California governor Gray Davis received the first California Golden Fleece Award for his failure to protect the state’s fiscal health by cutting waste from the state budget. The award, presented quarterly by the San Francisco-based Pacific Research Institute, spotlights wasteful California state or local spending programs or regulations that fleece Californians. Mr. Davis well deserves the award.

During his tenure as governor (1999-2002), the state budget has gone from an inherited $12 billion two-year surplus to a $24 billion two-year deficit. Mr. Davis squandered the surplus and led the state to the fiscal abyss by engaging in a spending spree that would make a drunken sailor take notice.

Over the past three years, California’s per capita general fund expenditures have jumped by more than 31 percent, while the state’s population grew only 5 percent. Keep in mind that if state spending had been held to 6.2 percent of personal income, as it was in 1998-99, there would be no budget deficit in California.

Mr. Davis also added 34,000 workers to the state payroll during his first three years in office, a greater increase than the next three largest states combined. And the state now spends $24 billion a year more than when he took office. Audaciously, the governor declared, “The problem is not spending. The problem is lack of revenue.” This comment came at a time when Californians send a larger portion of their personal income to Sacramento than ever before. What do they get in return? Fiscal irresponsibility. Here are a few examples:

	•	Residential and small business electricity customers could pay an extra $5.3 billion over the life of long-term electricity contracts that were negotiated by Governor Davis at above-market prices (The Utility Reform Network).
	•	The FBI estimates that Medi-Cal fraud will eventually total $1 billion (Los Angeles Times).
	•	A Los Angeles County grand jury finds that welfare fraud costs taxpayers as much as $500 million a year (Los Angeles Times).
	•	The state recently paid for a heart transplant at the Stanford Medical Center for a two-time felon, the cost estimated to be $1 million. The average cost of a heart transplant in the country is just over $200,000. Meanwhile, the Davis administration agreed to spend $122 million a year (when the program is fully phased in over seven years) to improve medical care for state prisoners (Los Angeles Times and Sacramento Bee).
	•	The Bureau of State Audits (BSA) reports that state payrolls continue to include the salaries of nonexistent employees—2,400 phantom workers in five agencies alone with combined salaries of $116 million in fiscal year 2000-01. Agencies move employees among positions to make them appear filled in order to keep their budgets bloated (BSA).
	•	The federal government assessed a $115.8 million penalty against the state for inept administration of its food stamp program, the most error-plagued program in the nation (Los Angeles Times).
	•	The lucrative wage and benefits package that Governor Davis gave prison guards limits wardens’ ability to oversee use of sick leave and overtime, thereby costing taxpayers up to $71 million a year (Los Angeles Times).
	•	State government departments were penalized $1.6 million for tardy payments to vendors in 2001 (Sacramento Bee).
	•	California National Guard members guarding Bay Area bridges were staying at local hotels including the San Francisco Marriott, rather than local military barracks, at a cost of $750,000 (Contra Costa Times).
	•	And, finally, how could we forget $12,000 for poetry readings through the Resources Agency (Citizens Against Government Waste).

Governor Davis has callously disregarded the welfare of California taxpayers by not vigorously using his constitutionally authorized power to reduce or eliminate appropriations, the so-called line-item veto, and by not using his executive power to root out fraud and misuse of taxpayer funds. Instead, by severe budget bungling and overspending, state residents next year will likely face the biggest tax hike in the history of any state.

Not surprisingly, corporate executives now rate California as the worst business climate in the nation. It was rated second best when Mr. Davis took office. Gray Davis, one of only four governors to receive the lowest grade of “F” in the recent Fiscal Policy Report Card on America’s Governors, can now add the California Golden Fleece Award to his growing list of “achievements.”

Lawrence J. McQuillan is director of Business and Economic Studies at the California-based Pacific Research Institute.