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Adding Up the Finance Appointee's Record

November 04, 2003|Evan Halper | Times Staff Writer

SACRAMENTO — The budget writer tapped by Gov.-elect Arnold Schwarzenegger to be California finance director has a reputation as a cunning strategist with a record for pushing through the agendas of Republican governors in Michigan, New York and Florida.

Many fiscal conservatives hold her out as a hero who has enabled lawmakers to cut taxes by saving billions through smart budgeting. But in Florida -- where she worked until her appointment Monday -- it's not just minority Democrats who grumble about the condition of the state's finances.

"We've created a game of hot potato for future elected officials with our budget," said Florida state Sen. Tom Lee, the incoming Republican Senate president. "The music is going to stop soon, and someone is going to be left with a big problem."

Lee describes Donna Arduin as a "classy lady," capable of solving the problems in any budget if the right political leadership is in place.

For The Record
Los Angeles Times Wednesday November 05, 2003 Home Edition Main News Part A Page 2 1 inches; 48 words Type of Material: Correction
Donna Arduin -- In Tuesday's Section A, a caption that ran with a photograph of Donna Arduin, Gov.-elect Arnold Schwarzenegger's choice for state finance director, said it was taken after the appointment was announced. In fact, the photo was taken last month when Schwarzenegger announced his transition team.

But like many other frustrated Florida Republicans in the GOP-controlled Legislature, Lee says Arduin's legacy there includes having helped Gov. Jeb Bush paper over budget gaps to permit tax cuts the state cannot afford, setting off funding shortages for critical government services.

In California, Arduin is taking on a state budget shortfall that could easily balloon past $25 billion, thanks to a chronic imbalance between spending and revenues and legally dubious borrowing.

Campaign strategist Mike Murphy first suggested that the new administration consider Arduin, whose work he knew from Michigan, where they both had jobs in the early 1990s. Schwarzenegger's transition chief, Rep. David Dreier (R-San Dimas), was impressed by rave reviews of Arduin, and then by conversations with her.

"She likes to say this is the Super Bowl of budgeting, to deal with the kind of challenge California faces," he said.

Arduin took a leave from her Florida post last month to perform what Schwarzenegger called an "audit" of California's books. The work in progress is more a study of state spending to help set budget priorities.

"We're looking through the books, working with staff around Sacramento and asking questions about fiscal policy, fiscal management, data gathering," Arduin said recently. "We plan to show him the best practices from other states."

Repeat Audits

Some officials question whether much more light will be shed on the books since the team assigned to work with Arduin -- 10 or so GOP legislative fiscal specialists -- already did their own audits during the last budget season. Those efforts concluded that balancing the budget without new taxes would require major reductions in higher education and social programs that most voters do not want cut.

Arduin, however, is confident that the audit will be valuable.

"Sometimes you just have to know what to ask," she said. Arduin declined to share any of what has been uncovered to date, and staffers for Schwarzenegger said her report might not even be made public despite the governor-elect's campaign pledge on the day he appointed her to "open up the books and let the people look inside." They said the findings would be reviewed for Schwarzenegger by former Controller Kathleen Connell, former Treasurer Tom Hayes and Stephen Moore of the Cato Institute, a conservative think thank.

Arduin, 40, is alternately described as brilliant, tough and loyal to the point of mistrusting those outside a small partisan circle. And she is also cautious: When interviewed for this report, Arduin fielded questions on a speakerphone, with a staffer for the governor-elect also in the room. Most questions were met with a long silence, followed by curt answers.

"She does not climb on top of the Capitol to let you know what is going on," said Doug Wiles, Florida's House Democratic leader. "But she is there and her tentacles reach into every aspect of state government."

Arduin's specialties: deep reductions in social service spending and privatizing government. She has championed what is known as performance-based budgeting, by which agencies must reach certain goals or they will not get all the money they want the next year.

"When policymakers are working on their budget, it is now much easier for them to see how well a program is performing versus the amount of money being spent on it," Arduin said. Prison heads are held accountable for recidivism rates at budget time, she said, and educators must address trends in test scores.

Bush credits her with helping to keep Florida's budget in check as the economy declined and such states as California continued to spend as if it hadn't.

"Donna has protected and built Florida's financial assets while instilling the fiscal discipline required for long-term strength and stability," Bush said in a written statement.

Arduin's strategy has involved deep cuts in many services, the kind most California lawmakers -- and even, to an extent, incoming Gov. Schwarzenegger -- have said they will resist.

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