State Gets a New Finance Chief

Signaling a more moderate turn in his government, Gov. Arnold Schwarzenegger on Thursday appointed to the finance director’s job former congressman Tom Campbell, known for his bipartisan instincts and eclectic policy ideas that include legalizing drugs and abolishing the national income tax.

Campbell, now dean at UC Berkeley’s Haas School of Business, is a familiar figure in the Capitol. A Republican, he served in the state Senate from 1993 to 1995, and is respected by Democratic leaders with whom the governor has sparred over the last year.

“My advice to the governor will be not to have any increase in taxes,” Campbell said at a morning news conference.

Schwarzenegger, who made the announcement, said: “What I like most about Tom is that he thinks the same way I do -- the way we want to approach our challenges, our fiscal challenges. And he is going to be very, very helpful to continue on with California on the road to recovery.”

In choosing Campbell as his chief budget aide, the governor appears to be recalibrating his top staff after a year in office. More changes are coming. Marybel Batjer, a senior aide who is the governor’s main link to state agencies and departments, has announced that she is leaving.

One person who has been approached by administration officials about possibly replacing Batjer is environmental secretary Terry Tamminen. Tamminen ran a Santa Monica conservancy group before joining the government and once described himself as a “tree-hugger.”

Campbell succeeds Donna Arduin, who was recruited by the governor from Florida and resigned after 11 months in the job. She was perceived as a committed conservative and outsider who faced criticism for an aloof style and comparative unfamiliarity with California’s complex budget process.

Even some of the governor’s Democratic critics described Campbell’s appointment to the $131,000 job as a promising hire at a time when California is weathering a persistent budget crisis.

Senate Democratic leader John Burton (D-San Francisco) said, “After calling Democrats obstructionist girlie men, now he [the governor] is appointing someone who will reach out to them. I consider it an olive branch to obstructionist girlie boy Democrats.”

Assembly Speaker Fabian Nunez (D-Los Angeles) said: “Donna was a hard-liner.” Campbell will more faithfully reflect the governor’s ideology, Nunez said, and that “will make all of our jobs easier. But more importantly, it’s going to make the inner workings of the governor’s lead team easier.”

At a news conference announcing the appointment, Schwarzenegger portrayed Campbell as someone in sync with the governor’s view that spending should be restrained and tax hikes avoided. The state is facing a shortfall next year estimated at $5 billion to $7 billion. Though Schwarzenegger has said more “discipline” is needed to control spending, he has shown little appetite for deep cuts in social services.

Arduin’s ambitious plans for shrinking government -- unveiled in the governor’s January budget proposal -- were mostly abandoned.

Bruce Cain, professor of political science at UC Berkeley, said Campbell would bring a more humane approach to controlling the budget.

“He is more of a moderate Republican, like Arnold, and therefore not so driven by the bottom line,” Cain said. “He’s less likely to embarrass the governor the way he was embarrassed on the cuts Arduin proposed for programs for the developmentally disadvantaged.”

After a public backlash, the governor renounced those cuts.

“That was the epitome of the Donna Arduin problem. She has a complete tin ear with respect to the political ramifications of particular cuts, “ Cain said.

“What Tom Campbell brings is a greater sensibility about what a cut means in human terms. That is important. When Arnold makes a cut, he needs to know what it means in human terms, how it translates into press reaction and public reaction,” Cain added.

Like Campbell, the governor reiterated Thursday that he opposed new taxes.

Asked to comment on reports that incoming Senate Democratic leader Don Perata wanted a tax hike to close the spending gap, the governor said: “Why would I listen to losers?”

He went on to say that various local ballot measures that sought to raise taxes were defeated at the polls Tuesday -- a sign that voters don’t want tax increases. After Schwarzenegger left the podium, aides quickly approached reporters to advise that the governor was not specifically calling Perata a “loser,” but rather, the strategy of raising taxes.

For his part, Perata issued a statement commending Campbell’s appointment as a sign that the governor wanted “to work cooperatively with the state Legislature to solve California’s budget woes.”

At the news conference, Campbell said most people expected that the state would try to “get out of its fiscal problems by increasing tax burdens on people. And that’s what sends businesses out of our state. I want businesses to come back to our state. I want people to think that we’re fiscally responsible. The easiest thing to say is we’ll just spend all we want and then make people pay for it through the tax system.”

Campbell, 52, served in Congress for 10 years, from 1989 to 1993 and from 1995 to 2001. A San Jose resident, he has been the dean at the Berkeley business school since 2002.

He has pledged to stay on the job in Sacramento for two years, having gotten a leave from UC Berkeley for one year, with an option for another. Campbell will be the state’s fourth finance director in less than two years -- turnover due in part to the change in government wrought by last year’s recall.

In an e-mail to students Thursday, Campbell wrote: “The finances of the state of California have taken a positive turn, but there is still much to be done, especially in the next 18 months. This is the time period when the next two budgets will be prepared and presented to the Legislature.

“I feel especially good about this position,” he continued, “because the recovery of the state’s finances will rebound to the benefit of all the state’s institutions and population, the University of California included.”

As a politician, Campbell is difficult to label, just like his new boss. Campbell supports abortion rights. When he ran unsuccessfully against Dianne Feinstein for the U.S. Senate in 2000, he called for treating drug abuse by allowing communities to give heroin to addicts.

“Why not take those who are already addicted and given them the drug?” he said in a meeting with the Contra Costa Times in 1999.

In 1997, Campbell voted against Newt Gingrich for speaker of the U.S. House. But he also voted in favor of President Clinton’s impeachment.

Running against Feinstein, he championed doing away with the income tax in favor of a national sales tax. He also would not rule out taxing sales on the Internet.

Campbell described himself as “cheap” when it came to government spending. As a congressman in 1999-2000, he sponsored spending bills that would have resulted in $49 billion in federal cuts, according to the National Taxpayers Union.

The Concord Coalition, a nonprofit group that rates members according to their opposition to deficits and support for fiscal accountability, gave Campbell a perfect score of 100 in 1997.

There is little doubt about Campbell’s intellect. He holds a law degree from Harvard and a doctorate in economics from the University of Chicago. Roll Call, a publication that serves Capitol Hill, once dubbed Campbell the “brightest” member of Congress.

State Treasurer Phil Angelides, a Democrat mentioned as a possible candidate for governor in 2006 and a fierce critic of Schwarzenegger, applauded Campbell’s hiring.

“I hope this appointment means the governor will now fulfill his promise to stop the state’s ‘crazy deficit spending,’ ” he said, using one of Schwarzenegger’s favorite phrases.

Times staff writer Nancy Vogel contributed to this report.