Popular start and education

In 1998, Davis was elected the Golden State's first Democratic governor in 16 years. The San Jose Mercury News called him "perhaps the best-trained governor-in-waiting California has ever produced."^[1] In March 1999, Davis enjoyed a 58% approval rating and just 12% disapproval.^[24] His numbers peaked in February 2000 with 62% approval and 20% disapproval, coinciding with the peak of the dot-com boom in California.^[8][25] Davis held his strong poll numbers into January 2001.

Davis's first official act as governor was to call a special session of the state legislature to address his plan for all California children to be able to read by age 9.

"I ran for governor because of my passion for education," Davis told CNN the Sunday night before the recall election on Larry King Live.^[1]

Davis's official biography profile as governor

Davis used California's growing budget surplus to increase education spending. He signed legislation that provided for a new statewide accountability program and for the Academic Performance Index and supported the high school exit exam.^[9] He signed legislation that authorized the largest expansion of the Cal Grant program.^[9] Under the Davis administration, California began recognizing students for outstanding academic achievement in math and sciences on the new Golden State Exams. Davis's Governors Scholarship program provided $1,000 scholarships to those students who scored in the top 1% in two subject areas on the state's annual statewide standardized test.

Official state portrait

Davis signed into law legislation that began the Eligibility in the Local Context (ELC) program that guaranteed admission to a University of California institution to students that finished in the top 4% of their high school class.^[26] Public schools received $8 billion over the minimum required by Proposition 98 during Davis's first term. Davis increased spending on recruiting more and better-qualified teachers. He campaigned to lower the approval threshold for local school bonds from two-thirds to 55 percent in a statewide proposition that passed. Davis earmarked $3 billion over four years for new textbooks and, between 1999 and 2004, increased state per-pupil spending from $5,756 to $6,922.^[27]

In 2001, Gov. Gray Davis signed Senate Bill 19, which establishes nutritional standards for food at elementary schools and bans the sale of carbonated beverages in elementary and middle schools.^[28]

Another early act of Davis's was the reversal of his predecessor Republican Governor Pete Wilson's alteration of California's eight-hour overtime pay rule for wage earners.

Signing SB 400 into law

In 1999, the CalPERS board proposed a benefits expansion that would allow public employees to retire at age 55 and collect more than half their highest salary for life (pension spiking). CalPERS predicted the benefits would require no increase in the State's contributions by projecting an average annual return of 8.25% over the next decade. When Board member Phil Angelides' aide questioned whether the stock market could grow that long, Board Chairman William Crist, a former union president, replied that they "could make all sorts of different assumptions and make predictions, but that's really more than I think we can expect our staff to do." CalPERS' chief actuary, objected, finding that it would be "fairly catastrophic" if the fund only grew at 4.4%. The benefits expansion bill, SB 400, passed with unanimous backing by California State Assembly Democrats and was signed into law by Governor Gray Davis. CalPERS then produced a video promoting the legislation with Chairman Crist promising greater benefits "without imposing any additional cost on the taxpayers" and the California State Employees Association president praising it as "the biggest thing since sliced bread". The next year the dot-com bubble burst, and CalPERS did not grow, instead losing value in the stock market downturn of 2002. In 2001–2002, CalPERS provided technical assistance for the Sarbanes-Oxley Act because it had sustained financial losses from the Enron and WorldCom bankruptcies. After the Great Recession, in 2009 CalPERS investments lost 24%, dropping $67 billion in value. Chairman Crist retired from the board and it was later revealed he had accepted more than $800,000 from a firm to ensure hundreds of millions of investment from CalPERS. This CalPERS mess was one of the factors that made Gray Davis get recalled. Governor Jerry Brown worked on trying to fix this retirement system for years, but CalPERS is still underfunded in 2022 and could end up costing state tax payers hundreds of billions in bailouts.

Domestic partnerships

Davis recognized the domestic partnerships registry in 1999 and, in 2001, gave same-sex partners a few of the rights enjoyed by opposite-sex spouses such as making health care decisions for an incapacitated partner, acting as a conservator and inheriting property.^[9] He also signed a bill to prevent disqualification from a jury based on sexual orientation. Additionally, he signed a bill allowing employees to use family leave to care for a domestic partner, though he did not make good on a campaign promise to convene a task force on civil unions.^[27]

Guns and public safety

He signed laws in 1999 banning assault weapons by characteristic rather than brand name, as well as limiting handgun purchases to one a month, requiring trigger locks with all sales of new firearms and reducing the sale of cheap handguns. Davis's ban included a ban on .50 caliber firearms and so-called "Saturday Night Specials."^[9][26] In 2001, Davis signed a bill requiring gun buyers to pass a safety test.^[27]

Crime

A supporter of the death penalty and tougher sentencing laws, Davis blocked nearly all parole recommendations by the parole board.^[27] Davis campaigned as an ardent supporter of capital punishment; which reportedly played a crucial part in his successful gubernatorial campaign. In 1999, he denied his first clemency request from Thai national Jaturun Siripongs, stating, "Model behavior cannot bring back the lives of the two innocent murder victims." Siripongs was executed in February 1999; the first execution to occur during Davis's governorship.^[29][30]

Relations with Mexico

Early in 1999, Davis sought to improve relations with Mexico. Davis believed that California under Pete Wilson had left millions of dollars of potential trade revenues "on the table."^[31] Davis said he wanted California to have relations with Mexico that were more like Texas under then-Governor George W. Bush.^[31] Controversy over the California-Mexico border and California Proposition 187 had strained the relationship between the two parties.^[32] Davis met with Mexican President Ernesto Zedillo to improve relations with California's southern neighbor and major trading partner within Davis's first 30 days in office.^[2][9] Davis later met with President Vicente Fox and participated in his inauguration. The Governor met with Mexican presidents eight times. Under the Davis administration, California and Baja California signed a "Memorandum of Understanding" expanding cooperation in several policy areas.^[2] Under Davis, Mexico became California's leading export market for the first time in history and California's trade with Mexico surpassed all of Mexico's trade with Latin America, Europe and Asia combined.^[2] Because of the growth in the California economy, Davis opened and expanded trade offices around the world, including in Mexico. But most of these offices were eliminated in the 2003 California budget due to difficult fiscal times.^[2]

Health, environment, business, and transportation

Davis significantly expanded the number of low-income children with state-subsidized health coverage.^[2] He signed laws to allow patients to get a second opinion if their HMO denies treatment and, in limited cases, the right to sue.^[26] Davis signed legislation that provided HMO patients a bill of rights, including a help-line to resolve disputes and independent medical review of claims.^[9] Under Davis, staff-to-patient ratios in nursing homes improved. However, Davis reneged on a campaign promise to expand low-cost healthcare to parents of needy children due to budget constraints.^[27]

Davis allowed non-disabled low-income people with HIV to be treated under Medi-Cal. He signed a law allowing people participating in needle exchange programs to be immune from criminal prosecution. He also increased state spending on AIDS prevention.^[27]

Under Governor Davis, California's anti-tobacco campaign became one of the largest and most effective in the nation.^[33] R. J. Reynolds and Lorillard Tobacco sued over California's antismoking campaign but their lawsuit was dismissed in July 2003. Davis also authorized a new hard-hitting anti-smoking ad that graphically depicts the damage caused by secondhand smoke.^[2]

In September 2002, Governor Davis signed bills to ensure age verification was obtained for cigarettes and other tobacco products sold over the Internet or through the mail, ensured that all state taxes are being fully paid on tobacco purchases and increased the penalty for possessing or purchasing untaxed cigarettes.^[34] He also signed legislation to expand smoke-free zones around public buildings.^[2][34]

Davis approved legislation creating a telemarketing do-not-call list in 2003.^[26] Under Davis, benefits for injured and unemployed workers increased. The minimum wage increased by $1 to $6.75.^[2] Davis backed higher research and development tax credits. He pushed for elimination of the minimum franchise tax paid by new businesses during the first two years of operation.^[27]

While Davis's record is generally considered pro-environmental due to increases in spending for land acquisition, maintenance of the state's park system, signing legislation that attempts to cut greenhouse gas emissions by having automakers produce more efficient vehicles, cutting fees to state parks and opposing offshore drilling, he was criticized for not backing tougher restrictions on timber companies as some environmentalists desired.^[27] Under the Davis administration, California purchased 10,000 acres (40 km²) for urban parks.^[9]

Davis signed the first state law in the US in July 2002 to require automakers to limit auto emissions. The law required the California Air Resources Board to obtain the "maximum feasible" cuts in greenhouse gases emitted by all non-commercial vehicles in 2009 and beyond.^[35] Automakers claimed the law would lead smaller and more expensive cars to be sold in California.^[36] In 2003, Davis signed legislation aiming to ban junk email.^[37]

On March 25, 1999, Davis issued an executive order calling for the removal of MTBE (a toxic gasoline additive) from gasoline sold in the state.^[38] In 2001, in order for gas prices to remain reasonable in California while removing MTBE, Davis asked President George W. Bush to order the EPA to grant California a waiver on the federal minimum oxygen requirement.^[39] Without a waiver, California would have to import a much larger amount of ethanol per year and gas prices were projected to increase drastically. Bush did not grant the waiver and in 2002, Davis issued an executive order reversing his earlier executive order.^[40]

Davis's actions when it came to regulating business suggested that Davis was a more moderate governor. He worked to kill a comprehensive bill opposed by banks and insurance companies to protect consumers' personal financial information. "What you saw in the campaign was what you got," said UC Berkeley professor Bruce Cain. "He's tried to negotiate a course between the different interest groups and keep Democrats on a more centrist, business-oriented track".^[27]

Davis approved $5.3 billion over five years for more than 150 transit and highway projects. One of those projects was construction on the new eastern section of the Bay Bridge. During 1999 and 2000, California spent millions on onetime projects like buying new rail cars and track improvements.^[27]

California electricity crisis

Soon after taking office, Davis was able to fast-track the first power plant construction in twelve years in April 1999, although the plant did not come on line before the electricity crisis.

According to the subsequent Federal Energy Regulatory Commission's investigation and report, numerous energy trading companies, many based in Texas, such as Enron Corporation, illegally restricted their supply to the point where the spikes in power usage would cause blackouts. Rolling blackouts affecting 97,000 customers hit the San Francisco Bay area on June 14, 2000, and San Diego Gas & Electric Company filed a complaint alleging market manipulation by some energy producers in August 2000.^[41] On December 7, 2000, suffering from low supply and idled power plants, the California Independent System Operator (CAISO), which manages the California power grid, declared the first statewide Stage 3 power alert, meaning power reserves were below 3 percent. Rolling blackouts were avoided when the state halted two large state and federal water pumps to conserve electricity.^[41]

Windmill field outside Palm Springs. Hot temperatures were thought to be pushing California to rolling blackouts, though it was later discovered that market manipulation was the cause.

On January 17, 2001, Davis declared a state of emergency in response to the electricity crisis. Speculators, led by Enron Corporation, were collectively making large profits while the state teetered on the edge for weeks and finally suffered rolling blackouts on January 17 and 18.^[41] Davis stepped in to buy power at highly unfavorable terms on the open market, since the California power companies were technically bankrupt and had no buying power. California agreed to pay $43 billion for power over the next 20 years.^[41] Newspaper publishers sued Davis to force him to make public the details of the energy deal.^[42]

During the electricity crisis, the Davis administration implemented a power conservation program that included television ads and financial incentives to reduce energy consumption. These efforts, the fear of rolling blackouts and the increased cost of electricity resulted in a 14.1% reduction in electricity usage from June 2000 to June 2001.^[41]

Gray Davis critics often charge that he did not respond properly to the crisis, while his defenders attribute the crisis solely to the corporate accounting scandals and say that Davis did all he could. Some critics on the left, such as Arianna Huffington, alleged that Davis was lulled to inaction by campaign contributions from energy producers.^[43] Some of Davis's energy advisers were formerly employed by the same energy speculators who made millions from the crisis. In addition, the Democratic-controlled legislature would sometimes push Davis to act decisively by taking over power plants which were known to have been gamed and place them back under control of the utilities. Some conservatives argued that Davis signed overpriced energy contracts, employed incompetent negotiators and refused to allow electricity prices to rise for residences statewide much as they had in San Diego, which they argue could have given Davis more leverage against the energy traders and encouraged more conservation.^[44] The electricity crisis is considered one of the major factors that led to Davis's recall.

Davis giving a speech on energy

In a speech at UCLA on August 19, 2003, Davis apologized for being slow to act during the energy crisis, but then forcefully attacked the Houston-based energy suppliers: "I inherited the energy deregulation scheme which put us all at the mercy of the big energy producers. We got no help from the Federal government. In fact, when I was fighting Enron and the other energy companies, these same companies were sitting down with Vice President Cheney to draft a national energy strategy."^[45]

When the Enron verdicts were rendered years later, convicting Enron and other companies of market manipulation, Davis responded with the following quote:

Ken Lay and Jeffrey Skilling, more than anyone, are the reason I'm talking to you now from this law firm.^[8]

(Skilling's conviction was later overturned by the United States Supreme Court in its narrowing of the "honest services" statute.)

On November 13, 2003, shortly before leaving office, Davis officially brought the energy crisis to an end by issuing a proclamation ending the state of emergency he declared on January 17, 2001. The state of emergency allowed the state to buy electricity for the financially strapped utility companies. The emergency authority allowed Davis to order the California Energy Commission to streamline the application process for new power plants. During that time, California issued licenses to 38 new power plants, amounting to 14,365 megawatts of electricity production when completed.^[2]

In 2006, the Los Angeles Times published an article that credited Davis's signing of the long-term projects for preventing future blackouts and providing California a cheap supply of energy with the increasing costs of energy.^[46]

In March 2003, the Federal Energy Regulatory Commission's long-awaited report on the so-called "energy crisis" was released. That report substantially vindicated Davis, laying the blame for the energy disruption and raiding of California's treasury on deliberate tactics employed by some 25 energy trading companies, most of which were based in Texas. Of the latter, the most notable was Enron, a number of whose principals were subsequently criminally prosecuted for their roles.

Budget crisis

During the economic boom years of the Davis administration, the California budget expanded to cover Davis's new programs. California's low national K-12 education rankings and Davis's campaign pledge to help education, along with the large majority that elected Davis to his first term and his early popularity, suggest that a majority of Californians supported increases in education spending during the early part of his first term when California was in budget surplus. Polls also showed that increased spending in education was supported by the California voters.^[47] Under the Davis administration, taxes were cut by over $5.1 billion that included a $3.5 billion cut in sales tax and a reduction in the vehicle licensing fees.^[26][48] The cut in sales taxes was mandated due to a 1991 law that required sales taxes to be reduced a quarter percent when budget reserves exceed 4 percent of the state general fund for two straight fiscal years which they did in 1999 and 2000.^[48] Davis also vetoed $5.1 billion in appropriations during that span.^[48]

Davis signing the 2000-2001 state budget. The 2002-2003 and 2003-2004 budgets would prove much more difficult to balance with a dramatic drop in state revenue.

While California's economy was expanding, California was producing record budget surpluses under Davis even after his tax cuts and new spending. According to the California Department of Finance, California, had a 10% surplus at the end of 1999 and California was projected to have a 4% surplus at the end fiscal year 2000.^[48] These surplus monies were left in the treasury. Davis claimed to be cautious with state finances.

"I'm trying to chart a prudent course and keep us somewhere in the middle. I don't want to jump the gun on spending; I don’t want to jump the gun on tax relief," said Davis concerning the budget surpluses on October 26, 2000.^[48]

The dot-com boom that had been fueling California's record tax revenues went bust. California was home to a large number of high tech firms and was largely dependent on state income taxes. State revenues fell while ongoing spending commitments created deficits. Restoring the vehicle licensing fees to pre tax cut levels to close the budget gap and stabilize the state's credit rating became unpopular.^[8][49] The beginning shortfall for the 2002-2003 state budget was $23.6 billion.^[50] Davis announced that the 2003-2004 budget shortfall would be $34.6 billion while the Legislative Analyst projected a $21.1.^[51]

Relationship with legislature

Davis, a moderate, had some disagreements with the more liberal Democratic-controlled Legislature.^[27] Democrat John L. Burton, the leader of the California State Senate, was Davis's chief antagonist.^[27]

Declining popularity

In May 2001, in the middle of the California electricity crisis, his numbers declined to 42% approval and 49% disapproval.^[52] By December 2001, Davis's approval ratings spiked up to 51%.^[53] His numbers declined back to the May 2001 level and remained about the same over the next year.^[54] In April 2003, Davis had a 24% approval rating and 65% disapproval rating.^[55][56] The leading causes of Davis's steep decline in popularity (and eventual recall) were the California electricity crisis, which involved a sharp increase in electricity rates and a series of blackouts in 2001,^[57] as well as voter discontent with an increase in state car registration taxes.^[58]

Davis had tried to maintain a middle-of-the-road approach, but ultimately alienated many of the state's liberals who viewed him as too conservative and many conservatives who viewed him as too liberal.^[59] Many were upset that in trying to balance the budget, Davis cut spending for schools while increasing spending for prisons. Some critics attributed the proposal to the California Correctional Peace Officers Associations donations to Davis's re-election campaign.^[60]