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Governor Blocked Tax on Large Donors

Budget: Timber firms gave $105,000 to Davis, who refused to include industry with the many facing new levies. Aides defend the decision.


Gov. Gray Davis this spring blocked efforts to impose a new $22-million tax on the timber industry, three months after leading timber interests donated $105,000 to his reelection campaign.

The legislative analyst's office suggested the timber tax hike, and several Democratic lawmakers embraced it as a way to help close the state's $23.6-billion budget deficit. But the governor successfully opposed it during budget talks, according to legislators who participated in those discussions.

Davis' revised budget, released in May, included general tax hikes that will affect almost all Californians but did not endorse the proposed timber tax.

Administration officials and timber company representatives say there is no connection between the campaign contributions and the governor's opposition to the timber tax hike. Although some environmentalists complain about the governor's actions--and accuse him of yielding to a campaign contributor--Davis aides and legislators who represent logging areas say the tax would have hurt already struggling companies.

The decision, a Davis spokeswoman said, was sound policy.

The administration's position against the timber tax is the latest in a series of steps Davis has taken as governor that have helped bring the timber industry, long allied with Republican candidates, into the fold of the Democratic incumbent. Altogether, timber interests have donated about $450,000 to Davis since he took office in January 1999.

The dispute over those contributions and Davis' actions, or inactions, including charges by environmentalists that the administration has been slow to protect a species of salmon threatened by logging, represents the latest challenge to Davis' fund-raising practices. Environmental leaders who once backed Davis now question whether the governor has given timber interests a break in part because those companies have helped pay for his political campaigns and have denied support to Republican gubernatorial challenger Bill Simon Jr.

The Sierra Club, for instance, endorsed Davis in 1998, but has not yet taken a position in this election. Carl Pope, the club's executive director, expressed disappointment with Davis' environmental record, especially on timber, water quality and fisheries. He described Davis' record on air quality issues as "pretty solid."

"The Sierra Club has not decided what to do in this race," Pope said. "Our two real options are endorsing the governor, or not endorsing" anyone.

The timber industry's donations are a concern, Pope said. "When a special interest is giving substantial campaign contributions, and the governor is not keeping his campaign commitments--which on forestry issues, he is not--you've got a very serious problem," he said.

He also criticized Davis for allowing extended vacancies on the state Board of Forestry. He called the state's timber regulations inadequate, and said the board and its staff have failed to make them more stringent.

"I can't tell if the policy is following the money or the money is following the policy," Pope said. "Whether it's quid pro quo or pro quo quid, I don't care which way it runs."

Shrinking Industry

David Bischel, president of the California Forestry Assn., said the timber industry has been shrinking for years in California and cannot afford more costly taxes and regulations. In the last year, he said, Pacific Lumber has closed century-old mills in Scotia, and the state's last factory that manufactured pencils closed in Stockton.

Faced with those difficulties, Bischel said, the industry contributes to Davis and other candidates who "support balanced natural resource policies."

"The process hasn't gotten any less complex or any less expensive [under Davis]," Bischel said. "But the administration has demonstrated a commitment to try to be balanced. We're not happy with everything the administration does. Nor are we upset with everything the administration has done."

Because of intense opposition from timber companies and agricultural interests, some environmentalists are concerned the Davis administration may stop short of designating the coho salmon as a threatened or endangered species. The salmon, which lives in Northern California, has been declining for decades, and environmental groups see its downward spiral as an indication of over-logged forests and muddied streams. The timber industry, meanwhile, fears additional protection for the fish will lead to new restrictions on logging in northern coastal forests.

As the election nears, the issue is coming to a head. The state Fish and Game Commission is scheduled to hold a hearing Aug. 1 in San Luis Obispo on whether to add the coho salmon to the state list of endangered species. That would protect the fish and could limit logging and farming in the northern part of the state.

In an effort to avert a head-on collision between the timber industry and environmentalists, state officials initiated talks earlier this year with the same groups that sought the listing.

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