Reporting from Sacramento — State government was failing at every level. There was an electricity crisis, a water crisis, a prison crisis. Car taxes had tripled. State contracts were tainted by corruption.
Financial ruin loomed.
In the state's historic recall election, voters turned to Arnold Schwarzenegger, a movie star whose brand was blowing stuff up, flexing muscles and delivering goofy one-liners.
Seven years later, with Schwarzenegger's tenure in its final day, the state's schools are in poor shape, the public university system is losing its sheen, the federal courts have taken control of part of the prison system. The deficit keeps growing.
In a recent interview in his stately Capitol conference room, his "Conan the Barbarian" sword resting in a case behind him, the governor looked back. He defended his record but admitted to errors that were key to his inability to fulfill the promise of tearing up the state's credit card and "ending the crazy deficit spending."
One crucial misstep came in the first few months, he said. Instead of confronting voters with the pain of dealing with the deficit he had inherited, Schwarzenegger shied away, backing a ballot initiative to borrow $15 billion to paper over the accumulated budget problem.
"It was a mistake," Schwarzenegger said. "I should've gone the other direction to early on solve the budget problem and use the political muscle I had in that first year in office."
He insists that the plan still could have worked. If the national economy had not slipped into recession in 2008, California's finances — and, by extension, his record — would look far better today, he says.
"If I had known then what I know now, that we would have another recession, I would not have signed the budget that year," he said.
That initial error had lasting consequences. Even the governor's most ardent critics acknowledge there were impressive periods of productivity in his two terms. Schwarzenegger deftly navigated the complex workers' compensation crisis, negotiating a deal to drastically cut the premiums paid by employers. The state's rolling blackouts quickly ended after he took office. His plans to audit government and root out all the waste and fraud flopped, but he ultimately won incremental reforms that will have a lasting effect. The landmark global warming law he signed propelled him — and the state — to the forefront of the environmental movement.
Yet even his biggest defenders concede that he never got control of the budget. Having missed his initial opportunity, Schwarzenegger found himself for the next several years playing a role for which he was ill suited: an inside game of Sacramento budget politics.
Schwarzenegger won election as an anti-politician and fared poorly once the public started to see him as yet another Sacramento insider. He repeatedly was outwitted and outmaneuvered by the machine Democrats and union bosses he railed against. They painted his plans for getting the budget under control as mean-spirited and damaging to the state. The public sided with them more often than not.
Much of the Legislature, meanwhile, grew irritated by him and his Hollywood shtick.
For many legislative Democrats, the irritation hardened into dislike in 2005, when the governor kicked off the year by picking a fight in his State of the State speech, demanding a tight constitutional spending limit that would force enduring large-scale cuts in education and other programs. He insisted new state workers be given not government pensions, but 401(k)-style retirement plans. He said teachers shouldn't get salary hikes just because they had been on the job a long time.
It was an agenda that thrilled the anti-tax activists at the Howard Jarvis Taxpayers Assn., the Club for Growth and Americans for Tax Reform, but left Democrats angry and perplexed.
"I remember sitting in the chambers during that speech and thinking, 'He just declared nuclear war on the first day of the session. Why is he doing this?'" said Sen. Denise Ducheny, who chaired the Budget Committee.
Schwarzenegger threatened to go to the ballot if lawmakers rejected his plans. When he did so, he tried to re-create the magic of the recall. He held grand events with big props. He swatted away protesting nurses as Sacramento "special interests" who resent him "because I always kick their butt." He declared Democratic lawmakers "girlie men," "spending addicts" and "losers."
The show was a flop. The opposition successfully branded him a bully, an egomaniac, a millionaire dilettante tinkering dangerously with the financial stability of the state's schools, police forces and firehouses. The demonstrations became such a nuisance that the locations of some media events were kept from the public so the governor wouldn't have to contend with chants.