Wilson Years Saw State Regaining Lost Luster

SACRAMENTO —  It was a time when California became California again.

Gov. Pete Wilson stepped into office eight years ago just as the Golden State was shaking, freezing, burning, flooding and fighting. The Berlin Wall had come down and landed flat on the economy, crushing more jobs in the defense industry alone than some states have in their entire work force.

It was enough to stain the nation’s image of a carefree paradise where the sun always shines. Time magazine in 1991 ran a photograph of a California sunset under a sorrowful headline: “The Endangered Dream.”

Today, as Wilson prepares to leave office, California is enjoying a historic high.

Forecasters and polls express confidence about continued growth. The government is planning a generational building boom in schools, roads and water resources.

And perhaps most remarkable, the world’s seventh-largest economy has fundamentally transformed itself from a Cold War-era manufacturing base to a healthy investment in high technology, entertainment and foreign trade.

California, during the Wilson years, came back to the future.

Few governors have spanned such a period of change. If Jerry Brown was an adventurous safari and George Deukmejian an uneventful excursion, Wilson’s time has been a wild roller coaster ride.

He has survived the state’s biggest budget deficit and passed out its biggest surplus. His favor with Californians has soared and plummeted through distinct periods of disaster, recovery and surplus.

Wilson has come through it with the reputation of a tenacious fighter. But he was also so quick to battle that he could look like a bloodthirsty general even when he was leading a popular war.

For many, he is tainted by his role in the racially charged campaign politics of illegal immigration and affirmative action: Propositions 187 and 209, which he championed, passed resoundingly in a state that in three years will no longer have a white majority.

Wilson will certainly be remembered for the bumps and bruises. But he is leaving the state in fairly good shape.

Indeed, Wilson was one of the most active chief executives in California’s history, supporting and signing into law several landmark bills that have changed life here.

Children are required to wear bicycle helmets and adults are prohibited from smoking in bars under legislation Wilson signed. Likewise, copycat assault weapons and cheap handguns will remain on sale here.

Wilson has a mixed record on the environment and health care. And his budgets passed financial hard times on to many cities and counties.

At the same time, he approved a welfare reform plan that is exceeding even high expectations. He backed get-tough sentencing laws and nearly doubled the state’s prison population--but also watched as crime dropped to levels not seen since the 1960s.

He signed creation of children’s health insurance that was the biggest new social program in more than 30 years. He negotiated a record tax increase that was later balanced against a series of cuts. He deregulated the utility industry, sparking debate about the quality and cost of service.

And as he leaves, he has fundamentally changed California education--from who teaches its students to what they teach and where they teach it.

Throughout his tenure, Wilson maintained a guiding philosophy that combined a classic supply-side theory of economics and a high standard of personal responsibility.

He funded several prevention programs, particularly those aimed at the health and safety of young children. But he was demanding in holding adults--and even juveniles--responsible for their actions, whether they were criminals, welfare recipients or local government officials such as the ones from Orange County whom he refused to help with their bankruptcy.

Wilson was also a champion of commerce, convinced that good times for California business would trickle down to the poor and to schools, roads and other areas of need.

But many did not agree, including labor unions, social workers, health care providers, local government officials and environmentalists who are still angry.

Wilson views his own legacy as the tough decisions he felt were required by tough times, despite the political costs.

“I think I am the typical California Republican--quite conservative fiscally, but willing to make needed investment,” Wilson said in an interview. “I think I have been very tough on crime. . . . On so-called social questions, I think that I have been both realistic and energetic in trying . . . to compel [people] to be responsible.”

ECONOMY

The economy is the star in Wilson’s crown.

Although he was largely along for the ride as the state’s prosperity tracked national and global trends, California experienced more than a dip in its economy--it went through a restructuring.

Most experts today give Wilson a high rating in this area, suggesting that he did as much as any state executive could to encourage California’s return to prosperity.

Wilson’s handling of his first budget remains one of the defining moments in his tenure.

Just a few months after his election, defense cuts and recession tore a staggering $14-billion hole in the state budget. Wilson’s plan to cover the shortage with equal spending cuts and tax increases angered both Democrats and Republicans.

But it was a cathartic moment for state government.

The crisis encouraged reluctant Democrats to cut welfare and pass pro-business reforms. And although Wilson denies it, many observers say he was never the same moderate politician afterward.

In those early months, Wilson created the California Environmental Protection Agency, and he bucked the state Chamber of Commerce by signing a Family Leave Act and a significant empowerment of the state Coastal Commission.

But soon after surviving the budget disaster, he hardened and intensified his approach on the economy.

He told business leaders they were his top priority. And in his 1992 State of the State address, he warned voters that education and other services would suffer from rising welfare rolls and illegal immigration.

Wilson won a cut in California’s welfare grants almost every year he was in office. One of the most significant trims in the state budget--about $3.5 billion--was taken from local governments in 1992 and 1993.

City and county officials said the shift, which made them responsible for paying some of the state’s mandatory school funding levels, triggered a local government crisis that still lingers.

Libraries closed and police department budgets were cut. Orange County blamed the tight finances for its risky investment policies that led to bankruptcy. And in 1995, Los Angeles County was on the brink of shutting its hospital emergency rooms before it was saved by a $364-million bailout from the federal government.

In recent years, the state has restored much of the money it diverted during the recession. Wilson backed a sales tax hike for local government that was approved by voters. And the state assumed much of the cost for operating trial courts.

Still, most experts agree that the financing of local government remains an unresolved hodgepodge. Wilson inherited much of it from as far back as Proposition 13 in 1978; he exacerbated it with his local funding cuts, then had to make a series of repairs.

Today, the loss of property tax revenue for local government remains a powerful disincentive for cities to build new homes. “There has been some progress, but not enough,” Wilson acknowledged.

In addition to the spending cuts, Wilson and the Legislature improved California’s poor business climate, so the state was poised to join the national recovery that eventually developed, slow as the turnaround was to reach this state.

Wilson merged several government functions to create the state Trade and Commerce Agency. He formed “Red Teams”--rapid deployment bureaucrats with authority to clear government red tape for companies thinking about moving into California or threatening to leave it.

Most significantly, after years of gridlock, lawmakers reformed workers’ compensation laws that lowered employer premiums and raised disability benefits by reducing fraud. Later, they adopted a major package of business tax cuts that brought California’s burden closer to that of neighboring states.

By the time Wilson was reelected in 1994, unemployment was still climbing but the tide had begun to turn. That was enough for Wilson to win a second term.

Later, with surplus budgets three years in a row--including a record $4.4 billion in 1998--he shifted his emphasis to tax cuts.

As he leaves, Wilson will have signed tax cuts worth about $4 billion, short of balancing the $6 billion in increases he approved since in 1991.

If the economy continues to exceed expectations, however, further reductions already signed by the governor will be triggered, raising his total tax cuts to a symmetrical $6 billion.

That appears unlikely now, however. In what may be at least a blemish on the governor’s economic record, state forecasters are predicting that Wilson will leave Gov.-elect Gray Davis with a budget shortfall next year of more than $1 billion.

ENVIRONMENT

Wilson’s focus on business prosperity took a toll on his environmental record. At best today, Wilson gets a modest score from environmental advocacy groups. Most give him a failing grade.

That is a switch from Wilson’s reputation when he arrived in Sacramento from the U.S. Senate.

He had a strong protectionist record in Washington, having fought for a moratorium on oil drilling off the California coast. In one of his first acts as governor, he signed a prohibition on drilling in state waters.

And he has won some high-profile trophies, such as a still fragile agreement to purchase the state’s last remaining old-growth redwood forest, a coastal and wetlands protection act, and the state’s first hard-fought plan for meeting federal clean air standards.

But Wilson has also triggered complaints from environmental groups for placing a price tag on the protection of some species and wilderness preserves. He has also used the environment as a campaign punch line, as he did during the 1995 debate over protection of the tiny fairy shrimp.

“In California we have a thing called the fairy shrimp,” he once told a GOP audience in Arizona. “You can find the damn thing in every puddle and drainage ditch in 27 counties, so I’m not sure how endangered it can be.”

But during his short-lived run for the White House in 1995, Wilson also stood up to pressure to back away from a commitment to require that auto makers sell a zero emission vehicle--an electric car--by 2003.

The auto industry launched a major lobbying effort that included letters to Wilson from Republican governors in car-factory states like Michigan that were key to his White House hopes.

Today, with Wilson’s support, the governor’s appointees on the California Air Resources Board have scaled back the electric car deadline with a provision that allows for some use of low--instead of zero--emission vehicles. Still, it wasn’t all that the auto makers wanted.

Clean air has been one of the environmental success stories of the past eight years. The greater Los Angeles area had just one smog alert last year compared with 41 in 1990.

But there is still considerable uncertainty about the state’s ability to meet federal clean air deadlines in the next century. And there is debate about whether Wilson did enough to keep the state on track.

“The best-case scenario is that you can argue that we made baby steps in the right direction,” said Tim Carmichael, president of the Coalition for Clean Air.

Wilson said that in making some of his controversial decisions, he was wary of overstated harm to the environment. “There is a need really for honest science rather than political science,” he said.

Citing inadequate science, Wilson fought a U.S. government effort to list the Coho salmon as an endangered species. Ultimately, when the United States ordered the salmon to be protected, federal authorities singled out California for restrictions because, unlike neighboring Oregon, it had failed to adopt a state plan for preserving the fish.

Wilson has also waged an ongoing fight with environmental groups in his hope of building a nuclear waste site on 1,000 acres of California desert near Ward Valley. And he persuaded the Legislature to scale back an early ban on methyl bromide, a pesticide considered so dangerous that Congress outlawed its use after 2001.

But Wilson also dedicated substantial state money for environmentally friendly projects.

When President Clinton arrived at Lake Tahoe to boast about a cleanup agreement to be shared by California, Nevada and the federal government, only Wilson had committed the money.

Since 1993, he has also funded a major effort to increase wetlands by 50% in California by 2010. The program was half-complete in 1998, with 112,000 additional acres preserved.

Looking to the next governor, however, environmental groups say their biggest hope is not just new laws, but a more receptive ear. They said Wilson appointments to oversight panels were largely representatives sympathetic to the industries they regulate, and the state has been reluctant to crack down on scofflaw industries.

“The main thing is . . . enforcing the environmental laws,” said Sierra Club lobbyist Michael Paparian. “Just that would be a giant step forward for the California environment.”

EDUCATION

It took awhile, but with budget surpluses and considerable political attention, Wilson made education his top focus in recent years and helped pass a series of reforms that profoundly changed the state’s system.

Conditions are still improving, and experts say more changes are needed. But the state turned a crucial corner during Wilson’s tenure.

When the governor took office, California’s schools were bad and getting worse. The state was ranked near the bottom and sinking further in reading and math scores, in books and teaching equipment, in computer access for students and in classroom overcrowding.

On top of everything else, the schools were falling apart, with billions of dollars needed for new construction and repairs.

Like other areas, education suffered through the recession years of Wilson’s first term. Educators fought and won a court battle that alleged Wilson and the Legislature were not living up to minimum school funding levels.

“Money alone is not the answer,” Wilson said in 1995, when the state budget was still running a deficit. Teaching phonics, he said, was more important than easing overcrowding in classrooms.

The following year, however, Wilson decided to reduce the size of California classrooms. When Democrats rejected his initial plan for a tax cut, Wilson suggested the money should be used to implement a maximum of 20 students per room in kindergarten through third grade--a major drop from the average class size of 29.

The idea had been on Democratic wish lists for years, but Wilson stole much of the credit, including some from Democrats.

“Class size reduction was a precipitating event that really focused people on the schools,” Assemblywoman Kerry Mazzoni (D-San Rafael), former chairwoman of the Education Committee, said recently. “If it had not been for Gov. Wilson, I don’t think we would have done it.”

Within months, the vote to reduce classes became one of the most popular initiatives of the governor’s career. And the groundswell, coupled with billions of dollars more in successive surplus budgets, quickly led to a wave of education reform.

Wilson forced reluctant Democrats to adopt a mandatory statewide testing program that will be used to compare individual schools or grades, perhaps even teachers.

A back-to-basics curriculum was launched that restores phonics instruction for early readers in place of an experimental approach called “whole language.” New English and math standards were also adopted.

Lawmakers lengthened the school year and expanded the number of charter schools from 130 to 250. They also voted to ban social promotion, and they beefed up remedial education for students in grades 2 through 6.

Finally, last fall, voters passed the largest state bond in California history, providing more than $9 billion for school construction plans in coming years.

Democrats and Republicans had comparatively minor quibbles about the direction of reforms needed to improve education. They differ, however, on who should get the credit.

“I was very gratified that he decided to embrace some of the important initiatives that I and others had offered,” said state school Supt. Delaine Eastin, a Democrat and outspoken Wilson critic.

HEALTH AND WELFARE

The economy provided a major boost to Wilson’s record on poverty, helping to send welfare rolls into a steep decline. Nevertheless, Wilson leaves with a heartless image born of his budget decisions that made life even tougher for the poor.

And that was exactly his point. If it was too easy to remain poor, he figured, too many people would not take the difficult steps to become self-sufficient.

Welfare rolls were growing at nearly 12% each year when Wilson took office. And thanks to an automatic annual cost-of-living increase first approved by Gov. Ronald Reagan, the California welfare grant ranked among the highest in the nation.

Wilson succeeded in reducing welfare grants almost every year in office. But when he asked voters in 1992 for a 25% cut in the monthly payments, the governor’s ballot measure was rejected.

Still, Wilson’s view that welfare fostered a paralyzing dependency and stifled independence was catching on nationally. Riverside County’s welfare-to-work program became a favorite example for Wilson and a national model that was ultimately a design for the federal welfare reform bill Clinton signed in 1996.

The federal law cleared the way for states to experiment with welfare. And since then, California, like the rest of the nation, has seen a major reduction in its caseload.

State officials predict the welfare caseload will drop next year to more than 30% below its high point in 1995.

“The track we are on gives us a very good chance of success,” said Frank Mecca, director of the County Welfare Directors Assn. “It’s really too early to put a verdict out on whether [welfare reform] works. . . . Overall, it is guardedly optimistic.”

Wilson also put his fingerprint on the biggest new social program initiated in decades: Healthy Families. The federally funded effort passed by Congress in 1997 is designed to provide health insurance for about 580,000 California children of the working poor--those who fall between 100% and 200% of the federal poverty level.

The federal law gave states the option of running the program publicly or privately. Wilson chose the private option.

But so far, Healthy Families has been slow and controversial.

It has covered fewer than 10% of eligible children.

Other areas of the state’s health care system are also struggling.

The governor, along with the Legislature, has skimped on funding for Medi-Cal, leaving California with one of the nation’s lowest rates of reimbursement to health care providers who serve the poor.

Mark Finucane, director of health care services for Los Angeles County, said the funding problems have made it difficult for hospitals to take advantage of revolutions in medical care, including more outpatient services.

“Probably the best way to put it, from my perspective, is that the governor simply was not interested in health,” he said.

Health care reform for middle- and upper-income consumers was also late and incomplete.

Ultimately, Wilson produced a reform plan that could create a new state agency to monitor HMOs and provide consumers with more information for comparative shopping. Wilson rejected a Democratic plan to allow patients to sue their HMOs.

Many changes have been left for the next governor to decide.

*

“The job is never done,” Wilson said.

There are decisions still to be made about securing adequate water for a growing population; tougher juvenile justice laws; more consequences for bad teachers and some reduction in frivolous lawsuits, he said.

Still, the governor said the accomplishments are noteworthy.

“We have managed to make a lot of change,” he said. “In fact, I think really quite a remarkable amount of change if you compare it with another eight-year period. But the interesting thing is that we not only made the change . . . we had some very tough circumstances to deal with.”

LUNGREN LOOKS BACK: Departing Atty. Gen. Dan Lungren is still coming to grips with his loss in governor’s race. A3