New Governor Must Get Grip on Budget Gap

In his first speech as governor, Arnold Schwarzenegger positioned himself Monday as a populist reformer who would cut through the state’s political dysfunction to restore its fiscal health and revive its economy.

The Republican cast the October recall election as a mandate to change not only the occupant of the governor’s office, but “the entire political climate of our state.” Laying out his initial goals, he pledged to work with Democrats and “put aside years of partisan bitterness.”

Much as he did in his abbreviated campaign for the governorship, Schwarzenegger suggested that optimistic and firm-handed leadership, more than anything else, was the key to polishing the luster of a state he called “ the golden dream by the sea.”

But as in his campaign, details were few. Apart from reminding lawmakers that there was a “public hunger” for comity, Schwarzenegger gave no hint how he would prod the sharply polarized Legislature into changing the way it does business. Given the depth of rancor between the Capitol’s warring camps of die-hard liberals and die-hard conservatives -- and signs Monday of wariness on both sides -- political experts were skeptical of Schwarzenegger’s prospects for ushering in a new era of harmony.

“The odds are against him, but what he’s doing is obviously a worthy experiment,” said Bruce Cain, director of UC Berkeley’s Institute of Governmental Studies. Schwarzenegger’s apparent premise, he said, is that lawmakers are not split by “fundamental ideological or cultural differences,” but by an “us-versus-them” mentality.

Schwarzenegger’s rhetorical flourishes and the absence of many details were in keeping with the tradition of inaugural speeches, which tend to emphasize broad themes.

The new governor lost no time Monday in taking action on a few issues that had formed the bulwark of his campaign. Shortly after he was sworn in, he signed an executive order rescinding the hugely unpopular hike in California’s vehicle license fee.

“This is action, not just dialogue,” he told reporters as he signed the executive order rolling back the increase approved by his predecessor, Democrat Gray Davis. “This is action.”

He also called a special session of the Legislature to consider budget and workers’ compensation reforms, as well as the repeal of a law allowing illegal immigrants to obtain driver’s licenses. He suspended all proposed state regulations and launched a review of those adopted under Davis.

Schwarzenegger’s first major challenge, however, will be to avert the kind of budget deadlock that bedeviled Davis over the last three years. In the face of giant shortfalls -- like the $14-billion gap that Schwarzenegger faces next year -- Republicans have refused to raise taxes while Democrats have balked at spending cuts.

Schwarzenegger aides are preparing a proposal to borrow as much as $20 billion to cover the shortfall; despite the praise Schwarzenegger sent Davis’ way in his inaugural address, their plan is to blame the immense proposed debt load on the former governor.

“The way that can be sold is if it is focused on the prior mistakes,” state Republican Chairman Duf Sundheim said.

While Democrats have voiced misgivings about the debt proposal, the first signs of resistance from Republicans emerged Monday as state Sen. Tom McClintock of Thousand Oaks balked at the plan.

“I certainly hope that it’s not a part of the fiscal package presented to the Legislature,” said McClintock, who became a conservative standard-bearer as Schwarzenegger’s main Republican rival in the governor’s race. “I believe that our children will have their own needs to meet without having to pay for this generation’s partying.”

Schwarzenegger’s speech made clear that he sees one of his main tasks as the effort to bridge the partisan divide in the Legislature. He said he had named Republicans, Democrats and independents to his Cabinet “because I want the people to know that my administration is not about politics; it is about saving California.”

Richard Riordan, a Republican whose close ties to Democrats hobbled his failed bid for governor last year, said Schwarzenegger is poised to run California as a “nonpartisan” leader.

“One of the problems is, Republicans and Democrats are standing there with guns pointed to each other,” said the former Los Angeles mayor, now Schwarzenegger’s education secretary. “Each one is afraid to give the other credit for solutions, where Arnold will give credit to everybody. He’s got the kind of ego and confidence to do it.”

In his inaugural speech, delivered to thousands of supporters and dignitaries outside the Capitol, Schwarzenegger went out of his way to embrace all sides. He reached out to Democrats with an invocation of John F. Kennedy, and followed that with a nod to Republican Ronald Reagan.

Underscoring the message of nonpartisanship was Schwarzenegger’s wife, Maria Shriver, Kennedy’s niece. One of her main roles in Schwarzenegger’s campaign was to call on Democrats and independents to join Republicans in supporting him. At the inaugural ceremony, Shriver, a Democrat, read a Maya Angelou poem on friendship and unity.

At a lunch after the ceremony in the Capitol rotunda, Schwarzenegger and Shriver were toasted by members of both parties, including several Democrats who are preparing to run for governor in 2006.

“We have to work together,” Schwarzenegger told the crowd. “We have no other choice. We have Democrats that have brilliant ideas, Republicans that have brilliant ideas. Why should we not put those brilliant ideas together?”

Assembly Speaker Herb Wesson (D-Culver City) offered the governor an Austrian toast -- “Zum Wohl.” He said Schwarzenegger would have the opportunity to “push the right to the middle and then it will be our job to push the left to the middle, and then ultimately we can accomplish good things.”

“His personality has to be the thing that drives this train and drives the Republican caucuses in both houses,” Wesson said. “Sometimes this place might need a Conan the Barbarian.”

Notably absent from the inaugural festivities was the Legislature’s most powerful Democrat, state Senate President Pro Tem John Burton of San Francisco, who was collecting campaign donations at a golf tournament in Palm Desert. Burton, who said he never attends gubernatorial inaugurals, was the only legislative leader who did not show up.

He described Schwarzenegger’s call for an end to partisan wrangling as “motherhood and apple pie.” Asked how Schwarzenegger could meet that goal, the senator responded: “Ask him. He said it.”

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Times staff writer Nancy Vogel contributed to this report.