California's Down-to-Earth Duke

Facing a bare till, a tightfisted Governor builds a surplus

Ronald Reagan would have picked Lester Lanin and Dom Perignon. Jerry Brown might have insisted on box lunches in a Sacramento park. George Deukmejian celebrated his first year in office at a Holiday Inn serving steak, salad and below-the-Borscht Belt Comedian Shecky Greene. When it comes to suavity and symbolic gestures, the current Governor of California is no match for his two famous predecessors. But it hardly seemed to matter last week. Describing the budget-priced dinner as "a little bit offence mending and a little bit of entertainment," the Republican Governor welcomed 200 legislators with a confident smile.

For once, even the tightfisted Deukmejian could have afforded to splurge. For the first time since he took office last January, the Governor's financial resources and political stock are soaring. The state's coffers, depleted only six months ago, are newly flush with an expected $205 million surplus this year, and nearly $1 billion projected for the next. Bolstered by cash and a record public-approval rating of 76%, Deukmejian took a bold conciliatory step in his State of the State address to the legislature the morning after the dinner. He presented a $30.3 billion spending plan that was so comprehensive and popular that even his toughest Democratic detractors clapped.

Only a short time ago, such applause would have been unthinkable. When Deukmejian took office in January of 1983, the recession had eaten away what little remained in the till; earlier, billions in state revenues had been tapped to bail out local governments in the wake of Proposition 13, the 1978 voter initiative that drastically slashed property taxes. Deukmejian faced a staggering $1.5 billion deficit, an unemployment rate of 11.2%, and a Democratic-controlled legislature steeling for a fight. Having pledged not to raise taxes, Deukmejian instead offered an 18-month salvage plan to balance the budget. The battle bitter. Deukmejian rejected the legislature's demands for a tax increase, and instead pared $1.1 billion from its budget by selective vetoes of spending items. The Democrats retaliated where they could, stonewalling Republican efforts to redraw the state's congressional districts and rejecting three of the Governor's high-level appointees. At times the conflict got a little childish. Last summer, when the Governor's staff began posting the number of days the Democrats had been holding the budget "hostage," the Democratic chairman of the rules committee yanked the parking passes of three of the Governor's staffers.

Deukmejian prevailed in the budget battle. California also was helped greatly by the economic recovery, which boosted states across the nation; it particularly benefited from the boom in defense industries.