New Bets on Tomorrow

Gov. Arnold Schwarzenegger says his revised state budget is balanced, just one year after California was sinking under a $22-billion deficit. Well, it’s “balanced” in much the same way that former Gov. Gray Davis used the word. Its success hangs on borrowing today and an improving economy tomorrow.

But the governor is clearly in command of the process, honing his force of personality, his public popularity and his political skills. His limited victory with the budget gives him a platform to accomplish the bigger structural reforms he promised in his campaign, though they’re largely absent from the $103-billion plan he delivered Thursday to the Legislature.

Barring unlikely rebellion in the Legislature, that budget is essentially the plan the state will live under during 2004-05. On that point he’s far ahead of Davis, whose last budget was denounced before it was printed.

Schwarzenegger’s proposal is a patchwork similar to Davis’ recent budgets: spending cuts across the board, side deals with important constituents, predictions of an uptick in revenues from a rebounding economy, some one-time money, more borrowing. The state still will be spending more than it’s taking in.

Schwarzenegger managed to keep taxes off the table and did not get a big argument from subdued Democratic leaders Friday.

They comprehend Schwarzenegger’s power and know that the tax issue could bite them in the fall election campaign.

The governor, having probably gotten his way, faces the challenge of bringing key legislators into his fold for the bigger changes that ought to come next.

The Schwarzenegger plan puts off costs until next year or the year after that. His side deals with local government, public schools and higher education promise generous budget increases in future years in exchange for sacrifices for one or two years. Those promises will all cost money, exacerbating continued multibillion-dollar gaps between projected outgo and income.

Does all this mean it’s a good budget or a bad one?

That depends. It buys Schwarzenegger time to build a realistic plan to reform state government -- to actually “blow up the boxes,” as he puts it. Those boxes include overlapping energy agencies, the scores of departments and offices dealing with healthcare and dozens of superfluous boards and commissions. Schwarzenegger hopes to find significant savings in wiping out duplication and identifying “waste, fraud and abuse” through a vast audit of state government. The audit was promised for his first 60 days in office but remains unfinished. “It’s a long process, you know,” he said. He hasn’t even touched dependence on fluctuating capital gains and an outdated sales tax system.

Schwarzenegger, ever the optimist, says California will survive the belt-tightening just fine, even students who have to attend community college for a year or two to get into universities where enrollment is limited. “May I remind you,” the governor told reporters, “I started at a community college. I don’t see much wrong with myself, right?” No one challenged him.