Davis Recall Effort Hurting California Economy, Says Governor's Ally

By Robert B. Bluey | July 7, 2008 | 8:29 PM EDT

(CNSNews.com) - California's top financial officers warned Monday that the campaign to recall Democratic Gov. Gray Davis is threatening the state's economic health and they blamed state Republicans for refusing to accept the governor's tax and spending plan.

State Treasurer Phil Angelides accused Republican lawmakers of holding up passage of a budget that was supposed to be finalized before the fiscal year started July 1.

"There is a broader message being sent around the country, which is not good," Angelides said. "And that is, there's political instability in California - if you will, unfortunately, a banana republic-like reputation for this state that will begin to affect business decisions."

Controller Steve Westly, who like Angelides is an ally of Davis, warned that the state faced even greater challenges in the weeks ahead. Bond rating agencies are already keeping close watch of California, and the recall only threatens to make the state's financial situation and economy seem worse, he said.

Angelides and Westly said the recall would cost the state upwards of $40 million, on top of all the negative publicity the effort has produced.

But Ted Costa, chief executive officer at People's Advocate, a group that has collected signatures for the recall, said it's ridiculous to believe that the attempt to remove Davis from office would have a worse impact than the governor's own past policies.

"They didn't [complain] about that when he gave out retirement benefits that cost billions and billions; that didn't have a negative impact," Costa said. "And when they gave out all these power contracts that they still haven't told us about, that wasn't a negative impact.

"Every time they spend a whole bunch of money, it's never a negative impact," he added. "But all of a sudden the recall is a negative impact. It's a real positive impact if the voters are wise enough to choose a leader who will balance the budget."

The signature-gathering phase of the recall is all but finished. By the end of the week, the groups leading the effort - including People's Advocate, Rescue California and Recall Gray Davis - plan to file their petitions with each county.

After the signatures are counted, Secretary of State Kevin Shelley must release a final count on July 23. At that point, supporters of the campaign to oust Davis will know if they have met their goal or need to wait another month for more signatures to be certified. Davis' foes need 897,156 valid signatures in order to place Davis' political future before voters.

Kevin McDermott, chief executive officer of Western Pacific Research, an organization keeping tabs on the count, said as of July 6, more than 1.26 million people had signed on to support the effort. McDermott said the final count might surpass 1.4 million signatures, far more than needed. However, many of the signatures are likely to be invalidated.

If Californians knew what was best for the state, they would abandon the recall drive, the financial officers warned.

Angelides singled out Republican legislators Assemblyman John Campbell and Sen. James L. Brulte as well as Steven Moore, president of the national Club for Growth. He said the three were using the lack of a state budget to advance the recall drive.

California Republican Party spokeswoman Karen Hanretty called the accusation erroneous. She said it was "ludicrous" to blame Republicans for the budget mess when Democrats control the governor's office and the Legislature.

A Republican budget plan that would have balanced the budget went down to defeat on a straight party-line vote Sunday night. Davis and his Democratic allies have been unable to pick off the Republicans necessary to win two-thirds of the vote for their plan.

"Probably the most significant damage that's being done right now is the perception that the fifth largest economy in the world, with a $1.4 trillion economy, is beset not so much by a financial crisis or economic crisis, but by a political crisis that is becoming a financial crisis," Angelides said.

But while Angelides complained about the politics of the recall movement, Westly refused to point fingers. He said all sides must come together and find way to solve the budget problem.

"There's plenty of blame to go around. I don't want to focus where the blame lies," Westly said. "I do want to focus on getting the budget done, and that means putting the politics aside, putting the recall aside, and focusing on what's important for the people of the state, and that's putting a balanced non-partisan budget in place as soon as possible."

Costa said he would be more than willing to withdraw the recall petitions if Davis went along with a responsible plan that would balance the budget. He remained pessimistic that would happen, however.

"We have to balance the budget," he said. "There can be no compromise."

See Earlier Story:
Push to Recall California Governor Enters Final Week (June 30, 2003)

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