Governor Is Willing to Bend on Budget

In an overture to state legislators, Gov. Arnold Schwarzenegger said Monday that he would compromise on the details of his proposed spending cap so long as the final version proves tough enough to end a worrisome string of budget deficits.

Schwarzenegger also sought to assure reelection-minded legislators that he was not working for their defeat, inviting them to join him this week on a campaign-style swing through Democratic districts up and down the state intended to rally support for his package of spending controls and bond proposals.

“I want them to come with me and stand up on the stage with me and to talk about this issue, about the bond and how important it is,” Schwarzenegger told reporters in the Ronald Reagan Cabinet Room. He said he wanted legislators to know that he would not be “going out there and attacking people and taking people out. This is not what I want to do. Not what I want to accomplish. What I want to accomplish is for us to work together and sell it together.”

The governor also has proposed immediately cutting the budget for this year and next, and on Monday expressed anguish over the task. Having been in office for two weeks, Schwarzenegger said he now appreciates what his predecessors meant when they advised him he would need to make wrenching choices.

In a reference to the nearly $4 billion in cuts he proposed over the next 19 months -- taking money from health-care programs, higher education and the developmentally disabled -- Schwarzenegger said: “I hate making cuts. Because it hurts me.... And now I understand when past governors said to me, ‘Arnold, it will be tough decisions you’ll have to make that are painful. We all make them.’ I understood last week what that meant for the first time. Because I didn’t quite understand what that meant. Those are painful decisions, to take money away from people.”

After a Thanksgiving holiday lull, Schwarzenegger on Monday stepped up his appeal for a bond issue of up to $15 billion and a spending cap designed to avoid future financial crises. Legislators face a Friday deadline to send the measures to the ballot. The governor met separately with television and print reporters in his suite of offices, and then spoke privately with the “Big Five” Democratic and Republican legislative leaders.

The leaders voiced optimism that they could draft an accord with the governor on the spending cap. Senate President Pro Tem John Burton (D-San Francisco) is supporting a temporary cap that would expire after an unspecified time.

“It’s a very, very short time frame for a very complicated issue,” Burton said. “But we’re going to do our best to reach it either up, down or sideways.”

Schwarzenegger is to make his case to Assembly Democrats this morning before leaving the capital for a stop in San Diego. On Thursday, he is to be in Bakersfield, and on Friday, he is to be in Tracy in the Central Valley. Schwarzenegger is singling out areas represented by moderate Democrats. He wants voters to call legislators and urge them to support his plan to close budget gaps and shore up the state’s finances. He is not anticipating defeat.

Borrowing language from the nation’s space program, the governor said: “Failure is no option. It just doesn’t exist. I didn’t campaign this way: ‘What if I lose this election?’ I never went into a competition, in weightlifting or bodybuilding, if I cannot lift this weight.... ‘What if this movie tanks in the box office? What if I hurt myself doing this stunt?’ ... I will work and do everything I can to make it happen. Because if you look for an excuse and say what if it doesn’t happen, you’re taking the easy way out.”

Still, Schwarzenegger is facing opposition from powerful corners of state government.

State Treasurer Phil Angelides, a Democrat expected to run for governor in 2006, is scheduled to launch a campaign against the $15-billion borrowing plan at a Sacramento elementary school this morning.

Angelides contends that the borrowing will prolong repayment of the state’s debt, leaving the children and grandchildren of Californians to pay for overspending that took place before they were born.

Schwarzenegger’s spending cap proposal has angered legislators and interest groups, who have portrayed it as a power grab by the executive branch of government and a vehicle for excessive budget reductions.

The cap he proposed would depress spending by $14 billion beginning in July and allow it to grow no faster than population and per capita income.

Education groups said they would resist the cap in its current form because it would cost local schools and community colleges billions of dollars, and end the constitutional guarantee that half of all new revenue goes to education.

Instead, in years when the state has a surplus, all of the money would go into a reserve account. That money could be spent only to provide tax rebates, pay off deficit financing bonds, handle emergencies or to supplement general fund spending when revenue drops during economic downturns.

The California Teachers Assn. has been working with the governor on revising his proposal to avoid the education cuts.

“I don’t believe the governor wants to cut education,” said Barbara Kerr, president of the association.

“He has said that publicly. He said it personally to me.... We are talking. I am hopeful we can work it out.”

Democrats are also alarmed by a provision in the governor’s cap that enhances the governor’s power at the Legislature’s expense.

Under the proposal, the governor could make budget cuts at any point in the year if the state begins running a deficit. The cuts would take effect unless two-thirds of the Legislature voted to overturn them.

“It is a complete reversal of the constitutional role in both the U.S. and the state constitutions,” said Senate Budget Committee Chairman Wes Chesbro (D-Arcata). “It is getting a very hard look by us.”

“This thing was hastily prepared,” Chesbro said of the governor’s proposed spending cap. “We will talk to them this week and try to come up with solutions for some of these problems.”

Burton said: “We don’t believe in an autocrat. People elect a governor ... not a czar.”

The nonpartisan legislative analyst advised legislators to closely study the details in the governor’s proposals, noting that they “have the potential to fundamentally shift the balance of power between the executive and legislative branches of government.”

The analyst said the cap would lock in future spending at a low rate, and bar legislators from bolstering state programs in a healthy economy.

Schwarzenegger did not dispute the claim that the spending cap amounts to an expansion of the power in his favor. “No two ways about it,” the governor said. “It’s something that is a safeguard so it [a budget deficit] doesn’t happen again.”

Yet he said he is not wedded to the proposed cap he unveiled last week, inviting a new approach.

“I let them know what my definition of a spending limit is; maybe there’s another definition that will make everyone feel more comfortable,” Schwarzenegger said. “This is like a collaborative effort so we can accomplish the thing that this will never happen again, the overspending. And so how do we protect the people from that. And that’s part of the promise I made to the people.”

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Times staff writer Jeffrey L. Rabin contributed to this report.