Budget woes lead to Schwarzenegger’s moment of truth

California governor urges passage of ballot measures to help save state funds despite polls showing plan may be rejected Andrew Gumbel in Los Angeles guardian.co.uk, Monday 18 May 2009 17.55 BST Article historyArnold Schwarzenegger faces a moment of truth in his six-year tenure as governor of California tomorrow, hoping against hope that voters will approve a rescue plan to help dig the state out of a $21bn budget hole and give a much-needed boost to his dwindling political credibility.

The once boundlessly confident action movie star turned politician finds himself a much chastened man as he turns once more to the voters to try to overcome a political stalemate in Sacramento, the state capital. The polls suggest, however, that the voters are not interested in helping him out and will more than likely reject a package of ballot propositions designed to free up extra revenue and introduce some modest tax increases.

That, in turn, spells big trouble for California, which has been hit so hard by the recession it cannot raise enough taxes to keep basic services like schools and public health facilities going. Tens of thousands of teachers, policemen, firefighters and other state employees are likely to lose their jobs.

It also spells big trouble for Schwarzenegger, who once dreamed of running for the US Senate - or even the White House, if a constitutional ban on foreign-born candidates could be overturned. With his approval ratings now languishing in George Bush territory - close to 30% - he has already abandoned aspirations to continue his political career when his second term as governor ends next year.

His best hope is that a ballot victory tomorrow would give him the political boost he needs to craft a comprehensive budget deal - the package of six measures would raise only $6bn, or one-third of the overall deficit - and leave him in a position to build some sort of legacy in his final 18 months.

"We are at a crossroads," he said in a rally speech at an African-American church in Los Angeles over the weekend. "Do we want to go .. down the road of financial disaster or do we want to get up, dust ourselves off and slowly march back towards prosperity?"

The voters, though, seem in no mood to indulge him. Conservatives don’t like the idea of tax increases, especially since Governor Schwarzenegger has, until now, made it a point of principle not to advocate them. Liberals, meanwhile, are uncomfortable that he wants to end spending mandates for mental health and early childhood education.

Not so long ago, Schwarzenegger was having the time of his life as governor of California. He enjoyed movie-star popularity ratings, regularly invited legislators into his custom-built smoking tent for cigars, and declared everything to be "fantah-stic". No more.

By most accounts, the reversal of fortune is largely out of his hands. Three decades of anti-tax activism have made California’s budgetary fortunes - and the political fortunes of its leaders - dangerously dependent on the business cycle. Even a charismatic governor has to struggle to win the required two-thirds majority in the state assembly to get a budget passed, and almost always hits a brick wall because of hardline Republican refusal to contemplate tax increases of any kind.

The reason Schwarzenegger is going to the people at all is because California’s political system has, in his words, become a "poster child for dysfunction". He and leaders from the two parties made big compromises to reach agreement on the wording of the six ballot propositions, risking considerable ire in their parties’ rank and file.

But the voters appear to be tired of the constant calls to the polls, the constant budget emergencies (this is the third of the decade), and the constant promises of wide-ranging political reform that never seem to arrive.

"I’ve never been able to see the money go to where they say it’s going," one voter who heard Schwarzenegger speak yesterday, retired loan officer Jo Evelyn Payne, told the Los Angeles Times. "I’m not entirely convinced that if we pass it, that the money’s going to go where they say it’s going to go."

And so the Terminator appears close, politically speaking, to being terminated. As his options dwindle, Schwarzenegger has offered up ever more alarming suggestions, including an auction of some of the state’s most recognisable property holdings - among them San Quentin prison, home to California’s death row, the Del Mar racetrack near San Diego, familiar to fans of pulp fiction and films like The Grifters, and the Memorial Coliseum sports arena in Los Angeles.

It is unlikely any such fire sale will take place immediately - the legislature has turned down the chance to sell off San Quentin four years in a row, most recently earlier this year - but something in this crisis is going to have to give, somewhere.

"There are thousands of buildings and land parcels throughout California that represent billions of dollars of equity," the governor’s office argues. After tomorrow’s vote, it may be only a matter of time before the bidding begins.