Bit of Budget Horse-Trading

It's been a good first 10 days for Gov. Arnold Schwarzenegger. He scored quick victories on two major campaign promises: rolling back the car tax and acting to repeal the law allowing undocumented immigrants to get driver's licenses. The governor even got a cheering ovation from 17,317 constituents at a Sacramento King basketball game Tuesday night. That's unheard of for a pol these days.

But Schwarzenegger's plan for restoring the state to fiscal stability received a frosty welcome from Democrats and some Republicans in the Legislature. He's proposing a long-term $15-billion general obligation bond issue to restructure existing state debt, a strict spending limit and immediate midyear budget cuts of $1.9 billion.

The bond issue would unnecessarily saddle the next generation with today's debt. And the proposed cuts fall heavily on health and social programs for the poor -- for example, limiting how many can participate in the Healthy Families program.

If there needs to be a spirit of cooperation in Sacramento -- and emphatically there does -- Finance Director Donna Arduin didn't help by charging that there had been flagrant overspending during the last five years, including acupuncture for Medicaid recipients. There is truth in much of what Arduin said, but to start off so sharply is like poking a bear with a stick.

The education lobby is worried that Schwarzenegger's proposed state spending cap would cut off funds from Proposition 98, the ballot measure that requires nearly half of any budget surplus to go to public schools. The cap would direct the whole surplus to a rainy-day fund. Both sides will have to give.

Proposition 98 causes boom-and-bust cycles for the schools and prevents the state from putting aside money. But the flow shouldn't be cut off all at once. The governor's finance staff and education officials need to figure out a middle course. The same goes for Schwarzenegger's plan to base the spending cap on the 2004-05 budget. Starting from such a low point would starve programs for years, from environmental safety to Healthy Families. Again, a good reason for the governor and legislative leaders to seek compromise rather than draw lines in the sand or issue threats.

The cuts envisioned next year could even trigger more support for a temporary tax increase. Unlike former Gov. Gray Davis, Schwarzenegger has the clout to get such an increase passed.

Noting the hostility of majority Democrats in the Legislature, a spokesman hinted that Schwarzenegger might go into lawmakers' home districts and campaign for his plan.

The governor would get further by meeting with key lawmakers to do some horse-trading before the Dec. 5 deadline for putting the spending plan and any potential bond issue on the March ballot. Schwarzenegger has real force of personality going for him. He shouldn't give up on the Legislature without trying, and after all his promises of bipartisanship.

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