Can Jerry Brown Cut California Down to Size?

In the '70s, he was "Governor Moonbeam." Now he's running for the office again—as a fiscal hawk

By Christopher Palmeri and Michael Marois

He's a master of political reincarnation. Can Jerry Brown, first elected governor of California in 1974 at the age of 36, double back to Sacramento and revive a state economy with the lowest bond rating in the U.S. and an unemployment rate clocking in at 12.6 percent?

With the state facing its third year of multibillion-dollar budget deficits—the gap for the fiscal year starting on July 1 is $19.1 billion—California's gubernatorial election is shaping up to be a referendum on who has the best strategy for fixing the Golden State's $1.8 trillion economy. The 72-year-old Brown, the state's attorney general and a Democrat, faces no serious challengers within his own party. He's also leading his potential Republican opponents, former eBay (EBAY) Chief Executive Officer Meg Whitman and state Insurance Commissioner Steve Poizner, a onetime Silicon Valley executive, according to a May 29 University of Southern California/Los Angeles Times poll. Brown led Whitman, 44 percent to 38 percent, and Poizner, 45 percent to 31 percent.

When it comes to understanding the intricacies of governing, few can match Brown's résumé. He served as California's secretary of state, governor for two terms, and mayor of Oakland. "The state is very messed up," Brown said in a June 1 interview. "The issues that we are facing are in some ways eerily similar to ones that I was focused on as governor. My central message then was that we were in an era of limits."

Whitman, who leads Poizner going into the June 8 Republican primary, says she'll cut business taxes, slash 40,000 state workers, and put future hires into 401(k)-like savings plans to cut pension costs. Brown says he would favor increasing retirement ages or workers' contributions to pensions but not elimination of state retirement plans. Overall he is vague on his policy.

Fund-Raising Challenge

One immediate challenge for Brown: how to compete in fund-raising with Whitman and Poizner, both of whom can draw from personal fortunes. Brown has raised $20 million so far, according to public records, less than a third of what Whitman has already spent in the primary. The state's labor unions are worried enough about a potential Whitman victory that they're forming independent committees to raise funds and run Whitman attack ads.

One, the California Working Families 2010 committee, is sponsored in part by the Service Employees International Union, the California Professional Firefighters, and Los Angeles investor Ron Burkle. It hopes to spend at least $30 million to portray Whitman as a heartless job slasher with Wall Street ties who'll give tax breaks to rich friends.

The heavy reliance on union money will make putting Sacramento's financial house in order tricky if Brown prevails. True, Brown's frugality is well known. As governor in the '70s, he shunned the official mansion and predecessor Ronald Reagan's Cadillac limousine in favor of a two-bedroom apartment across from the capitol and a state-issued Plymouth Satellite. "He reduced salaries when he came to office," says Gray Davis, who served as Brown's chief of staff in the 1970s and was ousted as governor in a 2003 recall. "He will perform as necessary."

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