With the Iraq-plagued George W. Bushsliding down the toilet in California, the main thing going for Republicans in the Golden State is the action superstar turned fusion governor. Arnold Budget 2.0, more formally known as the governor’s May revision, is getting mixed reviews. (Arnold Budget 1.0, in January, was dead on arrival.) It is receiving praise across the board for its political adroitness and criticism for going only partway toward structural reform. Many, including legislative analyst Elizabeth Hill, see it as a buy-now-pay-later approach that achieves many reductions today in exchange for future spending tomorrow, bets big on an economic revival, and defers some hard choices to the future.
Schwarzenegger’s proposed $102.8 billion budget contains major reductions in education, local government, welfare and prison spending but is something of a relief to many Democrats who feared a harsher approach. The fearsome terminator has cultivated many Democrats, none more so than Senate President John Burton, the famously acerbic San Francisco liberal whom the governor has courted nearly as assiduously as he courted Maria Shriver, with an endless array of gifts and chats. Burton has definitely responded to the action superstar’s overtures. While expressing disagreement with some of Schwarzenegger’s latest budget proposal, he lauded the governor’s good intentions, saying: “I know he cares about people less fortunate than he is. Hell, we’re all less fortunate than he is.”
While it might be balanced this year, most analysts see it as unbalanced in the future, not getting rid of the structural deficit that emerged from the state’s continuing to spend heavily even after the collapse of the dot-com boom.
That is not how the many-time Mr. Universe — buoyed by the first increase in the state’s beleaguered credit rating in years, from squat to squat-plus — sees it. “This is a great budget,” he tells me. “A great budget. You know me, I focus on one thing at a time, but I work on many things at a time. It is all part of a large picture. Don’t focus on a negative piece.
“First we stabilize the finances of the government with the economic-recovery bond. We improve the climate for the businesses with the workers’-compensation reform. We grow the economy and figure out how we grow smarter to cut the sprawl and pollution. Now we move forward with a budget that starts cutting away but preserves essential services for the people.”
But that does not raise taxes, at least not yet.
“This is not the time to raise taxes,” says Schwarzenegger. “The economy is just beginning to revive. It is a fragile thing. The state already tells the businesses to do so many things. We need the businesses to stay here and succeed to generate the revenues we all want for good programs.
“You see,” he says, “I am trying to reform the budget and reform the economy at the same time. It is not just one thing, it is both. If we reform the economy, we have more revenues. To do that we need to cut business costs with workers’-compensation reform and energy reform, keep the businesses here and attract more business. We grow the economy to grow our revenues.”
Or, as his Uncle Jack put it: “A rising tide lifts all boats.”
“You will see,” says the ever-confident Schwarzenegger. “We get the budget done, then we do energy reform to cut more business costs and help the environment, we start on education reform, we use the Performance Review and Medi-Cal reform to do more structural reform on the budget. Then we see where we are.”
Needless to say, he is counting on things that haven’t happened yet.
Does he expect this year’s budget — which, despite its avoidance of the bloodiest health and welfare cuts, still seriously dings college students on fees and access to universities — to go through as is?
“We will work it through,” says the governor, who celebrates compromise as victory, “then we will have a compromise like we did on Prop. 57 and 58 and on workers’ comp, and everyone will be a winner.”
The governor brushes aside the complaints of students and their parents who would see their admissions to four-year state universities shunted aside for two or more years into crowded community colleges. “I took classes where I could,” says America’s most famous immigrant. “There is nothing wrong with going to community college. I went to Santa Monica College, I went to West L.A. College, I made it work for my bachelor’s degree,” he notes.
Of course, that is easy for him to say, since his career path has been anything but conventional, and he knows full well that few are as single-mindedly determined. And, while his future was not assured, he was already Mr. Universe when he came to America with his legendary gym bag and 50 bucks.
The combination of unexpected one-time revenue from a hugely successful tax amnesty and better-than-projected ongoing revenues was enough to avert politically bloody cuts in health and welfare programs proposed in the first version of the budget and to avoid temporary tax increases, at least for now.