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Arduin to Walk Economic Tightrope

Confirmed as the state finance director, the administration's 'bad cop' favors budget cuts.

March 16, 2004|Evan Halper | Times Staff Writer

SACRAMENTO — She is the marvel of Republican strategists nationwide as a fiscal fix-it expert able to swoop into states awash in red ink and restore stability.

Now, Donna Arduin, confirmed by the state Senate on Monday as state finance director, is on the spot in California to the tune of $14 billion.

"I have seen firsthand -- in other states -- governors and legislatures going through difficult fiscal times," she said in an interview at her Capitol office. "I know what has worked and what hasn't."

At the urging of her boss, Gov. Arnold Schwarzenegger, voters earlier this month approved billions of dollars in refinancing bonds through Propositions 57 and 58. But the state still faces a $14-billion shortfall in the fiscal year beginning July 1, and it's Arduin's job to find solutions. Soon.

The state must OK a balanced budget by June 30. The Legislature is divided on how to make it happen, and the governor remains a wild card in reaching agreement.

Arduin will play constantly shifting roles as she deals with the Legislature, maneuvers within the Schwarzenegger administration and works to rebuild Wall Street confidence in California. By summer, she could emerge as a crafty budgeteer or a GOP hatchet woman clueless about California.

As early as last November -- after a five-week review of the state budget -- she inflamed Democrats with her bluntness. "We knew this was going to be bad," she said of the state's finances. "The fact is, this is staggering."

Her proposed cuts in spending for the developmentally disabled became a public relations disaster. And she walked out of a public hearing during hostile questioning.

But on Monday, the contrast couldn't have been sharper. The Senate, by a 34-0 vote, confirmed the new budget chief.

"We think the governor should have his own person," said Senate President Pro Tem John Burton (D-San Francisco).

Arduin -- the number-crunching favorite of the GOP and an outspoken advocate of privatization and cuts -- has emerged as a player in Sacramento's bruising game of "Let's Make a Deal."

"She came with what we perceived to be a rather large ego and not much of a desire to work collectively to solve the problem," said state Sen. Joe Dunn (D-Santa Ana).

"Lately she has shown a willingness to set her ego aside, roll up her sleeves and work toward solutions -- although I suspect that may be driven less by her desires than those of the administration as a whole."

The Democratic-run Legislature is by far her biggest challenge.

Legislators are still not sure what to make of Schwarzenegger's finance wizard. Many of the Democrats working on the budget said they had not met her as of early this month.

Some that have say her curt manner makes her difficult to read -- a sharp contrast to her predecessor, Democrat Steve Peace, a former chairman of the Senate Budget Committee brought in to engage the Legislature by a governor having trouble getting their respect.

The emotional Peace enjoyed chewing over weighty policy issues in public. Lawmakers say they typically knew where he was going. And when he felt the Legislature went too far astray, he would let its members know it.

Arduin's role is different. Schwarzenegger doesn't need her to build bridges with legislators, or to try to bring them under control. He has proved gifted at doing that himself. He needs her to generate ideas. And by most accounts, he is listening to what she has to say.

"She is not the backslapping type of person," said Assembly Republican Leader Kevin McCarthy (R-Bakersfield). "We [didn't] hire her to be a backslapper."

In January, Schwarzenegger and Arduin presented a blueprint for closing the budget gap through deep spending cuts in almost every area of government. It was roundly criticized by legislative leaders.

Now, the finance director must help the governor find middle ground. It is not an easy task for someone who is arguably the most conservative voice in a diverse Cabinet.

Ashcroft Comparison

Republican political consultant Dan Schnur says she is well-received by the party's conservative activists the same way the U.S. attorney general helps President Bush. "She's the John Ashcroft of the Schwarzenegger administration," he said

Arduin cemented her reputation as a champion to anti-tax and libertarian activists in her last job as Florida Gov. Jeb Bush's budget chief. There, she used skills honed as top deputy budget director in Michigan and then New York -- two states where Republican governors pushed through plans to dramatically cut back state services.

She says she still has regular phone chats with Bush, where they bounce ideas off one another. "Donna has gained a national reputation as the single foremost expert on cleaning up state budgets," said Stephen Moore, president of the Washington, D.C.-based Club for Growth. The political committee targets for removal from office Republican legislators whom they deem too liberal on fiscal issues.

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