Mon, Nov 17, 2003 - Page 7 News List

Schwarzenegger has big plans for his first 100 days

ACTION California's new governor faces the dilemma of solving the state's deficit problems without the option of new taxes or funding cuts

AP , SACRAMENTO, CALIFORNIA

When he takes office today, Arnold Schwarzenegger will begin running America's most populous state with an ambitious agenda for his first 100 days and high expectations.

He'll soon learn the differences between making promises and actually getting them accomplished, particularly for a Republican dealing with a Democrat-controlled Legislature.

"People will be forgiving to a degree," said Barbara O'Connor, director of the Institute for the Study of Politics and the Media at Sacramento State University.

"They perceive him as new to Sacramento, and they will be willing to give him a little time. But they are not going to be willing to have him raise taxes and they're probably not going to support any massive cuts -- especially to education," O'Connor said.

Schwarzenegger won the recall election that bumped Governor Gray Davis from office by running a campaign built on reform, promising to rebuild the state's economic engine, protect the needs of children and the elderly and break the hold of special interests over the Capitol.

The new governor said he would repeal the tripling of the car tax that took effect in September and renegotiate union contracts with state workers.

Schwarzenegger is expected to call a special session of the Legislature to begin tomorrow. The session will consider issues including imposing midyear spending cuts to help reduce next year's expected US$10 billion deficit, reforming the state's workers' compensation system, repealing a new law that will allow undocumented immigrants to get driver's licenses, and crafting a spending cap that would be placed before voters in the March election.

He has also promised a balanced budget that does not include any new taxes or any significant cuts in funding for education and local governments.

His incoming finance director, Donna Arduin, raised the bar even higher on Saturday by projecting that the state actually has a deficit of nearly US$25 billion. Her estimate excludes borrowing and other accounting maneuvers the state has used to paper over the budget hole.

Arduin's markedly higher projection also acknowledges Schwar-zenegger's plan to repeal the car tax increase -- imposed last summer by Davis and the Legislature to close part of the state deficit -- would add US$4 billion to the state's budget deficit.

The money from the car tax is due to cities and counties, who need the funds to pay for law enforcement and public safety, including the cost of fighting wildfires such as the ones that hit Southern California last month. If that money is taken away, the state would be pressured to replace it.

State Controller Steve Westly, a Democrat, said repealing the higher fees would mean cities and counties would immediately begin losing about US$11.5 million daily. In some jurisdictions, already bled dry by the wildfires, that loss would require immediate spending cuts, something Schwarzenegger has promised to avoid.

Meanwhile, the clock is ticking on a plan to borrow US$10.7 billion to pay off the state's deficit. The cash will be needed by June.

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