three of those former governors, along with California’s other living ex-governor, Pete Wilson, are advising Governor Newsom as members of his coronavirus Task Force On Business and Jobs Recovery. Former Governor Gray Davis joined KCBS Radio to offer some historical perspective on the current budget crunch.

If memory serves, you had to deal with a budget deficit about half as big as the one confronting California today, but it was a much larger percentage of the overall budget at the time. What lessons did you learn from closing that gap that you can bring to bear now to help Governor Newsom?

I think with all the problems facing Governor Newsom and the legislature, we have to be grateful for our blessings. The Governor has about $20 billion of money that’s either reserve or rainy day funds that he can apply to that $54 billion. I didn’t have that, I wish I did, but I want to congratulate Governor Brown and the legislative leaders during the eight years of his third and fourth term. That money was accumulated for a rainy day, I don’t think any of us thought it would be the coronavirus that would be the rainy day, but thank God that we had it. 

If the federal government does its part, and I would argue that the federal government has an obligation to do it’s part for two reasons. First, the first 20 years of this century, California has been a donor state to the federal government giving more than we’ve gotten back. Secondly, with the federal government suggesting first that we stay out of the virus’ way, and the only way we could stay out of its way is not go to school, not go to work, and stay in our homes. Since they were part of the problem that led to the collapse of the economy, they should be part of the solution. 

What has the dynamic of the Economic Recovery Task Force been so far?

It’s been very stimulating, the Governor has some really creative people on his calls. He’s not only compiling recommendations to use prospectively, but he’s actually solving problems in real time. On Monday, for example,  you’re going to see some guidelines coming out for the entertainment industry, which California is closely identified with. Here is where I think we can use our high standards to our advantage, this is probably the safest place to work. Entertainers would rather sleep in their own bed rather than being in a hotel somewhere around the world or some other state. If we can make it safe for people to come back to work here and open up the easy parts of that - animation, post-production, maybe a set where’s there’s just 2 or 3 actors on set with the rest of the crew in another building somewhere else - we can get entertainment up and running here again and recapture our former status as being a home of entertainment.

What has been your message to the Task Force?

Most of what we tell the Governor obviously has to stay between the two of us, but I have said publicly that the emergency powers the Governor has are really critical. I think he’s signed 38 or 40 emergency orders and probably will sign some more. I remember when I was Governor, one of the many things we learned during the energy crisis was that our plants were really old. The newest plan was like 40 years old. Among the many things we did was sign an emergency order that allowed us to build 32 plants, which is more than my five predecessors combined. If I was one of those five, and didn’t have the lights going out in Beverly Hills a week before the Oscars, I wouldn’t have been able to build the plant either. We got 32 plants online, there are only 17 years old now. They are more modern, more efficient, and they are supporting the energy grid as we speak today. So sometimes you can solve the immediate problem with an emergency order, but also help the next generation 20-30 years down the road.

Some critics say that the Governor should be engaging the legislature in a more collaborative way, what advice would you give the Governor about how to handle that relationship?

The first thing I would recommend is to not say that ‘the legislature is here to implement my will,’ those were not very thoughtful words that I uttered twenty years ago. He’s put together one good budget with the legislature and I’m sure they’ll find some accommodations to get California moving again. California and the MIT/Harvard area in Boston are really the two sources of innovation in America. Much of America, and the world’s future for that matter, is charted by those two parts of America. So if you get California moving again, you’re getting the innovation machine moving again, and that will not only help California but the rest of America. 

Governor Newsom has not proposed raising taxes or fees to help balance the budget, is that a promise that will be challenging to keep?

I don’t like to comment on what he is going to do or what the legislature is going to do, they ran for the offices and they get paid the big bucks to make those decisions. But obviously it’s not good when you have to raise taxes, if you can avoid it and still reach a fair result, I would recommend that. In some form, in some fashion, there has to be a sharing of the burden and I’m confident that somehow that will get worked out between the legislature and Governor Newsom.