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California's State Budget 

What They’re Saying About the California Budget Crisis

Following are comments from leaders and policy-makers:

  • Governor Gray Davis: “The terrible tragedy of September 11 has injected even more uncertainty into our economy, and we must prepare for greater revenue reductions as a result.” He gave department directors until October 22 to produce plans for 15 percent reductions in their budgets for 2002-03. Only public safety and fire-fighting spending would be spared from cuts, he said. Earlier, the governor had requested plans for cuts of up to 10 percent. (Governor’s memo to department directors, October 11.)

  • Rob Wassmer, California State University-Sacramento economist, said the spending cuts would really be more than 15 percent. “We’ve been going anywhere from 3 to 5 to 7 percent increases each year, then to all of a sudden ask for 15 percent (reduction) – you have to add that to the increases we’re used to. That’s where it’s going to hurt the most, because we’ll be moving into this austerity when we were in an expansion period.” (Oakland Tribune, October 12.)

  • Ted Gibson, chief economist, Department of Finance: As long as there are no further attacks on the nation or threats to the economy, California is in a good position to ride out the economic troubles. “I don’t see the structural damage to the economy (major job losses because of defense cuts) that we saw in the 1990s that caused that long and deep recession.” (San Jose Mercury News, October 12.)

  • Steve Maviglio, spokesperson for Governor Davis: “Raising taxes in an economy that is hurting is a last resort.” (Contra Costa Times, October 12.)

  • Democrat Assembly Member Tony Cardenas, chair of the Assembly Budget Committee, issued a press release saying that “while budget cuts may appear necessary, we need to ensure that education and public safety funding remain intact.” (Sacramento Bee, October 12.)

  • Republican State Senator Dick Ackerman, member of the Senate Budget Committee: “It looks like (Governor Davis) is trying to blame the current status of the budget on the September 11 event. I think he’s kind of had his head in the sand.” (Sacramento Bee, October 12.)

  • Democrat State Senator Steve Peace, chair of the Senate Budget Committee: “I would implement (budget cutbacks) immediately. Every dollar you save this year saves you two next year.” (San Francisco Chronicle, October 12.)

  •  Legislative Analyst Elizabeth Hill: “A softness in September (revenues) is not  a good sign of where the budget is headed.” (San Francisco Chronicle, October 12.)

  • Sandy Harrison, spokesman for the Department of Finance: “This is not to suggest every department will now be cut by 15 percent. It’s designed to create options and contingencies.” (San Francisco Chronicle, October 12.)

  • Republican Assembly Member John Campbell, set to serve as lead Republican on the Assembly Budget Committee: “The budget was going to be in a severe deficit even if September 11 had never happened because of overspending in the last three years and because of a slumping economy before the attacks.” (Los Angeles Times, October 12.)

  • Senate Budget Committee Chair Steve Peace on the magnitude of the budget problem: “ … the challenge in front of the Legislature next year is going to be worse than in 1991” when the state faced a record $14-billion deficit. Los Angeles Times (October 9).
  • Senate Republican Leader Jim Brulte: “The Legislature has not been forced to make tough decisions in terms of spending for the last five or six years. I would fully expect there would have to be some rollback of existing programs. It’s going to be a very, very difficult year.” Los Angeles Times (October 9).
  • Ted Gibson, chief economist of the state Department of Finance: “My sense is that we’re in for a tough three or four months here. We could see losing billions of dollars” in revenue. Los Angeles Times, October 9.
  • Hilary McLean, spokesperson for Governor Davis: “Any governor would be loath to raise taxes, particularly in an election year. We’re probably going to be looking at trimming, borrowing and other types of cost savings.” Los Angeles Times (October 9).
  • Ted Gibson, Department of Finance chief economist, on problems encountered in issuing bonds to repay the state general fund for electricity purchases: “If we can’t issue the bonds – and right now, the prospects are pretty bleak – we’ve got a real problem. Everyone is talking about the next budget year, but we could even be facing problems this year if we don’t take care of that soon.” Los Angeles Times (October 9).
  • Governor Gray Davis on the slump in state revenues following a report that tax dollars from the state’s major sources were $559 million below expectations in September: “We’ve known for a long time that consumer spending was a big reason that the economy was performing slightly better than some of the pessimistic doomsayers were predicting. We have seen some evidence that consumers are pulling in their horns. That’s what worries me more than anything else.” Sacramento Bee (October 3).
  • Senate President Pro Tem John Burton, on first-quarter revenues being $1 billion below last summer’s estimates: “We’re in for very difficult times. I think we may eat up the surplus (the state’s $2.6 billion budget reserve).” Los Angeles Times (October 3).
  • Assembly Budget Committee Chair Tony Cardenas, reacting to the decline in revenues: “We knew revenue was going to be down. But this is certainly beyond our expectation. … We’re looking at cuts if it continues at this rate.” Los Angeles Times (October 3).
  • Senate Republican Leader Jim Brulte, calling on the governor to examine spending bills carefully:  “Every dollar that is added to a general fund program is a dollar that builds the base of that program in future years.” Los Angeles Times (October 3).
  • Brad Williams, senior economist for the Legislative Analyst’s Office, noted that the economic problems were largely unrelated to the September 11 terrorist attacks. “It appears as though the drop in the stock market and slowdown in economic activity that had occurred even before the September 11 attack is depressing revenues related to profits, capital gains, stock options and wages.” Los Angeles Times, October 3.