The first sign a recall campaign against Gov. Gray Davis could affect California public policy came last month, when the term-limited Democrat dramatically adjusted his budget plan.
Once adamant about no deficit spending, Davis was prepared to finance billions in debt over five years, making peace with local governments, Indian gambling tribes and a Democrat-controlled public education establishment angry over hits they would have taken under his earlier proposal.

Now the recall campaign is raising the stakes on dozens of other legislative decisions heading the governor's way, from a local income tax to driver's licenses for undocumented workers.

"It's hard to imagine how you even handle a situation like this," said Mark Baldassare, research director at the Public Policy Institute of California. "He's got to be very aware of the implications of all of his actions."

Consider these developments:

* The California Professional Firefighters, a longtime Davis supporter, is leading a labor-backed campaign to oppose the recall and has donated at least $118,000 to the cause.

The firefighters also are behind a bill allowing cities and counties to impose local income taxes for public safety programs. Davis has not taken a position on the plan, proposed before the recall bid began.

"We believe the governor is going to look at our legislation now the way he's always looked at our legislation, which is on the merits," said firefighters' spokesman Carroll Wills.

* While Wills insists the governor's supporters aren't using the recall as leverage, he says Davis' opponents are doing just that.

From the start, the rationale Republicans have cited for the recall is that Davis should be held accountable for the state's budget crisis. And Senate Republican leader Jim Brulte warned fellow GOP lawmakers last week that he would campaign against them if they agreed to tax increases.

"If they get an early budget, the steam goes out of this" recall, Wills said. "So it's in the interest of the Republicans to hold out on the budget as long as possible."

Meanwhile, he said, "The presence of the recall in their minds makes them believe they can get more out of the governor. It's become a bargaining chip, in their hopes."

Sunday's June 15 constitutional deadline for passage of the budget passed with no action taken.

Brulte says his threat was consistent with his no-new-taxes position and had nothing to do with the recall campaign.

* Two unions representing state employees and prison guards have yet to attach their names to the anti-recall group; advocates don't expect them to as long as Davis wants contract concessions because of the state's $38.2 billion budget shortfall.

* The Operating Engineers, representing public and private transportation workers, succeeded in persuading the administration last month to restore millions of dollars in proposed cuts from state transportation funds. The union last week gave $75,000 to the anti-recall group.

Cindy Tuttle, political director of the union, Operating Engineers Local 3, said the group has historically supported the pro-labor governor and that his budget revisions played no role in the decision to donate to the anti-recall campaign.

* As the recall campaign proceeds, lawmakers are debating dozens of measures to curb soaring costs to businesses of providing workers' compensation for injured workers. Davis has pledged to sign comprehensive reforms to reduce premiums, but some proposals could anger campaign donors in the legal and medical communities. Davis is also under pressure from businesses to scale back injured worker benefits. Among major anti-recall donors, at $100,000, is Zenith Insurance Co., one of a handful of workers' comp carriers in California.

Stanley Zax, chairman of the company, said he would contribute against the recall even if one had been launched against former Republican Gov. Pete Wilson. "People shouldn't be criticized or their motives impugned because they're offended about the recall," he said.

* The regional director of Service Employees International Union, a $50,000 contributor to the anti-recall campaign, recently met with top Davis aides to urge the governor's support of a bill giving illegal immigrants driver's licenses.

Davis vetoed such legislation last year, citing terrorism concerns. Well before the recall campaign, the governor said he hoped to sign a compromise satisfying his objections. It's unclear what concessions the bill by Sen. Gil Cedillo, D-Los Angeles, will contain if and when it reaches the governor's desk.

If the recall qualifies for the ballot, however, Davis will have to weigh reactions from unions, Latino voters and liberals against potential backlash from groups that don't want to expand privileges for undocumented residents.

Cedillo said he and Davis have discussed policy considerations only: "He seemed remarkably oblivious of the political context in my discussions with him on this bill."

* After standing by for three years while financial institutions killed similar proposals, the governor last week pledged his support for a financial privacy bill by Sen. Jackie Speier, D-Hillsborough, to limit businesses' abilities to sell or share information about customers.

Supporting a measure that could change before it reaches his desk was an unusual move for Davis. But to date, no major financial institutions have shown any desire to get involved in a recall, and polling shows overwhelming public support for financial privacy legislation.

Speier said the governor's staff approached her about supporting the measure in April, after the recall bid was announced but before U.S. Rep. Darrell Issa, a wealthy Republican from Southern California who wants to be governor, pledged to finance the campaign.

"I think there was a genuine effort to do what was right," Speier said of Davis' support. "If it played a role," she said of the recall, "it was a very modest role."

Since the recall bid started in February, Davis has said he would not allow it to interfere with policy-making in Sacramento. He maintains he changed his budget to be pragmatic; lawmakers weren't going to approve his initial plan.

The governor has yet to take positions on many measures being colored by a possible recall. Still, legislative advocates and political analysts say Davis must eye each through the lens of recall, as he might weigh decisions in an election year but with added caution because a gubernatorial recall election is uncharted ground.

If his budget decisions are any indication, legislative advocates and political analysts say, the moderate governor will gravitate to the left and to the core of his party, courting teachers, laborers, environmental groups, women's organizations and other liberal groups that provided money and support in his past two elections.

"We certainly didn't have any conversations like 'You need to move in this direction,' " said Wayne Johnson, president of the California Teachers Association, of Davis' budget changes.

"I just think it was him thinking, 'There's this recall movement, and it could be real,' " Johnson said. "That if they do make the ballot, he's in very serious trouble. And that if he's going to survive it, he's going to need all the people that helped him get elected originally."

A Public Policy Institute of California poll last week found three-fourths of likely voters disapprove of Davis' job performance and 51 percent support his recall.

"It's much like the siege Clinton was faced with during the darkest days of his administration," said Speier, the state senator, comparing Davis' budget-driven problems to the former president's struggle to survive impeachment in the face of a sex scandal.

"How do you maintain the dignity of the office?" Speier said. "How do you continue to lead? How to do you continue to lay the foundation for a legacy?"

Recall supporters have until September to qualify the recall for an election by gathering nearly 900,000 signatures of voter support required by state law. If enough valid signatures are gathered, a first for a California governor, an election could be held this fall or next spring.

Meanwhile, lawmakers have until mid-September to send bills to the governor.