Q&A: Governor of California Gray Davis (BarfORama Alert!)

Gray Davis was elected governor of California in 1998. He easily won the Democratic nomination for a second term in Tuesday's primary election and will face Republican businessman Bill Simon in the Nov. 5 general election. Davis was interviewed Thursday by the Union-Tribune's editorial board.

I ran for this job because I have a passion about education. I think you printed the story that when I was going to high school as a tenth-grader I was trying to make the baseball team, couldn't make it, sitting on the bench. The baseball coach, who happened to be teaching history, came over and he says, 'Gray Davis, you actually have some ability. If you just had some direction, if you just had some goals in your life you could make something of yourself.' It just stunned me. I didn't think this guy knew I existed. That one conversation turned my life around. And I ended up being captain of the baseball team, going to Stanford, going to law school, to Vietnam. It gave a sense of direction and purpose to my life because another human being had confidence in me.

I cannot tell you what a difference it makes when an adult, particularly if it is not a family member, expresses some confidence in the abilities and the possibilities of a young person. And so, because education is so important to whatever success I've been able to achieve, that is my passion.

And I want to do my level best to offer every child the opportunities they deserve...

We have a new system of accountability. Everyone talks about it, but we have it, where we grade every school. There are 8,000 of them. We rank them 1-10. It is on the Department of Education Web site. And then we rank you as to how you did, whether or not you improve over your performance the year before. And that is the most important thing to me because only one school can be the best and only one student can be valedictorian, but every student can get better, every teacher can get better, so can every governor, every legislator, every council person, every supervisor.

You remember the old TV show, 'The Jeffersons,' and the theme song 'Moving On Up?' That is what I'm trying to do, get people buying into this notion of moving on up. I inherited the schools after about 30 years of neglect. Pete Wilson, his last year (as governor), did some good stuff on class-size reduction, but that was it. We ranked 46th, 47th, 48th by any criteria. So we are making progress. We still have a long ways to go. We have external tests that Pete Wilson started and I have continued, and the test scores have gone up three years in a row. That is very hard to do. This is a nationally run test.

We have increased (education) spending by more than 30 percent in three years. That is pretty remarkable. We spent a lot of it here at the University of California San Diego program to train teachers. They've trained about 100,000 teachers. It is a one-week experience during the summer. So, we're trying to improve the skill sets of teachers, we've trained about a third of them so far.

Then we have two institutes for principals, one at Berkeley and one at UCLA. These are 15-month courses that teach management, leadership, law, finance and education, because a principal is like a basketball coach, or a baseball coach ... he or she has got to bring the best out of their talent, know where to put what teacher, or tell a teacher they need new training and new skills, or need to go back and improve certain parts of their diagnostic techniques...

When I took office, the average amount of money spent (on education) per child was $5,756 and in my proposed budget it is $7,058. So we are making real progress by almost any yardstick you use...

Another important thing we can do is provide health care for more children. Literally 1 million children have health care today that didn't have it when I became governor.

When I (became) governor, we had 51,000 kids enrolled (in the Healthy Families program). We have 510,000 now...

And, as you know, we established the first-in-the-nation nurse-to-patient ratios. We rank second-to-last in America. I just opened the skilled nursing facility at the veteran's home in Chula Vista. I'm very proud of that facility.

Now, on transportation, no governor in America, no governor spent more money improving roads and highways than I have. We've spent almost all of the surplus that we had in 2000 on one-time projects, transportation being the principal usage. I know in total in San Diego, we're spending, as I speak to you, more than $400 million on 44 projects. And statewide we are spending $6 billion, providing about 180,000 jobs.

On public safety, we've been able to help finance, through our COPS program, 3,000 new police officers or deputy sheriffs. Crime has gone down since I've been governor. We work very closely with your sheriff, (Bill) Kolender and the police chief. We've also given about 300 local law enforcement agencies better equipment to deal with identity theft and other high-tech crimes.

Two last things. The economy, you know, I've been criticized by (unsuccessful Republican candidate Richard) Riordan in his initial commercials for being hostile to business. I beg to differ. We have created, net, 900,000 new jobs. We were up to close to a million before Sept. 11. No state in America has come anywhere close to that. When I took the oath of office, we were the seventh-largest economy on the planet. We passed Italy my first year, France my second year, and we will pass the U.K. in two years. We are the fifth-largest economy in the world. Only Germany, the U.K. and Japan and the United States are better than us.

Energy. Let me say at the outset, I didn't deserve the wonderful economy I inherited the first two years that allowed me to do some of the good things I just mentioned. I didn't deserve the mess I inherited in energy. I didn't complain. I didn't moan and groan. I didn't say 'Woe is me.' I just rolled up my sleeves and we eventually worked our way through the worst of this problem.

I went to two meetings in the secretary of the treasury's office ... They said, 'Governor, you must act, you must raise rates.' They wanted me to raise rates to make up the gap between $7 billion and $27. They wanted me to raise your rates 400 percent. Now you know what happened in San Diego in 2000 when you had to experience deregulation. It was a disaster. And I explained time and again, I said this is a theory, it is not working. Our job is to make things work. We shouldn't be slaves to a theory that is not working. I'm not saying energy deregulation, some place, somehow... won't work. I'm saying the plan that we adopted in California (isn't working) and that basically the Federal Energy Regulatory Commission... is failing to do their part of it. The combination of their inaction and our screwed-up law has put us in a hell of a mess.

So, we had to basically start buying power on the spot market. Since December was high, so was January when we started buying power. In February and March we signed long-term contracts, reduced our cost by 75 percent below the spot market. Nobody knew then that the following two things would happen: Because I asked for and the Legislature gave me $1 billion worth of incentives, the good people of this state reduced their consumption by 10 billion kilowatt hours, or roughly 9.1 percent. No one thought that was possible. We were able to put 11 plants online. So the combination of unexpected conservation, more power coming online than we anticipated in the spring, and the biggest surprise of all, the Federal Energy Regulatory Commission finally woke up, remembered the third name in their title and did something significant in June. And I've got to give President Bush credit because I met with him in Los Angeles and he says, 'Governor, I'd like to help you out. If I was in your shoes, I'd do exactly what you are doing. I understand your problem. I'll try and fix your natural gas problem.'

... Natural gas is about 30 percent of the price of electricity and we were paying between two and four times what the rest of the country was. That had to do with a little scam that El Paso Natural Gas was running. By the way, Simon has a little company that works with El Paso Natural Gas.

This is like a war. This is worse than being in Vietnam. This is a full-out war against me. Everyone said I can't possibly do this. But the bottom line is Bush did help us with natural gas.

We are not totally out of the woods, but if we continue to conserve and continue to build plants to replace these 40-year-old clunkers that are the underpinning of your biotech community and the underpinning of Silicon Valley, I mean you probably wouldn't drive a 40-year-old car, but that is what's driving our economy, 40-year-old plants. And we need to build new plants that are more efficient, less polluting and frankly more economical to ensure reliable energy for this state.

I kept the lights on. And this sounds a little presumptuous, but I think I should at least get a round of applause. I don't get squat. People just roundly criticize me, but this was a war and I'm delighted that people are now seeing the duplicity and the manipulation Enron practiced against its own employees and investors because Enron was the best of the lot. I don't want to be naming names, but Enron was the best of the lot.

My opponent is for deregulation. He says he is an old oil and gas guy. He's got a major investment in El Paso Natural Gas. He doesn't believe in price caps. Trust me, if there is ever a role for government, it is to make sure that the unbridled market does not take this state dark.

Question: Let's talk about some of the changes in the political landscape and your opponent. You now seem to have the opponent in the fall that you preferred. However, your job approval ratings are still fairly anemic.

What do you think your prospects are in the fall? And what is Bill Simon's connection to El Paso Natural Gas?

I said for some time that we would win this election by 10 points. We have a good story to tell. The energy problem, basically, has blacked out all good news. But you know when we advertise we get to tell our story unfiltered. And we have a good story to tell.

This state is not going to elect someone who has never held office, rarely voted and is out of step with the state on most major social issues, including women's right to choose, sensible gun control, energy deregulation. . He is pro-voucher and pro-privatization.

Plus, he criticized my management skills. You show me one other state that's got 900,000 new jobs. He mucked around in Western Fed, lost $92 million of taxpayers' money. He was on the board for about a year and he's admitted he's responsible for monitoring that investment.

He's never run a company. He's just invested family money. We're talking about the fifth-largest economy. You need to bring something to the table. You need to pay your dues. You need to serve on some board or commission. Run for some office. Do something that shows your civic contribution before you ask people to vote for you.

Because El Paso Natural Gas manipulated the market. Their marketing division refused to let any natural gas pass over its portion of the pipeline. So he benefited, he made money during this energy crisis. That is not going to sit well with the people of San Diego and the rest of the state.

No, but you spent $10 million dollars attacking the front-runner, Richard Riordan.

I spent $10 million to defend myself. Mr. Riordan went on the air on Jan. 8 accusing me of colossal mismanagement and policies that were hostile to business. I've already cited my business credentials.

This notion that you have to wait until the Republican primary is over before you can defend yourself is a very antiquated concept. (Riordan) went on the air Jan. 8. We waited until Jan. 24 before we ran an attack ad. Dick Riordan was the chief architect of his own defeat. He took the Republican primary for granted.

Do you have any qualms about the extraordinary amount of money that you are raising from all kinds of interest groups and individuals to fund that $10 million and the next $25 million?

Absolutely not. You're probably looking at the last governor of California who is not a billionaire.

I'm running against a man who doesn't vote. What is the value of being an American? Is there anything more precious than the right to vote?

Part of your story is the $14 billion state budget deficit. How are you going to explain that and what are you going to do about it?

First of all, we have already reduced that by $3 billion. That is unheard of. We reduced $2.2 billion in the current year. And after that, another $800 million is gained in the budget year starting in July because of cuts we are going to make. So we're going to have to make some more cutbacks, but every single program will be better off in 2002 than it was when I took office in January 1999.

Will you be able to make the additional $5 billion in cuts that legislative analyst Elizabeth Hill wants you to make?

We're not sure she is right. But we will know whether she is right in May. $1.1 billion is simply the result of a federal formula on the cost of living adjustment that affects how much schools get. That formula is published the first week in May.

The other $3.9 billion are her estimates on capital gains-driven revenues that are lower than ours. If she's right, we'll have to make more cuts.

In terms of the energy crisis, if you had the last two years to live over again, would you do anything differently?

All you could have done is repeal the (1996 electricity deregulation) law before the energy companies sold their plants.

But the main criticism is that you panicked and signed long-term contracts at a very high cost.

If I didn't panic, you wouldn't be able to put out your paper. I saved this friggin' paper. I kept the lights on in this state. Do you understand that? I kept the lights on.

Some experts say you shouldn't have signed those contracts, that you should have known that the prices were coming down.

This thing was a scam, a total scam to rip off Californians and there has been a massive shift of wealth from San Diego and the rest of this state to Texas and North Carolina.

No question, we passed a law that didn't make sense. We didn't know what we were doing back in 1996. The energy companies were smart, they took advantage of it. They may have acted legally, they may have acted illegally, but by the time I got into it the two giants that are supposed to run this system, Edison and PG&E, were on their knees.

You hired me to get a job done. I got the job done and I'm plenty tired of people sitting on the fence saying 'Oh, we should done this and should have done that.' We got 11 plants online. And they said the energy problem was going to bring me down. Where is Enron today?

What is your response to the criticism that the mistake you made was having the state step in and buy the power? The argument is that while there might have been some temporary disruptions, the generators would still have had to sell the power. The debt would have rested with the ratepayers and much of the loss would have been borne by the generators, as opposed to the state taxpayers.

This is a giant game of chicken. The generators did not have to sell us power. I didn't tell them this, but in my heart of hearts, I was not going to let this state go dark. There were several people, this guy popping up all the time, (University of California professor) Peter Navarro, saying 'Oh, just call their bluff, they'll go dark for two or three days, but then they'll have to sell us the power.' They do not have to sell us the power. They can sell it to Nevada, to the Northwest, Arizona.

Do you still believe that condemning power plants and having the state buy them would have been too expensive?

I wanted the generators to think I would seize the plants, but I didn't think seizing a plant that was 30 or 40 years old was a good expenditure of money. First of all, who's going to run the plant? Who has the expertise, other than utilities, to run these plants? This was a game of chicken. They had all the cards. I had none. All I had was bravado, bluster, threats and lawsuits.

I think that we did the best job we could. We reduced the electricity cost by 75 percent below the spot market, which was the only source of power we had at that time. No one knew that the federal government would step in and further reduce the cost of electricity. No one knew we'd have marvelous conservation. No one knew we'd get 11 plants online. So we achieved my first goal, which was not to destroy the economy... Now, we're going to go back and restructure these contracts.

If I don't restructure them one penny, no one will see an increase in their rates. In fact, they will see a reduction in their rates about two years out. If I restructure... only some of them, it will further increase the rate reduction.

You've praised Pat Wood, the chairman of the Federal Energy Regulatory Commission, but he is now proposing that the FERC lift the price caps in September.

Well, that was the original order, but he's told me, he's given me private assurances that if he does that there will be rules in place to avoid disruptive activity between then and the end of the year. He understands the political backdrop of this decision. And he volunteered that, I didn't ask him.

No, I don't think it is a long shot. I have confidence that (FERC)... will act responsibly and do something to help us restructure the contracts. They see, believe it or not, this is not a fully deregulated market. The power act says the Federal Energy Regulatory Commission should ensure rates are reasonable and just. As you well know ... and you are the only paper that has opined on this repeatedly, and thank you for that ... the FERC made that determination in October of 2000. But you don't have a right without a remedy, and they didn't give us a remedy.

Pat Wood, he's a very decent fellow, and I know (FERC commissioner) Nora Brownell, she is a very decent person. They have a consumer bias, even though they are Republicans, and they want markets to work.

Another criticism of you is that you didn't make California's case strongly enough to Washington.

That is not true. It's like talking to the wall. I mean, I'm like I'm always like a runner looking for daylight and I say I can't get through that way, I've got to find another way to get through. Thank God that Pat Wood and Nora Brownell came along. Thank God the Senate turned Democratic because that at least allowed the Senate to have hearings that would draw attention to issues that may not be going well. And there's about 60 Republican Congress people who wrote letters to (Curt) Hebert when he was still (FERC) chairman, saying please do something to help California.

President Bush didn't really do anything until his approval rating in California had fallen to 26 percent. Isn't that true?

He appointed Brownell and Pat Wood. They helped save our behinds. He may have taken a while to do it, and I think the world of President Clinton but the Clinton administration didn't give us any help. They were just trying to get us to raise rates 300-400 percent and I wasn't going to do that.

One quick question on the budget. If the Legislature passes out a tax increase, will you approve it?

In my judgment there will be no tax increase. I don't think the Legislature has the collective will to pass a tax increase. I don't think one is needed because we all depend on a growing economy. And if individuals have to tighten their belts, institutions have to tighten their belts, the government has to find a way to tighten its belt. We all believe that this belt-tightening will be temporary and that we will start to see economic growth during calendar year 2002, and presumably the next budget year will not be as challenging as this budget year.

Let me just say this: I want to give you every assurance that taxes will not be increased. That is my strong belief. I do not want to. I'll do everything I can to resist the need to raise taxes.

Almost posted this again before I found that you had! Thanks for doing the work!

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To the followers of CALPOWERCRISIS note that Davis is going to attach a Simon investment in El Paso natural Gas to the fact that it was a Simon plot to charge high prices only to California for natural gas!!!

This is like a war. This is worse than being in Vietnam. This is a full-out war against me.

No gray-out, its the truth. It just feels like hell. As they say, you don't know SQUAT !!!

ITs a gruesome task posting stuff in here sometimes.. But We Do It for the Children...After All. :-)

Its kind of funny that GraYOUT will let MTBE flow into water sources for a while longer.

Hell he aint living in any of the affected neighborhoods

Its just another ticking time bomb and the powers that be are willing to profit from its use while the general health concerns are glossed over by the Idiots in charge and in cahoots with the producers and purveyors of this crap.

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