Riordan Charges, Retreats on Budget

SACRAMENTO â€”  Republican Richard Riordan on Thursday brought his unofficial campaign for governor to the state capital, where he challenged Democratic incumbent Gray Davis to tell Californians they face a budget shortage of $10 billion to $20 billion next year.

“I think as a leader, he’d be smart to get out there and tell people now what is going to happen next year instead of trying to sneak it through at the last minute,� the former mayor of Los Angeles said.

But within hours, Riordan was retreating from his own figures.

Financial analysts recently have warned that the next state budget may be short $9.3 billion unless a long-stalled state bond issue is sold to repay the treasury for money spent to buy electricity during the energy crunch.

But a $20-billion shortfall was far higher than anyone else had publicly predicted.

Asked to clarify his numbers, Riordan said the $20 billion represented a worst-case scenario and was drawn from a “very, very rough estimate that I got from some advisors.�

Later, he said the advisors did not actually forecast a deficit of $20 billion, about $6 billion higher than the record shortfall former Gov. Pete Wilson had to deal with in 1992. Instead, Riordan suggested, that sum included projections of severe tax revenue shortages that Davis and the Legislature did not anticipate when they approved the $103-billion budget last summer.

Since the Legislature adjourned last month, Davis, who is running for reelection, has vetoed multimillions of dollars in spending bills on the grounds that they are too expensive to finance as the economy shifts toward a recession. His vetoes have blunted the impact of a drop in tax revenues.

Though he insisted that Davis owed voters a full accounting, Riordan would not say what actions he would take to manage a budget shortfall.

“Well, I’m not governor, yet,� said Riordan, who plans to formally start his campaign Nov. 6.

Steve Maviglio, press secretary to Davis, brushed aside Riordan’s assertions. “Mr. Riordan makes a strong argument why you need someone with experience in state government,� Maviglio said.

“Yes, there will be a large budget deficit and everyone who is not a megabillionaire like Riordan knows that,� Maviglio said. “The governor has warned for years that we’ve got to put money aside for tough times and we’ve done this.�

Riordan would not detail how he as governor would manage the shortfall, but he did tick off his priorities. “The first thing I would do is tell the public what we are headed for. The second thing, I’d try to cut back on expenses well ahead of time.� He said Davis would need next year to make “incredible cutbacks in government.�

“There will be zero money for any discretionary [spending] next year and there probably will not be enough money to cover� basic budget programs and services, Riordan said.

Riordan’s visit to Sacramento included an address to about 60 people at a convention of the California Hispanic Chamber of Commerce, where he endorsed a bill on Davis’ desk that would enable certain undocumented immigrant students to pay California resident fees to attend public colleges. Now they must pay higher fees charged to out-of-state students.

“I don’t care whether they are legal or illegal. But if they are children, I’m on their side,� he told the chamber.

Part of Riordan’s appeal among Republicans has been his rapport with Latino voters, whom he attracted in large numbers in his mayoral campaigns. He has made several moves aimed at cementing the relationship during the exploratory prelude to his announcement.

But only a few weeks before that announcement, Riordan has yet to firm up his own campaign organization. He has yet to appoint a campaign manager, and on Thursday turned aside questions about who would run his effort.

He said his organization has “really jelled� in the last two to three weeks, but would not say how. He also downplayed the abrupt departure this week of Dan Schnur, a veteran campaign operative who had managed the early days of his campaign.

Riordan announced Thursday an addition to his kitchen cabinet of unpaid advisors--Pasadena business executive Rick Hernandez. He said Hernandez is not an experienced campaign hand, but is a strong businessman and trusted ally.

Before the speech to Latino business owners, Riordan was peppered with questions about his positions on matters before the state.

Riordan said he opposes a bill to dramatically boost benefits of workers injured on the job, a labor-sponsored proposal opposed by major employer organizations. Sacramento, he said, should get rid of its “anti-business� attitude.

He criticized approval by the Public Utilities Commission of a controversial plan to save Southern California Edison from bankruptcy. He conceded he did not know details of the plan, but said it appeared to be “flaky� and seemed to be “making defeat sound like victory.� He warned that despite assertions to the contrary, the settlement constitutes a rate increase for Edison customers.

He also was asked whether as governor he would keep S. David Freeman, former head of the Los Angeles Department of Water and Power, as chief of the state’s newly created public power authority. “I’ll pass water under that bridge when I get there,� Riordan said.