Schwarzenegger quickly begins action

AUSTRIAN immigrant Arnold Schwarzenegger disproved F. Scott Fitzgerald's famous dictum about there being "no second acts in American lives" by conquering both bodybuilding and motion pictures, and on Monday he began his third incarnation as California's 38th governor.

And just minutes after being sworn into the governorship before thousands of well-wishers on the steps of the Capitol, newly minted Gov. Schwarzenegger committed his first major official action -- and perhaps his first major mistake -- by slashing taxes on Californians' cars by billions of dollars.

Republican Schwarzenegger, who had promised "action, action, action, action" after the Oct. 7 election that ousted Democratic Gov. Gray Davis, wasted little time after his relatively low-key inaugural in beginning to fulfill his promises. He not only rolled back the tripling of vehicle license fees that the Davis administration had implemented last spring, but he called special sessions of the Legislature to work on the state's immense budget deficit and reform worker's compensation and urged repeal of the controversial new state law granting driver's licenses to illegal immigrants.

All four issues -- the car-tax boost, budget crisis, worker's compensation and driver's license law -- had contributed to the deep public enmity toward Davis and thus sparked both his historic recall and Schwarzenegger's election. Moving on all four, therefore, might be popular with voters who, as he acknowledged in his brief inaugural address, elected him "on faith and hope" rather than a political track record.

"Today is a new day in California," he declared. "I did not seek this office to do things the way they've always been done. What I care about is restoring your confidence in your government."

But even those in the friendly audience wondered: Can Schwarzenegger, a famous but untested politician manage a state that is widely thought to be ungovernable?

It's one thing to declare that we're all riding in the same lifeboat and can only reach shore if we all pull on the oars. It's another to actually persuade the state's fractious interest groups, who have struggled for survival and dominance for years, and an ideologically polarized Legislature to work for the common welfare. And the car tax is both a symbol of why Davis wore out his welcome and a harbinger of Schwarzenegger's task.

There's no question that owners of California's 28 million motor vehicles cheered when Davis and predecessor Pete Wilson slashed the license fee -- a property tax based on vehicle value -- to a third of its former size and booed when Davis' administration raised it back this year.

Most Californians, however, don't know that car tax revenues go to local governments for the libraries, police patrols and fire protection services they value so much. When it was reduced, the state made up the loss of revenues to cities and counties -- about $4 billion a year -- but when the state's own finances went into the tank, Davis pulled a "trigger" to reinstate the levy.

Inaugural attendees enthusiastically applauded Monday when Schwarzenegger renewed his pledge to cut the tax again by two-thirds, and motorists will probably join them. But if the new governor makes good on his promise to "backfill" the money to local governments again, it punches a big hole in a state budget already awash in red ink.

Dan Walters writes for the Sacramento Bee.

Schwarzenegger's new budget director, Donna Arduin, projected on Saturday that the state faces cumulative deficits of $62 billion by 2007 under current law, characterizing the problem as "staggering." But at least $13 billion of that total would result from cutting back the car tax and making up the loss to local governments.

Schwarzenegger says he won't raise state taxes to close the deficit, but there's no way he can cut spending enough to do the job. So he will almost certainly propose a $20 billion-plus bond issue to refinance the state's accumulated deficits and close next year's gap. And that means he will ask voters to borrow money, in part, to finance their car tax cut -- which doesn't make very much fiscal sense.

In fact, it resembles the hide-the-pea budgeting that got California into deep trouble in the first place and the "politics as usual" that he has promised to end.