Gov.’s Agenda to Go to Ballot

SACRAMENTO —  Rebuffed by state lawmakers in an early test of his administration, Gov. Arnold Schwarzenegger will now try to bypass the Legislature whenever feasible and tap into the public support he commands by taking his agenda directly to the ballot, aides said Saturday.

The governor himself remained publicly silent about Friday night’s defeat of the state spending limit and $15-billion bond measure he had proposed to put before the electorate. His aides, however, cast the votes as confirmation that the Legislature is ignoring the message of the Oct. 7 recall election and the mandate that they contend Schwarzenegger won.

The aides showed little interest in reopening talks with legislative leaders.

Instead, they said their plan was to try to close the shortfall in the current year’s budget by relying on a $10.7-billion bond issue that the Legislature approved this summer.

That issue is under court challenge from conservative groups that say the state cannot legally go into such deep debt without voters’ approval.

Once past the current year’s budget, Schwarzenegger aides said, the governor -- with a phalanx of political consultants already in place to push through various initiatives -- will take what staff members described as a tight spending limit to next November’s ballot in a show of direct democracy that could leave the Legislature marginalized.

Schwarzenegger had needed legislative approval to get his proposals on the March ballot because the deadline for collecting signatures had long since passed. But aides say they expect no trouble in gathering enough signatures for future initiatives.

“So we go on without the Legislature in every way that we can,” Rob Stutzman, the governor’s communications director, said late Friday, when it was clear the governor’s package would not pass. “And that will mean going directly to the ballot” and allowing “the people to do the work that the Legislature is unwilling to do.”

In the days before Friday’s votes, Schwarzenegger publicly insisted failure was “no option.” Yet his aides said later that, in fact, failure had been predicted.

Within his office, many expected all along that their proposals would be defeated and were surprised only that negotiations did not collapse sooner, Stutzman said.

“Most of us thought the odds were against getting the Legislature to act,” he said. “The fact that it went all the way to Friday with legitimate talks exceeded many of our expectations.”

Now that the $15-billion bond issue appears to be dead Schwarzenegger will face difficult choices in the seven months remaining in the fiscal year. The $10.7-billion bond issue that was passed as part of the budget this summer would cover much -- but not all -- of the current year’s deficit, Democratic and Republican budget analysts agree.

“There’s no question the ... $10.7 billion does not get us all the way there,” Stutzman said.

So the governor will seek to make nearly $2 billion in additional cuts to the budget as one step toward ensuring that the state has the money to pay off $14 billion in short-term loans that come will due in June.

Many of those cuts -- which could hit large areas of state spending, such as higher education, medical programs for the poor and prisons -- could be politically unpopular.

Moreover, Schwarzenegger himself has questioned the legality of the $10.7-billion bond issue because it was approved by the Legislature, not by voters. The administration will now have to oppose that same argument in court, arguing against the conservative groups that have challenged the bonds.

If that challenge succeeds, Schwarzenegger might have few choices but to propose a tax increase to provide the state with enough money to pay its debt. He has already said he would oppose the sort of huge budget cuts needed to eliminate the current year’s deficit without borrowing money or raising taxes.

Assuming the governor avoids that problem, his attention will turn to what aides and strategists see as an 11-month campaign that will end with November’s election.

That campaign could involve more than half a dozen measures sponsored by Schwarzenegger and various groups aligned with him. Included would be a constitutional amendment for a balanced budget and spending cap and a package of changes in the state’s workers’ compensation system, according to a gubernatorial advisor.

Schwarzenegger may also promote constitutional amendments to make government more open and to restrict fundraising during the budget season; an initiative to change how the state draws legislative and congressional district boundaries; a gambling measure; and a referendum on health care.

The buildup could be bitter. One Schwarzenegger advisor said that deciding how partisan an approach to take is the major strategic decision now facing the governor.

In the Legislature, deep skepticism remains over Schwarzenegger’s plans to largely circumvent an entire branch of government.

“If the administration is going to make threats and tell us they are going to go to the ballot and not work with us, that’s their choice. I think it would be a mistake,” said Assemblyman Darrell Steinberg (D-Sacramento). “You cannot govern solely by initiative. That kind of threat obscures the real conversation that needs to take place in California and which the governor must lead.”

Assemblyman Joe Canciamilla (D-Pittsburg) agreed.

“It’s not a realistic way to govern, nor is it responsible,” he said. “What are you going to do? Go out and gather signatures for every measure? It could take a year every time. It’s silly. It’s foolish to think something like the budget can be taken to voters on a regular basis. It is just not practical.”

Schwarzenegger aides, however, said they saw little choice. With Democrats dominating both houses of the Legislature, and with most lawmakers in safe districts where they face little opposition, the Republican governor is unlikely to win significant victories unless he can prove to legislators that he can beat them at the polls, they said.

Two GOP operatives who have worked with Schwarzenegger argued Saturday that the legislative setback had showed the wisdom of his decision to keep his team of political advisors from his campaign -- including strategists Mike Murphy, Don Sipple and George Gorton -- on board and to have them begin planning for ballot measure campaigns even before he was sworn in.

As that campaign began, Democrats and Republicans traded jabs about who was to blame for the breakdown of negotiations in the last few days.

Democratic legislators praised the efforts of the governor and his aides to establish good ties with legislative leaders.

At a recent meeting in the governor’s office, for example, Herb Wesson (D-Culver City), the 5-foot-5 speaker of the Assembly, arrived to find a pillow on the chair where he normally sits.

He picked it up. One side read, “Speaker Herb Wesson.”

“Turn it over,” the governor said. The other side read: “Need a lift?”

When Senate President Pro Tem John Burton, the prickly San Francisco Democrat, stalked out of a meeting of the governor and legislative leaders last week, Schwarzenegger’s chief of staff, Patricia Clarey, hurried after him.

Do you want to get a cup of coffee? Clarey asked. Burton agreed. The two went upstairs to Burton’s office to talk, and the senator later said that he had been charmed by Clarey’s gesture.

But in the end, personal warmth proved inadequate to make up for Sacramento’s partisan nature and the difficulty of the issues dividing the two sides.

Stutzman complained that by midafternoon Friday -- hours before the legislative deadline -- Democrats had simply stopped calling the governor’s office.

Democrats countered that the governor had interrupted the flow of negotiations by leaving the Capitol three days last week to appear at raucous, campaign-style rallies aimed at pressuring lawmakers to support his plan. “Had he spent the time here, almost every one of us in the Democratic caucus who has spent any time with the governor believes that we could have been very close to a deal by now, because it is the kind of thing that only the governor can negotiate,” said Sen. Don Perata (D-Oakland). In Schwarzenegger’s absence, the talks were left to gubernatorial aides whose own political leanings vary.

Finance Director Donna Arduin is considered a strong fiscal conservative who has endorsed cuts in health care and social programs to bring budgets into balance in the other states where she has worked.

By contrast, another top Schwarzenegger aide who played an important role in the budget talks was Bonnie Reiss, a self-described liberal Democrat and close friend of the governor’s. Also assisting him were such outside emissaries as Bob Hertzberg, a former Democratic speaker of the Assembly who served on Schwarzenegger’s transition team.

The diversity of administration voices complicated the talks, legislators said.

“It’s always difficult when you have multiple people to negotiate with,” Wesson said.

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Times staff writers Evan Halper, Michael Finnegan and Nancy Vogel contributed to this report.