To: calgal who wrote (4107 ) 11/15/2003 11:23:04 PM From: calgal Respond to of 6358 Schwarzenegger Has Ambitious Agenda URL: foxnews.com Saturday, November 15, 2003 SACRAMENTO, Calif. — When he takes office Monday, Arnold Schwarzenegger (search) will begin running the nation'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." Schwarzenegger won the recall election that bumped Gov. Gray Davis (search) 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, who will be sworn in at 11 a.m. Monday, is expected to call a special session of the Legislature to begin Tuesday. The session will consider issues including imposing midyear spending cuts to help reduce next year's expected $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 also has 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 (search), raised the bar even higher Saturday by projecting that the state actually has a nearly $25 billion deficit. 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 Schwarzenegger'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 $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 $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 $10.7 billion to pay off the state's deficit. The cash will be needed by June. No one on Schwarzenegger's team will speak publicly about how he might deal with the budget problems, but lawmakers close to the administration have said privately that a huge bond deal is likely to be the preferred solution — as much as $25 billion to be paid back over 30 years. While the bond idea solves some problems, repayment costs would almost double the debt by the time it is paid back, to $39.7 billion, according to state Treasurer Phil Angelides, a Democrat. Some observers say such a budget proposal might have political ramifications. "He'll receive significant and sustained criticism if he proposes any tax increase," said Brian Janiskee, a political scientist with the Claremont Institute and California State University, San Bernardino. "He may even face some of the same criticism from party conservatives with such a large bond issue — which could be argued is worse than a tax increase because you are saddling our children with the debt," he said. And although Schwarzenegger comes to Sacramento with a lot of political capital to spend, he's got to be careful not to alienate the right wing of his own party, Janiskee said. Schwarzenegger also faces a Democratic-controlled Legislature. So far, key players such as Assembly Speaker Herb Wesson and Senate President Pro Tem John Burton (search) have said they are willing to give the new governor a chance. "How the Democrats react will be interesting," said Allan Hoffenblum, a GOP consultant based in Los Angeles. "These are guys that gave Gray Davis nothing but fits."