Transition--Eight Weeks That Will Shape the State : Politics: Governor-elect Wilson must select his key aides and devise a budget. All this before he takes office.

Otto Bos quickly found out what it is like to be a senior adviser to a governor-elect this week. He had been out with friends on a boat in San Diego’s Mission Bay celebrating Pete Wilson’s victory and was disembarking when he reached up and felt his chest.

“I was surprised,” he recalls. “I thought I had put on muscle or weight during the campaign, then I discovered I had about 20 resumes in my pockets.”

Wilson and his closest aides can expect to receive thousands of resumes in the next few days as friends, relatives, contributors, campaign workers, hangers-on and some present appointees of Gov. George Deukmejian line up for roughly 1,000 soon-to-be-vacant political jobs that pay from $40,000 to $100,000 or more.

“In the first week alone we had over 3,000 job applications,” Steven A. Merksamer, Deukmejian’s first chief of staff, said of that Administration’s first weeks. “We had tens of thousands in the course of the transition.”

Before he takes office on Jan. 6, Wilson also must piece together a state budget proposal to send to the Legislature. And the fiscal picture is bleak. Budget officials already are forecasting problems that could approach or even surpass this year’s, when Deukmejian and the Legislature spent much of the summer trying to close a $3.6-billion revenue gap.

“Pete will face some of the most important decisions he’ll make as governor in the next two months,” Merksamer said. “I’ll never forget when George (Deukmejian) and I went in to see Jerry Brown after the election and he said you may not believe this, but your decisions during the next two months will be your most important. I realized it was true in the abstract, but I never realized how true it really was until much later.”

It will be a hectic eight weeks. Besides surrounding himself with a team of senior advisers and cabinet members and creating a budget for one of the world’s largest governments, Wilson must also take care of some personal business: like settling on a place to live, deciding how to redecorate his office--every governor has a different style--and staging the inauguration.

Wilson already has begun to make some of those decisions, at least the easy ones. The day after the election, he designated Robert S. White, 48, who has been his top aide in three elective offices, to be his chief of staff in Sacramento. Bos, 45, a longtime adviser who directed Wilson’s winning campaign, assumed the title of communications and public affairs director for the transition.

The Wilson Administration also will have a Deukmejian hue. Loren Kaye, 34, deputy cabinet secretary for Deukmejian, has been named Wilson’s policy director. Terrance Flanigan, 43, Deukmejian’s appointments secretary--the gatekeeper who screens job applications and recommends whom to appoint--will serve the same role for Wilson.

On Friday, the governor-elect came to Sacramento to begin making the really tough decisions, such as appointing a finance director, who basically will keep track of taxes and spending. Next to the chief of staff, this will be the most important appointment Wilson makes.

There were rumors--not denied by Wilson’s inner circle--that the leading candidate for finance director was Thomas Hayes, the appointed state treasurer who lost in Tuesday’s election to Democrat Kathleen Brown. Hayes is a former state auditor general with broad fiscal experience and substantial knowledge of state government. “Pete obviously has a high regard for Tom,” White said. “We’ve asked Tom to help us out on some briefings during the transition.”

Wilson also was reaching out to Democrats. Conspicuous at the formal opening Friday of his transition office in a high-rise looking down on the state Capitol was Bill Hauck, chief of staff for the late Democratic Assembly Speaker Bob Moretti. Hauck, a longtime Wilson friend, will be involved in policy development for the governor-elect, aides said.

The governor-elect told reporters that his “highest priorities” before inauguration day “will be setting the direction of my Administration through major appointments and policy initiatives.”

“Most important of all will be fiscal policy,” he said, announcing that budget briefings will begin next week. Wilson, however, also intends to return to Washington next week to begin closing down his Senate office.

The governor-elect also must choose a successor for his Senate seat, someone who must stand for election in 1992.

Beyond that, there also are the mundane, personal decisions, such as finding a place to live and redecorating offices.

The nation’s most populous state does not have a governor’s mansion. It used to, a fine old gingerbread Victorian in downtown Sacramento. But Nancy Reagan considered it a firetrap and moved out shortly after her husband took office in 1967. The governor’s wealthy friends--his so-called kitchen cabinet--bought a large house for him to use. Meanwhile, Reagan had the state begin building a sprawling $1.5-million governor’s mansion on a river bluff far outside of town.

But the big mansion was not completed until Reagan left office. His successor, Edmund G. Brown, Jr., refused to live in it, preferring to sleep on a mattress on the floor of an old apartment house across the street from the Capitol. Deukmejian wanted to live in the mansion, but the Democratic-controlled Legislature ordered it sold. So the new Republican governor took a room in a Holiday Inn for a few weeks before moving into a modest apartment. Ultimately, as with Reagan, wealthy supporters bought a house for Deukmejian to use.

During the transition, Wilson plans to rent a house in the Sierra foothills near Auburn, 30 miles east of Sacramento. He will move closer to the Capitol when he becomes governor.

Once that happens, Wilson’s working conditions should be a lot better than what Deukmejian found when he entered office eight years ago.

“The governor’s office then was a disgrace,” conceded B.T. Collins, Brown’s chief of staff. “It was a safety hazard. The carpet was torn. Files were being stored in the shower.”

The shower had been installed by Reagan, but Brown blocked it off with an office refrigerator. Deukmejian reopened it, but replaced the tile personally chosen by Nancy Reagan, regarding it as “too commercial.”

Deukmejian found duct tape everywhere holding carpet together. Hard wooden benches dominated the reception lobby, installed there by Brown to discourage protesters from staying too long. Paint was peeling. So before his inauguration, Deukmejian ordered the first remodeling of the governor’s office since the Reagan era.

One morning, Brown walked in and realized what it was like to be a lame duck: A workman was standing at his desk sawing Venetian blinds for the governor-elect. “He just exploded,” recalled Collins. “The governor was trying to make a phone call and there’s this guy using a power saw at his desk.”

Two days before Deukmejian’s inauguration, after all the offices had been remodeled and emptied, some of Brown’s longtime supporters and aides decided to hold an impromptu New Year’s Eve party in the refurbished quarters. They filled garbage barrels with champagne and ice and partied until 2 a.m., leaving one of the barrels in Collins’ vacated office, which soon was to become Merksamer’s.

“The ice melted and leaked out of the can and completely soaked the floor and buckled the parquet underneath,” said Jim Burton, who was Collins’ deputy and the transition liaison. “I got back in there at 9:30 the next morning and Steve Merksamer had a very concerned look on his face. He seemed worried that after all the (remodeling) work, we had gone through and rioted in the offices.”

Filling the offices with the right people will be Wilson’s biggest problem. Unlike Republican Deukmejian taking over from Democrat Brown, or Brown replacing Reagan, “this will be a friendly takeover and we’ll be dealing with people who are our friends,” said Kaye.

Some friendships will be strained and feelings bruised because many people will be asked to leave. Wilson will want to place his own people in most key jobs, aides said.

Even so, it is bound to be smoother than past “hostile takeovers.”

“We had some bozos who said they weren’t going to quit, that they wanted to be fired by Deukmejian,” Collins said.

Michael Franchetti, Deukmejian’s first finance director, who ultimately was denied Senate confirmation, recalled how “on the first day Deukmejian was governor, we assumed all of the (Brown political appointees) would leave. But some stayed in their offices for days and days. We finally got a former cop and made him the enforcer. We said it’s your job to ferret out these people and make them leave. Some stayed on until we threatened to move them out physically. A couple were still there seven years later.”

Merksamer described the considerations that go into a governor’s decisions about appointments, which include a personal senior staff of about 10, a nine-member cabinet of agency secretaries and more than 50 department directors.

“You’re balancing all kinds of factors,” he said. “Were (the applicants) helpful in the campaign, were they not helpful, to what extent do you broaden your (political) base, to what extent do you play to your base; there are ethnic considerations, gender considerations. . . . There’s a problem finding people who are knowledgeable about state government. . . . You want people who are honest, straight shooters, who will not just tell you what you want to hear. People want jobs and they’ll do a lot of things to get jobs. It’s very, very tough, the hardest thing about a transition.”

Shortly after Deukmejian’s election, Collins gave Merksamer this advice about filling key government positions: “Never underestimate the importance of loyalty. Get a signed, undated resignation from every appointee. And fire someone as soon as you can to show who’s in charge.”

But just days after a triumphant election, “it’s a very heady, exhilarating time,” Merksamer noted.

Everything is going well. And the governor-elect still is not responsible for state government. “But after you’ve reviewed your 600th resume and grappled with billions of dollars of budget items, it becomes sobering,” Merksamer said.