of state prisons. As the heat of the campaign
was 2006. But Schwarzenegger wasn’t shy about his
increased, the duration of the budget delay also
ambitions. “That is my favorite job in a political arena.
increased. Eventually, the state was to go over two
Being CEO of a state—that, to me, is interesting.” 4 3
months without a budget, a record not to be exceeded again until the summer of 2008 under Governor
By August, although various proposals on the
Schwarzenegger.
budget were debated in the legislature – including a major increase in the tobacco tax - none seemed
The new fiscal year began with the usual warnings
close to breaking the stalemate. Without a budget,
that certain payments could not be made without an
state employees were still receiving their full pay
enacted budget, and with conflict between Governor
although a legal challenge to paying them more than
Davis and Controller Connell over what payments
the minimum wage had been mounted. Various
would be made. A legislative analyst’s report
other providers of state services were not being paid
suggested that if the current trajectory of revenues and
at all and Cal Grant scholarships were also delayed.
spending were continued, the state would face deficits
Republicans charged that Davis was “alarmingly
over a multiyear period, i.e., that economic growth
disengaged” from the budget process. 4 4
alone was not expected to repair the problem. In late August, Assembly Republicans and Democrats As the budget stalemate persisted, Governor Davis’
seemed to be moving towards a deal. It involved
popularity with voters was certainly not enhanced.
certain changes in business taxes that would bring in
However, Republican gubernatorial opponent Simon
more revenue in the short term (although less in the
seemed to be having difficulties convincing prospec-
future), various spending cuts, and some cosmetic
tive voters that he would do a better job than Davis
deferrals of expenditures into the next fiscal year. But
or even in raising funds to support a campaign to tell
the deal also involved a possible ballot proposition
them so. There were reports that Simon was under an
that would earmark a portion of the general fund for
IRS investigation concerning his income taxes and
infrastructure improvements. In the end, agreement
a tax shelter he had used of uncertain validity. But he
was reached in the Assembly, but without the
continued to refuse to make his returns public, saying
infrastructure proposition. The Assembly version of
he would do so only if elected. As pressure mounted
the budget was then passed by the Senate.
on the issue, Simon eventually allowed reporters to see the returns, but not to copy them.
In signing the budget in early September 2002, Davis called the process of negotiations “an arduous and
On the other hand, a Field poll suggested that Prop
difficult task.” Gubernatorial rival Simon charged that
49 scheduled for the November 2002 enjoyed strong
the new budget was “a fabrication that was neither
public support.
42
Prop 49 earmarked funding for
balanced nor fiscally responsible.” 4 5 However, by
after-school activities and was supported by actor
that time Simon was looking increasingly to be a likely
Arnold Schwarzenegger. Schwarzenegger was
loser in November, albeit with Davis seen by voters as
interested in possibly running for governor in some
being only the less bad of a poor choice.
future election. His political advisors had suggested sponsoring a ballot initiative to introduce him to the public as a serious figure. At the time, no recall was envisioned so the earliest Schwarzenegger could have been contemplating a run for the governorship
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