Davis signs bonds-sale bill, blasts GOP

By Emily Bazar
Bee Capitol Bureau
(Published May 11, 2001)

Accusing Republicans of "playing with fire" and jeopardizing the economy, Gov. Gray Davis on Thursday signed a bill allowing the state to sell a record-setting $13.4 billion revenue bond package to finance its past and future electricity purchases.

The Democratic governor's harsh words capped a tense partisan standoff in the Legislature that forced a delay in the bond sale until August.

Davis warned that the delay, which he blamed on GOP lawmakers, could hurt Californians if state programs are cut to pay for electricity until the bonds are sold.

"They should know that their constituents may well be hurt if, as a result of their actions, cuts have to be made in law enforcement, transportation, health care, education and programs for seniors," Davis said. "If I have to go into every district occupied by a member who voted against (the bill) and make a case about why this measure is necessary, that is what I will do."

Davis commended the only Republican to vote for the measure, Assemblyman Anthony Pescetti of Rancho Cordova, calling his a "courageous vote in the face of blind opposition."

Since mid-January, the state has committed $6.7 billion from its budget to last-minute electricity purchases.

In order to pay that back, and to pay for power the state has lined up through long-term contracts, Davis asked the Legislature to approve a bill authorizing the sale of $13.4 billion in bonds. The bonds will be repaid with higher customer rates over the next 15 years.

Assembly Republicans balked, saying the ratepayers would be saddled with debt for too long. They proposed an $8 billion bond package instead, and suggested using a one-time allocation from the state budget to make up the difference.

But Monday, Assembly Democrats pressed forward with the $13.4 billion figure. Because they could not muster enough Republicans for a two-thirds vote, they passed the measure, SB 31x, with a simple majority, requiring a 90-day wait for the bill to become law. Assembly Republican leader Dave Cox of Fair Oaks said Democrats could have won Republican support if they had seriously considered the GOP proposal and actually negotiated. He accused Davis of engaging in "fear politics." "We didn't hear from the governor. It kind of leaves you with the impression that maybe there was never any intention of negotiating," Cox said. "It was either their way or forget it." The state's blueprint calls for the $13.4 billion to last until Jan. 1, 2003, by which time wholesale electricity prices are expected to have fallen, new power plants added and debt-ridden private utilities stabilized. But the plan rests on numerous assumptions beyond the state's control, including the price of electricity, extent of conservation, quantity of power available from the Pacific Northwest and production by alternative energy suppliers. Under a worst-case scenario, critics say, the state could spend the bond funds within several months and be left holding the bag for $50 million or more per day in electricity bills. Also Thursday, the Senate sent Davis emergency legislation that expedites power plant construction in California, two weeks after a controversial labor amendment hung up the bill, SB 28x.

Lawmakers removed the amendment after Davis enacted its provisions in an executive order Tuesday. He is expected to sign the bill early next week.

-- Anonymous, May 11, 2001