Q & A; With the Men Who Would Be Governor
Three Republicans are vying in next week’s primary election for the right to challenge the vulnerable incumbent, Gov. Gray Davis, who is unopposed on the Democratic side. Former Los Angeles mayor Richard Riordan has held the lead in the polls, but now is trying to fight off a late surge by businessman William Simon, with Secretary of State Bill Jones lagging.
Here, the three GOP hopefuls explain their views on issues important to the state’s business community. They were interviewed by Howard Fine of the Los Angeles Business Journal.
RICHARD RIORDAN
Q: Why specifically should Republican voters back you on March 5?
A: Actions speak louder than words. Look at what I’ve done. As mayor of Los Angeles, I had eight straight balanced budgets without raising taxes one penny. I left with the largest surplus in the history of any city in the state. We created hundreds of thousands of new jobs by being friendly to business, changing the rules on getting entitlements and permits. Also, I’m the only Republican who can beat Gray Davis.
What about the state’s business climate?
In the long run, I think the state is in big trouble. We have an administration in Sacramento that is the enemy of business. The rhetoric there is terrible, the taxes are way too high and the fees keep going up,like workers’ compensation just recently. The worst part is the thousands of regulations that stifle the ability of a company to get anything done. If someone wants to move to California or expand here, they just don’t know what the rules of the game are, because the rules change every day.
Our housing is inadequate, we have no water policy that goes beyond a year, our transportation is in dismal shape, healthcare is over a cliff and in education we’re near last in math and science. We’re not prepared for future growth.
What steps would you take as governor to improve that climate?
First, I’m going to put together a task force to put a microscope on all regulations and do a cost-benefit analysis. We should get rid of the vast majority of them so people will know what the rules of the game are.
Next, we have to invest more in our infrastructure. I spoke with a top executive of a major manufacturing company and asked them what they need from the state to consider expanding here, and he said, “Better housing, transportation and education.”
We also must look at lowering taxes and lowering fees.
Gov. Pete Wilson tried to streamline regulations and do cost-benefit analyses. But he ultimately made little progress. So what makes you think you can succeed where he didn’t?
Because when I set a goal, I always get there. I’m going to get Democrats, Republicans and independents to buy into this. There’s an axiom here that’s very useful: Successful businesses bring jobs to the poor and everyone else. So everybody should be in favor of attracting businesses and helping them to be successful.
Name three state programs you would cut to reduce the state’s $12.5 billion budget deficit.
I would start by looking at departments that could be entirely cut out. I would have only one department dealing with energy instead of the five or six that deal with energy now. I would have one department dealing with education, one with transportation, etc.
I would also do zero-based budgeting. And I would come up with budgets for departments not based on what they think but on what I think is necessary for them to do their job. Then, I would require them to live within that budget. Otherwise, any time you fight over details with bureaucrats, bureaucrats win.
What about specific programs?
As far as other cuts, I’m going to wait for the May revise of the budget to come out. That’s when we get the real numbers. Then, you will have to make the tough choices. And borrowing just won’t do it, because there’s a $3.5 billion built-in deficit each year for the next three years.
BILL JONES
Q: Why are you running?
A: I’m running for governor because the current administration has failed to provide the vision for California. They have failed to energize the public behind the major initiatives that need to be dealt with in California: education, transportation, jobs and, of course, public safety. I have served in public life and I have a background in the private sector as a third-generation farmer/rancher/businessman. My vision as governor is fewer crime victims, better-educated children, healthier families and an economy strong enough so that there are jobs for everyone. And I think I can deliver that.
How do you see the state’s business climate?
You’ve got the energy crisis, which has left a tremendous overhang in debt,both in the state budget and in higher energy bills that employers and employees are paying. That’s a big problem that we’ve not dealt with. Businesses are making decisions because of this workers’ comp measure that was passed the other day. Davis was talking about a 50% increase in costs offset by savings due to the measure. But those savings are not going to materialize. We’re going to be talking about a 75% to 100% increase in costs. You’re not going to see the job growth, you’re not going to see the incorporation increases of the last few years, because the principles Sacramento is operating on now are not job-creating principles.
You’ve talked about a stimulus package to improve the state’s business climate. What would go into that package?
We have a manufacturers’ tax credit and a reduction in the capital gains tax. When we put this together, we were looking at workers’ comp reform. Now that the Davis package has been passed and signed, we’re going to have to go back into the Legislature on the workers’ comp issue and try to get real savings in there. We also have to convince businesses that we’re serious on making infrastructure improvements,not just new schools, but water facilities, highways and rail.
What’s your view of the California economy?
Between now and the November election, there will probably be some improvement in the California economy. Certainly we’ve gone through a very difficult period over the last year because of the dot-com collapse, the national recession and Sept. 11. When the Pacific Rim economies rebound, as they will, we will see the ability of trade to drive the Southern California basin.
Name three state programs you would cut to reduce the state’s $12.5 billion budget deficit.
First, I would freeze or even reduce the 35,000 new employees that have been added to state payrolls over the last three years. Some of these positions have been allocated but not yet filled. Those that haven’t been filled should be deleted, at least for the time being. Second, there was legislation that was passed and signed by Gov. Davis that added some $2 billion to the general fund. Those measures need to be set aside until we see whether this is an ongoing deficit or a one-year deficit. Third, we need to reallocate Proposition 99 (education) funds to support ongoing children’s programs instead of new education programs.
WILLIAM SIMON
Q. Why should voters with Republican ballots vote for you?
A. Because I’ve got the answers to the problems that face our state. I’ve come out with specific proposals with respect to the economy, the budget, our schools, roads, water and power. I’m a problem solver and a builder,look at my background in business.
I also favor local control, smaller government and more accountability, all of which have been prominent themes in my campaign. And I’ve been a candidate of the grass roots. I’ve gotten the support of the grass roots organizations like the California Republican Assembly and tax limitation groups. I also won that straw poll at the recent state Republican convention.
What’s your view of the California economy?
At this point, the picture looks mixed and it’s not clear to me exactly when we’re going to bottom out, though I think it will be some time this year. I think that Southern California is in much better shape than Northern California. However, I think the bottoming out will not be felt by the voters until well after the election,not unlike what happened to George Bush senior back in 1992.
But the issue is really more about getting some responsible fiscal leadership so that we can ride through the tough times.
What does that mean?
One of the big mistakes people make in business is they chase the revenues down. That’s what’s happened in Sacramento. They’ve modified expected tax receipts downwards four times in the last six months. That’s an indication that they are not on top of the situation. I’m sure that when the May revision comes out, revenues will be adjusted downward again and Davis will have to order more cuts.
Remember when we had that spike in revenues back in 1999 and 2000 from the personal income tax? That was a one-time event, but the Davis administration pumped that money back into the operating budget to fund new and expanded programs. They increased the operating budget 37% over three years, a rate three times faster than the cumulative population and inflation growth. No responsible business would do that.
What are the three top things you would do as governor to improve the climate for business in the state?
The most business-friendly thing we can do is reduce the capital gains tax rate from the current 9.3% to 5%. Second I would reduce the regulatory burden. Now take workers’ compensation. Businesses here pay the highest fees in the nation, yet the workers are 49th in the level of benefits. There are too many middlemen in there taking their cut of the money and there are too many bureaucrats involved.
Finally, we must look at reducing frivolous litigation. We can institute some changes that could reduce those lawsuits. Let’s look at the system the British have of making the loser pay the winner’s attorney’s fees (plus their own). That would give many people filing these frivolous lawsuits pause.
Name three state programs you would cut to reduce the state’s $12.5 billion budget deficit.
We have looked at three areas. One is the $400 million for vacant positions in the state budget. I don’t think we can afford to hire those people now, so at least for now, we should cut all or most of those. Next, there was $100 million in pork that was handed out to get the budget passed last summer. We can’t afford it. Then there’s $700 million in new programs. If we could have gotten along for so long without them, we can defer them until we can afford to pay for them. On top of all this, I have recommended cutting 15% from the $19 billion state operations budget.
