Gov. Is on Right Track in Seeking a Spending Cap

Gov. Arnold Schwarzenegger’s No. 1 priority among all his “reforms” is a state constitutional amendment to control deficit spending. On this, he has his priorities straight.

This initiative -- limiting spending to average tax revenues -- would have the most sweeping and immediate impact on state fiscal management and, thus, on public policy.

Political players at the Capitol, however, are split into three camps: conservatives who complain that Schwarzenegger’s approach is too wimpy, liberals who cry it’s too harsh and the governor and his business allies who are seeking a middle ground.

“Conservative Republicans don’t like it and Democrats don’t like it. There must be something right about it,” says Bill Hauck, a principal coauthor of the plan. He’s president of the California Business Roundtable and a longtime government wonk who has worked both sides of the partisan fence.

Problem is, Schwarzenegger and his allies waited a long time before deciding which spending control plan to back. The governor originally proposed a softer version. Conservatives have been pressuring him to endorse one that’s tougher.

So it wasn’t until Friday that the initiative Schwarzenegger will raise money for and promote on the hustings was cleared by the attorney general for signature gathering. Backers now have only one month to collect the nearly 600,000 voter signatures necessary to qualify the measure for an expected special election in November.

Schwarzenegger’s other significant reform -- stripping the Legislature of its power to draw legislative and congressional districts and handing it to retired judges -- makes so much ethical sense that virtually nobody is bucking the concept. The tradition of legislators drawing their own districts -- choosing their own voters -- has become indefensible.

There is an argument, however, over whether the new redistricting should take effect in 2008 -- the earliest it could -- or in the normal time frame of 2012, after the next census. Schwarzenegger wants it sooner; Democrats and congressional Republicans later.

Schwarzenegger thinks there’s so much momentum building for redistricting reform that he’s ready to take his measure to the ballot with or without bipartisan support. Redistricting may not be on the public’s priority list, but voters do smell an odor they’d like to get sanitized.

Most important for legislators, the governor’s optimism means he no longer feels compelled to compromise with Democrats by linking redistricting to needed term-limit reform. Schwarzenegger earlier had indicated a willingness to deal. Democrats assumed this would be an opportunity to expand term limits to a more reasonable length. But they apparently didn’t move fast enough.

“There’s no reason for us to do it,” says gubernatorial spokesman Rob Stutzman.

But Schwarzenegger would like to compromise on a bipartisan spending control proposal that the Legislature could place on the ballot, avoiding the campaign cost, bitterness and political risk of an initiative fight. “This is one where he’s open to a variety of ideas,” Stutzman says.

So far there have been no serious negotiations. Relations are strained between the governor and Assembly Speaker Fabian Nunez (D-Los Angeles). “He’s all sound bite,” Stutzman says, adding that Senate leader Don Perata (D-Oakland) “seems more interested. He seems to get it.”

The governor also is being pestered by conservatives.

Mike Spence, president of the 10,000-volunteer California Republican Assembly, calls the Schwarzenegger-backed plan “a fake spending cap,” asserting that “all this money and effort is going to be spent on an almost-meaningless initiative.”

The conservative group backs a tighter spending cap pushed by state Sen. John Campbell (R-Irvine). It would limit spending growth based on population and inflation. But backers don’t have enough money to collect signatures for their initiative.

These are the basics of the Schwarzenegger proposal, written by Hauck and Allan Zaremberg, president of the California Chamber of Commerce and former top advisor to Gov. George Deukmejian:

* Spending growth would be limited to the average increase in revenue over the past three years.

* If the Legislature didn’t pass a budget on time, the old spending plan would stay in effect.

* When a budget deficit loomed, the Legislature and governor would have 45 days to fix the problem. If they couldn’t agree, the governor could cut spending practically any way he wanted.

* Proposition 98 would be amended to give the state more flexibility over school funding. Schools could get a one-time bonus without it becoming part of their annual guarantee.

Backers call this constitutional amendment “a solution to the budget roller coaster.”

Responds Assembly Budget Committee Chairman John Laird (D-Santa Cruz): “Why doesn’t the governor just submit a balanced budget?”

Good point. And why doesn’t the Legislature just pass one -- an honest budget free of gimmicks, borrowing and cooked numbers? Or, in boom years, a budget that doesn’t pour one-time windfalls into ongoing programs or permanent tax cuts, creating future deficits?

Unfortunately, neither the Legislature nor this governor have proved themselves capable of living within their means. Schwarzenegger correctly recognizes the need for enforced discipline.

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George Skelton writes Monday and Thursday. Reach him at george.skelton@latimes.com.