WHERE THE CANDIDATES STAND ON THE BUDGET AND ECONOMY

The governor has the following power over creation of a state budget and
improving California's economy: -- Each January, he must propose a
comprehensive spending plan for all state operations, including public
schools, and revise that plan in May. -- He signs the final budget passed
by the Legislature with power to veto specific spending. -- He can sign or
veto bills that improve or harm the state's economy and use influence of
the job to affect passage of legislation. -- He can issue executive orders
that change state priorities in ways to stimulate the economy.

Taxes

Peter Camejo: Favors increasing state taxes for those earning $130,000 from
9.3 percent to 10 percent and for those earning $260,00 or more to 11
percent. Supports a 67.5 percent increase in vehicle license fees, taking
them back to 1998 levels. Backs legalization of marijuana and taxing it. .

Gray Davis: Opposes increasing state income tax for the state's wealthiest
citizens. Backed an increase in vehicle license fees to help close this
year's budget gap. The fees have been cut 67.5 percent since 1998; Davis
wanted an increase that would still have kept the fees 25 percent lower
than in 1998. He backed a 50-cent increase in taxes paid on a pack of
cigarettes, then backed a $2.13-a-pack increase, an idea lawmakers
eventually abandoned. .

Bill Simon: Proposes tax break for parents who home-school their children.
Supports initiative to give homeowners a tax exemption of between $7,000
and $32,000 and a $125 tax credit to renters.

Economic Stimulus

Peter Camejo: Proposes to enact "living wage" laws statewide to reduce
poverty. Would help first-time home buyers with down payments, spend more
on public transit and create a universal health care system for California. .

Gray Davis: Supported increases in research and development tax credits and
approved a boost to the amount of past losses companies can write off once
they become profitable. Abolished a minimum tax that new businesses pay
after they start up. Signed law sharply increasing workers compensation
benefits, over employer objections. Added new state trade offices to
improve exports. . Bill Simon: Would lower state tax on capital gains from
9.3 percent to 5 percent. Proposes to change the way sales tax and local
property tax revenues are distributed to local governments to encourage
more housing construction. Would relax endangered species and environmental
review laws. Proposes a permanent moratorium on taxing Internet commerce.

Balancing The Budget

Peter Camejo: Would erase the deficit mainly with a series of tax
increases, many of which are politically unfeasible. Among the proposals
are legalizing and taxing marijuana to raise $1.5 billion, narrowing the
three-strikes sentencing law and abolishing the death penalty to save
nearly $200 million, increasing vehicle license fees to raise $3.5 billion,
ending tax breaks for oil companies, reassessing commercial property more
often and imposing higher tax brackets on California's wealthiest citizens.
. Gray Davis: Described the two-month late budget he signed in September as
"not a perfect document" and has declined to talk about what he would do to
cover next year's deficit. "It's absolutely foolhardy to talk about next
year's budget until we get through all the spending implications of this
year." . Bill Simon: Proposes to cut spending in unspecified programs. No
tax increases.

In good years, would create a second budget reserve to cushion against
future economic downturns.

Source: Interviews and information furnished by the Gray Davis, Bill Simon
and Peter Camejo campaigns