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Gray Davis on Budget & Economy

Former Democratic CA Governor


Signed toughest personal bank info privacy law in America

Q: What are you, a centrist or a progressive? DAVIS: I’m very proud, for example, to have signed the toughest privacy law in America. No longer can a bank take your bank balance or your spending patterns and sell it to another company who will solicit you to buy their product without your express permission. That stands up for the consumer. In that case, that was a progressive position
Source: Recall debate in Walnut Creek (pre-debate interview) , Sep 3, 2003

Retail energy market was never deregulated

The system we inherited, which was put in place without a dissenting vote in the legislature, deregulated the wholesale market. But it did not deregulate the retail market. It lowered rates 10% and froze them for five years. We call this a flawed deregulation scheme. That’s why we say that because it was not deregulation; we deregulated the wholesale market but froze the retail market. Also, we did not do what every other state that deregulated did, which was require that the people who buy our power plants to sell us back the power. Every other state that sold off its power plants did that. So we have 5000 megawatts being sent out of the state serving other markets in search of higher prices.

So that is what I inherited, a flawed deregulation scheme which under the best of circumstances was likely to produce distortions. The good news is that we’re not complaining. We’re not looking to Washington to solve our problems. We’re fixing them ourselves.

Source: Press Release , Mar 1, 2001

Buy wholesale electricity; build plants; conserve now

California, the state where the electricity crisis began, has been widely blamed by its neighbors for creating supply shortages that have driven up electric rates by 10% to 80% in some Western cities. Gov. Davis [urged allowing] the state to buy as much as $10 billion worth of power through long-term contracts to try to stabilize the electricity market. He pledged that California would move at “warp speed” to build new power plants, after more than a decade in which not a single major plant had been built in the state.

And he managed to defuse some of the anger directed at him and his state with his description of the conservation measures that he said California was undertaking. “I’m doing my part,” Davis said. “My office is so dark you can almost develop film in there,” he said, adding that he and his wife had turned the heat down to 55 degrees in their bedroom at the governor’s mansion. “I go to bed looking like I’m going to work out-heavy sweatshirt, heavy pants. We’re doing our part.”

Source: New York Times, p. A7 , Feb 3, 2001

Electricity deregulation a colossal and dangerous failure

Calling California’s two-year experiment in electricity deregulation a “colossal and dangerous failure,” Gov. Davis proposed several major steps today to reassert the state’s control over its power market, including the creation of a new state energy authority that could buy generating plants from private utilities and build new plants.

“We will regain control over the power that’s generated in California and commit it to the public good,” he said. The governor’s plans represent a startling turnaround from the mood that existed four years ago when the deregulation plan passed the legislature unanimously on promises that market forces would bring power costs down.

Davis focused most of his venom at the out- of-state companies that sell power into the deregulated market here, as well as the federal government, which last month lifted the cap on wholesale prices for electricity. “I reject the irresponsible notion that we can afford to allow our major utilities to go bankrupt,” he said.

Source: James Sterngold, NY Times , Jan 9, 2001

Bankruptcy reform: limit Chapter 7; protect states' role.

Davis adopted the National Governors Association policy:

    The Governors are particularly concerned that bankruptcy reform legislation address the following issues:
  1. Prevent Chapter 7 Use by Those with the Ability to Pay: Present bankruptcy law does not prevent use of Chapter 7 by those with ability to repay, nor does it require that debtors use Chapter 13, which would require them to repay creditors what the debtor can afford. The Governors strongly support federal efforts to prevent debtors from using Chapter 7 when they are financially able to pay some or all of their unsecured debts.
  2. Encourage Payment of Domestic Support Obligations: Bankruptcy interferes significantly with states’ ability to assist citizens owed domestic support and to collect unpaid domestic support owed them. The Governors strongly encourage Congress to ensure that any federal bankruptcy reform requires that domestic support obligations have the highest possible repayment priority, that all domestic support obligations be nondischargeable, and that commencement of bankruptcy not prevent the continued collection of child and other support obligations.
  3. Give State Claims Parity with Federal Claims in Bankruptcy: Today, bankruptcy rightly gives certain preferences in payment to federal claims against the bankruptcy estate, but similar treatment is not always accorded state claims. The Governors strongly support congressional efforts to reform the treatment of state claims in bankruptcy to provide parity of treatment with federal claims.
  4. Protect the State Role: The Governors oppose efforts to preempt state authority to determine exemptions under state bankruptcy law. Currently, debtors have a right to choose between federal and state exemptions. The Governors support efforts to shape bankruptcy reform policy that protects the rights of states to determine their own standards instead of having uniform federal regulations imposed without regard for individual state needs.
Source: NGA Economic Development Policy EDC-21: Bankruptcy Reform 01-NGA2 on Feb 15, 2001

Uphold commitments to states before other spending.

Davis adopted the National Governors Association position paper:

The Issue

The major budget issue will be over the surplus and how big of a surplus there will be. How much will be dedicated to paying down the national debt, how much to tax cuts, how much to increase defense spending, what to do about key discretionary spending programs, and whether and how to change key entitlement programs, such as Medicaid, Medicare, and Social Security? How these decisions are made could have significant impacts on the federal-state partnership, especially as they affect vital health and human services programs. What will happen to funding for priority state domestic discretionary programs for the federal fiscal year? When will Congress act?

NGA’s Position

Before considering new spending initiatives or tax cuts, the federal government must first uphold its current commitments to the states.
Source: National Governors Association "Issues / Positions" 01-NGA8 on Sep 14, 2001

Other governors on Budget & Economy: Gray Davis on other issues:
CA Gubernatorial:
Jerry Brown
CA Senatorial:
Barbara Boxer
Dianne Feinstein

Newly seated 2010:
NJ Chris Christie
VA Bob McDonnell

Term-limited as of Jan. 2011:
AL Bob Riley
CA Arnold Schwarzenegger
GA Sonny Perdue
HI Linda Lingle
ME John Baldacci
MI Jennifer Granholm
NM Bill Richardson
OK Brad Henry
OR Ted Kulongoski
PA Ed Rendell
RI Donald Carcieri
SC Mark Sanford
SD Mike Rounds
TN Phil Bredesen
WY Dave Freudenthal
Newly Elected Nov. 2010:
AL: Robert Bentley (R)
CA: Jerry Brown (D)
CO: John Hickenlooper (D)
CT: Dan Malloy (D)
FL: Rick Scott (R)
GA: Nathan Deal (R)
HI: Neil Abercrombie (D)
IA: Terry Branstad (R)
KS: Sam Brownback (R)
ME: Paul LePage (R)
MI: Rick Snyder (R)
MN: Mark Dayton (D)
ND: Jack Dalrymple (R)
NM: Susana Martinez (R)
NV: Brian Sandoval (R)
NY: Andrew Cuomo (D)
OH: John Kasich (R)
OK: Mary Fallin (R)
PA: Tom Corbett (R)
RI: Lincoln Chafee (I)
SC: Nikki Haley (R)
SD: Dennis Daugaard (R)
TN: Bill Haslam (R)
VT: Peter Shumlin (D)
WI: Scott Walker (R)
WY: Matt Mead (R)
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Page last updated: Nov 23, 2011