Can The Terminator Save California?

By Terry McCarthy/Los Angeles

Governor Gray Davis of California may have the charisma of a coatrack and he may irritate aides by taking conference calls on his exercise cycle in the morning, but he has not been accused of any crime, there are no state funds missing and no interns telling stories to the tabloids. So why is he facing a burgeoning movement to have him recalled from office less than a year after he was re-elected?

Well, there's California's $38 billion deficit, the largest state shortfall in history, a number larger than the entire budget of all but one other state (New York). Much of the deficit is due to the collapse of the dot-com universe, which powered the state's economy in the '90s, and Davis can hardly be blamed for that. On the other hand, he was not exactly forthright about how large the deficit was going to be. In any case, Californians want a target for their fiscal pain and frustration, and Davis has become the state insignia for economic ineptitude. "It's no longer the San Andreas Fault, it's Gray Davis' fault," comedian Dennis Miller said at a fund raiser for President Bush in Los Angeles last month.

Davis' fate has had a seismic effect on Republicans in California and Washington, though for different reasons. As Republican state hopefuls--possibly including Arnold Schwarzenegger--line up to vie for Davis' job, the White House is keeping its distance. With eyes fixed on the next presidential election, the White House would rather see a deeply unpopular Democratic Governor stay in his job, which might help Bush's chances of winning the state in 2004--something no Republican has done since a different George Bush won there in 1988.

Despite popularity ratings as low as 21% and a host of rivals circling him, Davis is defiant. He dismisses the recall campaign against him as "partisan mischiefmaking by Republican right-wingers." In an interview with TIME last week, he said he would not resign, adding, "It's like the [Oakland] Raiders wanting to get a second game against the Tampa Bay Buccaneers because they didn't like the way they played in the Super Bowl. That's not the way life works."

Maybe not, but it is the way California's kooky political system works. The mechanism for recalling a Governor is remarkably simple. The petitioners--with the financial backing of San Diego congressman Darrell Issa--need to gather signatures equivalent in number to 12% of the voters in the last election, or 897,158. Issa is paying hired hands $1 for each signature they collect and claimed last week that the total had passed 900,000. Once the state has certified the signatures, a new election will be scheduled. This could come either in the fall or next March, depending on how long the certification process takes. Voters would answer two questions on the ballot: 1) Do you support the recall of the Governor? And 2) Which alternative candidate from a registered list do you prefer? If a majority votes against the recall, the second question is moot. But if the recall motion attracts more than 50% of the votes, a simple plurality elects another candidate to head a state whose economy qualifies as the world's sixth largest. If there are more than a dozen candidates, as some have predicted, the plurality could be less than 10%. To put one's name on the ballot requires a deposit of $3,500 and a mere 65 signatures. Already a newspaper columnist has announced he will run for Governor, alongside likely candidates Issa, Schwarzenegger and a number of other Republican and Green Party wannabes.

Schwarzenegger has not officially declared himself in the race, and he is likely to delay doing so as long as possible to avoid answering awkward questions about his private life--and whether he knows, for example, how to wrestle down rising state Medicaid costs. He has the tacit support of many moderate Republicans who believe he can help shift the party back to the political mainstream. In the past decade the state party has been hijacked by hard-core conservatives, who play well in the districts around San Diego and Orange County but are unelectable statewide. Republicans do not hold a single statewide elected position in California, and they are in the minority in both houses of the legislature.

But while California's Republican Party seeks to rebuild on the ashes of Davis, G.O.P. strategists in Washington are wary. When President Bush swung through San Francisco and Los Angeles last month on a campaign tour that netted him a cool $5.6 million in a single day, he didn't so much as mention Davis and the recall campaign. "This is a matter for the people of California to decide," says Bush's press secretary, Ari Fleischer. Why? Because White House guru Karl Rove thinks the people of California--and their 55 electoral votes--just might go for Bush in 2004, especially if the President can use Davis as a punching bag. Bush lost California in 2000 by 11 percentage points, and his father lost the state to Clinton in 1992--but from 1968 to 1988 the Republicans took California in every presidential race. "It's not that long ago that California seemed to be a lock for the Republicans," says a G.O.P. insider. "It's not permanently in the Democratic column."

Davis' plight is grim, but it's hardly unique. States across the nation are struggling with falling revenues and budget crises, and overall spending by the states is set to decline for the first time in 20 years. New York is hiking income and sales taxes, Alaska is charging higher fees on studded tires, and Nevada Governor Kenny Guinn is suing the state assembly for failing to pass a budget on time. In 2000, the states had rainy-day funds that totaled nearly $50 billion; last week only $6 billion of that was left. But California, with its $38 billion deficit, is in a class of its own. The intensely partisan state legislature in Sacramento last week failed for the 17th time in 25 years to pass a budget on time, with Republicans refusing to accept any tax increases and Democrats calling for a mix of increases and spending cuts. Davis is attempting to bridge the ideological divide in Sacramento, but he can't avoid sniping at some of the Republican cost-saving proposals, including raising the age for kindergarten eligibility. "I won't sign a budget that slams the door on more than 100,000 kindergarten kids," he says.

Ironically, California's political paralysis is a result of attempts to make state politics more progressive. The ballot initiative and recall processes, intended to give a voice to the ordinary voter, have often been taken over by well-funded special-interest lobbies. Term limits have sent to Sacramento inexperienced lawmakers who are not interested in political bridge-building.

"We are the state with political reform and all these innovative ideas--then we fall on our face," says Stephen Levy, director of the Center for Continuing Study of the California Economy in Palo Alto. "That's pretty embarrassing." Nobody is more embarrassed than Davis, who has seen his state taken for billions by energy speculators and threatened with being downgraded to junk-bond status by Wall Street. He might argue that none of that was his fault. But California is also the land of no-fault divorces. --With reporting by Matthew Cooper/Washington and Sean Scully/Los Angeles

With reporting by Matthew Cooper/Washington and Sean Scully/Los Angeles