The Savings Bump Up Against the Costs

Even before its official release, a plan commissioned by Gov. Arnold Schwarzenegger to revamp state government elicited wide skepticism Friday over whether it could produce its promised savings and overcome opposition from some of the Capitol’s established lobbies and institutions.

Though many groups were withholding public judgment until they read the report, others voiced concerns that some of the report’s recommendations cloaked political goals beneath the veneers of frugality and efficiency.

“I think it will be tougher for the governor to get this through than the budget. There are just so many oxen that are going to get gored,” said Ron Roach, communications director of the California Taxpayers Assn., a business-funded Sacramento nonprofit organization. “All these boards and commissions and various programs have developed constituencies that are going to howl if they get threatened.”

Public employee unions, among Sacramento’s most potent forces, are wary of suggestions that could lead to more work being done by private companies or outside their purview. The plan would eliminate $41.5 million in automatic merit raises over the next five years.

Environmentalists signaled Friday that they expected to oppose proposals that would consolidate or eliminate many boards that allow for public participation in regulating air and water pollution.

Advocates who have spent years creating and protecting cherished programs that serve those without political power are unnerved that they could be affected.

And budget experts are concerned about reforms that would shift the costs of essential public operations elsewhere.

The California Performance Review report was assembled over the last five months in secret by 275 state employees, experts and outside consultants.

Schwarzenegger and his top aides have yet to sign off on any of its more than 1,000 recommendations, which would also have to survive a battery of public hearings and one or more legislative votes to become law.

The report’s strongest appeal lies in its promise to help ease California’s budget woes, and indeed the report claims to have found ways to save $32 billion over the next five years.

But most of those savings are not projected to materialize for some time. If every one of the recommendations were adopted, only $6 billion would be realized by June 2006, according to the report. Even those numbers appear optimistic to some.

“I think those projections, just intuitively, are just really high, given that they say that they’re not going to fire people,” said Barbara O’Connor, director of the Institute for the Study of Politics and Media at Cal State Sacramento.

In fact, some of the report’s ideas would cost taxpayers more money to improve the dozens of programs that the panel found operated deficiently. The report recommends spending, over the next five years, $32 million to improve criminal background checks; $1.6 million to boost career technical education classes in high schools and $550 million for better monitoring of traffic operations.

Jean Ross, executive director of the California Budget Project, a Sacramento watchdog group, said that a number of the provisions appeared to shift responsibilities and costs away from Sacramento and onto other entities, including local governments and individuals.

The report recommends saving $432 million over the next five years by giving local agencies the responsibility of maintaining about 6,500 miles of state highway lanes. Such measures could bring out the wrath of local leaders, who showed themselves to be a formidable political force in this year’s budget negotiations.

A proposed change to California’s existing programs to give property tax relief to the elderly and disabled would reduce the amount Sacramento spends on the programs by $696.5 million over the next five years.

Some of the biggest budget changes come not from government streamlining but from raising more money. The report advocates increasing college and university tuition for out-of-state residents to bring in $1 billion over five years and setting an earlier enrollment cutoff date for kindergarteners to save $2.7 billion.

The toughest part of winning approval for the proposed overhaul is likely to be in the Legislature -- especially if Schwarzenegger decides to present a package of reforms to be voted on in one block.

The panel favors eliminating 1,153 appointed positions on the hodgepodge of state boards and commissions where governors and legislators often stash allies.

A number of the provisions are likely to irk lawmakers. In some areas the report recommends reducing the amount of information state agencies provide to legislators. Other provisions -- such as changing the state budget to cover two years -- may also be interpreted as grabbing power.

“It would be my suggestion on something this big you can’t just take it or leave it,” said Senate President Pro Tem John Burton (D-San Francisco). “We would reject it as a whole then go through agencies or departments one at a time and see what we wanted to accept. I guess they could put it on the ballot as an initiative, but when you are goring 2,000 offices, you’ll have a whole lot of interests against it.”

The public employee unions have enormous sway among the Democratic majorities in the Senate and Assembly, which could complicate the heart of the proposed reorganization. Several recommendations would reduce the importance of seniority and allow non-state employees to apply for management jobs.

“Clearly there is a political agenda being run to outsource state services,” said J.J. Jelincic, president of the California State Employees Assn., which represents more than 140,000 mostly white-collar state employees. “To the extent that this leads to more efficient public services, we’re going to be supportive. If this becomes a cover for reducing public services, we’re going to have a problem.”

Some of the ideas have been rejected in past sessions; others would alter rules and agencies that were established by advocates and legislators. Anthony Wright, the executive director of Health Access California, a Sacramento-based consumer advocacy group, said he was concerned about the idea of moving the Department of Managed Care, which his group helped found, into another part of the bureaucracy.

“The way it seems to be done in the pieces of paper I’ve seen indicates that we have real concerns over HMO patients losing the consumer protections that we won in California five years ago,” he said.

Yet for all the consternation, many are excited about Schwarzenegger’s notion of reexamining the way Sacramento works -- something that has not been tried on this scale since Ronald Reagan was governor.

“I applaud what he’s done and that he searched for the best brains around the country,” said Stanley Zax, a Democrat who is vice chairman of the Little Hoover Commission, which must approve government reorganization plans before they are sent to the Legislature.

“Whether what they re-scrambled, so to speak, is workable or not, that is what we have to study,” he said. “What’s the worst that can happen? It engenders serious debate?”

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Times staff writer Marc Lifsher contributed to this report.