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THE RECALL CAMPAIGN

Schwarzenegger Calls for Deep Cuts

The candidate vows to spare schools but is generally vague. His plan adds no taxes.

August 21, 2003|Michael Finnegan | Times Staff Writer

After two weeks of declining to say how he would confront California 's fiscal crisis, gubernatorial candidate Arnold Schwarzenegger on Wednesday sketched the outlines of a plan for billions of dollars in spending cuts with no new taxes.

But the Republican actor's pledge to avoid tax increases was less than airtight. He said an earthquake or other disaster could strike California, so "you can never say never" to new taxes. He also refused to specify spending cuts, saying only that they would be extensive.

"Sometimes, as a surgeon would say, you have to cut to save the patient, and this is what the situation is here," he said.

Overall, Schwarzenegger portrayed himself as an honest outsider well suited to challenge what he implied was a rotten Sacramento culture that had left the state's finances a shambles.

"What the people want to hear is: Are you willing to make the changes?" Schwarzenegger said, in dismissing calls for specifics. "Are you tough enough to go in there and provide leadership? That's what this is about. And I will be tough enough. And independent. I can go up there and really clean house."

On another significant campaign issue, Schwarzenegger said he was leaning against Proposition 54, an initiative on the Oct. 7 ballot that would bar the state from tracking statistics by race.

"I'm looking at that right now, because I'm getting from both sides the input, and you know my indication is not to change the way things are," he said. "But I want to hear, again, both sides." The initiative is sponsored by UC Regent Ward Connerly and opposed by many leading Democrats.

Schwarzenegger's remarks on the budget came under immediate fire from Democrats, including the man he hopes to replace, Gov. Gray Davis. Davis said the Republican hopeful should present a far more specific plan to voters.

The state projects a budget shortfall of more than $8 billion next year. In the opening days of his campaign, Schwarzenegger proposed building schools, hiring teachers and cutting vehicle license fees; those moves would widen that gap to more than $12 billion. On Wednesday, he vowed to spare public schools from budget cuts.

Schwarzenegger's most extensive public remarks to date on the budget mess came at a news conference at a hotel near Los Angeles International Airport after he met there with 19 economic advisors. The group included economists, politicians and several executives from the high-technology and financial industries. At one point, Schwarzenegger was explicit about his strategy, saying that he is not eager to be pegged clearly as Republican or Democrat, liberal or conservative.

"It is not coincidental that Secretary Shultz is on my right and Warren Buffett is on my left," he said, referring to his two leading economic advisors, George P. Shultz, the former secretary of State and secretary of the Treasury, and Buffett, the billionaire investment mogul.

The gathering showcased Schwarzenegger's emphasis on the economy, but also illustrated the unusual nature of a superstar's first campaign for public office: It drew a swarm of news and entertainment media from around the globe.

The economic advisors' meeting was private, although afterward the candidate, along with Buffett and Shultz, met with reporters. Schwarzenegger took questions for 42 minutes; it was his longest encounter with journalists since the campaign began.

He also took time to issue a mock upbraiding of Buffett, who last week created a political headache for Schwarzenegger by suggesting that California homeowners pay too little in property taxes -- a situation brought about by Proposition 13, the 1978 ballot measure that capped increases in those levies.

"I told Warren, if he mentions Prop. 13 one more time, he has to do 500 sit-ups," quipped the former champion bodybuilder, who reiterated his support for the politically sacrosanct initiative.

As for the upcoming budget, Schwarzenegger pledged to:

* Cap state spending, through an amendment to the California Constitution. He did not specify what the cap would be.

* Name "an outside auditing group free of political influence to examine the books and find out how bad the situation really is" with state finances. The review would take 60 days.

* Enact energy reforms to cut the power bills of businesses. He gave no indication what they would be.

* Call a special session of the Legislature to reform the state's system for insuring workers injured on the job. The soaring cost of workers' compensation premiums has put a huge burden on California businesses, but state lawmakers have been unable to agree on reforms.

* Name a working group to study restructuring of state debt.

"You know, Maria and I, we teach our kids basic principles," he said, referring to his wife, Maria Shriver. "We teach them: Don't spend more money than you have.... I promise you that's what I would teach Sacramento."

"Sacramento has overspent, overtaxed and over-regulated our businesses," he said.

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