Schwarzenegger Vows to 'Make Every Use' of Overhaul Plan

By Peter Nicholas

Aug. 4, 2004 12 AM PT

Times Staff Writer

SACRAMENTO — Gov. Arnold Schwarzenegger pledged Tuesday to “make every use” of a meticulous proposal to overhaul California’s bureaucracy, describing it as a tonic for state government and setting in motion what is expected to be an impassioned public debate about the state’s direction.

In his first public comments about the report, Schwarzenegger did not single out anything he liked or disliked about the 2,504 pages of recommendations. But he predicted that “special interests” would attempt to foil the most sweeping plan to revamp California government since Ronald Reagan served in the Capitol.

“Of course there will be the special interests that will be screaming,” he said. “They will be complaining. They will be squawking about the recommendations, calling them unfair and impractical or maybe even worse. But this is because their agenda is not the people’s agenda.

“The people know that California needs many, many reforms: prison reform, energy reform, government reform, education reform,” the Republican governor continued. “We are going to meet all those challenges and much more.”

Schwarzenegger was handed a copy of the phone book-sized yellow volumes at a ceremony in a vast state property warehouse, against a backdrop of aging computer monitors and dusty surplus desks that are being offered for sale to the public. The governor promptly turned the report over to officials who will take it on the road for public comment.

Though the overhaul is meant to streamline government, it has already spawned one new commission: In June, Schwarzenegger created a panel of 21 state legislators, public officials, academics and political supporters who will hold five hearings around the state and summarize the responses in a second report to the governor.

The plan officially unveiled Tuesday is the work of the 275-member California Performance Review team set up by the governor early in the year. Members included state employees borrowed from various departments, outside consultants and top aides to the governor.

At Schwarzenegger’s behest, the task force carried out a top-to-bottom review of state government largely in secret, working out of two floors in a leased office building a few blocks from the Capitol. The entire effort cost about $9 million -- most of that reflecting the salaries of the state workers.

The report is so broad and ambitious in scope that it is likely to frame the debate in the Capitol for months to come and trigger discussion about questions fundamental to California: How much power should rest with the governor? How should the environment and industry be regulated? What should be done to invigorate public education?

Recommendations number more than 1,000. The review team calls for state government to be shrunk by 12,000 workers. It suggests doing away with 118 state boards and commissions and, in most cases, shifting their duties to the executive branch. It hopes to make government more accountable by centralizing decision-making in the governor’s office.

Total savings would reach nearly $32 billion over the next five years, according to the report, although some Democratic lawmakers already have raised doubts about the figure.

“We will make every use of the California Performance Review to create an efficient, responsible and responsive government -- a 21st century government for the future of California,” the governor said. “We cannot just chip away at the edges of our state’s problems. Sometimes a surgeon has to cut in order to save the patient.”

Schwarzenegger said he would also distribute the report to his Cabinet for advice. The governor has a number of choices. He can:

* Try to adopt parts of the plan through legislation.

* Package sections as initiatives that would go to the ballot.

* Enact some elements by executive fiat.

“It’s got a lot of good thoughts in it,” said Senate Minority Leader Dick Ackerman (R-Irvine) “I hope the majority of those could be carried forward. And if they’re not, I think the governor would fulfill his promise to take it to the ballot.”

Within hours of the report’s release, Democratic state officials began to question some recommendations and maintained that the report’s credibility was tainted because so little was known about how the review team operated. Members were asked to sign confidentiality agreements that forbade them to talk publicly about their work.

State Treasurer Phil Angelides said the Schwarzenegger administration needs to release records showing how the report was prepared. Major corporations -- including Microsoft, Hewlett-Packard and EDS -- met privately with the review team as the study was underway, while various public interest groups said they were excluded.

“If the governor is sincere about the effort, he needs to get off on the right foot so there’s no taint in this process,” Angelides said in an interview. “He needs to keep the commitment he made last year: to do everything in the open. No decisions in the dark.

“It would behoove him to release a full record of all the meetings and communications between the governor and members of his administration, and private interests -- whether they’re corporations or lobbyists or individuals -- so that everyone can see what meetings were held, who attended, who had access, what was discussed and what was proposed by whom.”

Lt. Gov. Cruz Bustamante, who was defeated by Schwarzenegger in October’s recall election, released a statement praising a couple recommendations but concluding that, “I found a number of bad and failed ideas being recycled and efforts to concentrate a great deal of power under the governor. If efficiency is improved by these measures, that will be a good thing. But efficiency cannot be used as an excuse to hide decision-making from the public and the news media.”

Assembly Speaker Fabian Nunez (D-Los Angeles) also struck a skeptical tone. “As we review the operations of government, we need to be careful that, in the name of efficiency, we don’t shortchange the public’s ability to influence its own government,” he said. “We need to be careful that we don’t put too much control in the hands of the few at the expense of the many.”

The governor and review team leaders defended their methods.

Team co-executive director Billy C. Hamilton, who led a similar examination of state government in Texas 13 years ago, said the atmosphere in Sacramento was an open one. “I’m hearing all this secrecy stuff,” Hamilton said. “Anyone can walk into those offices. I’ve had some of the craziest people come in with ideas. We listened to them. But it doesn’t mean we buy it.”

Asked how the panel functioned -- why it might have embraced some suggestions and eschewed others -- Hamilton cited the “stupidity” of some ideas that came in. “When public employees are involved, there’s always the idea that we ought to raise everyone’s pay by 15% and we’d all feel better,” Hamilton said. “But we’re trying to save money to make the government work better....”

Schwarzenegger said it was essential for review team members to keep quiet about the study before its completion.

“It was very important for everyone to just stay and keep it inside and not come to conclusions or go and give information away,” the governor said. “So I think confidentiality in that case is very important, because we always had the intention to open up the report to the people of California. There’s no secret in there.”

Both the governor and Hamilton said industry did not have special access.

“The two or three vendors that I talked to, most of them wanted to know what the heck we were doing,” Hamilton said. “They really didn’t try to sell us much of anything. I’m sure they were trying to figure it out so they could figure out if there was business in the future.”

Said Schwarzenegger: “There are many in the corporate world that are very smart in reorganization, and we of course talked to them because we want to get their input. But we are sharing with everyone now, at the same time, that information. No one got a look at [the report] before me.”

The 21-member commission that is now set to solicit public comment makes its first stop Aug. 13 at UC Riverside. Next up will be UC San Diego on Aug. 20. Then Cal State Fresno on Aug. 27; San Jose State on Sept. 10; and Cal State Long Beach on Sept. 17.

William Houck, co-chair of the commission and president of the California Business Roundtable, said there would be more than an hour at each hearing for members of the public to offer thoughts.

An agenda for the first hearing lists introductions, then an explanation of the study, followed by testimony from invited witnesses. Others will be given a chance to comment at the end of the five-hour session, right before adjournment.

“I want to hear directly from you,” Schwarzenegger said. “I’m asking every citizen how we can make our government work better for you. I want everyone to know that you will be listened to. I want to listen to your ideas. And you don’t have to be a Sacramento insider to have your voice be heard. Our commission is coming right to you.”

Changing state government

Gov. Arnold Schwarzenegger on Tuesday received the initial report of the California Performance Review, calling for sweeping changes in state government. A new commission he appointed will begin hearings Aug. 13. Final recommendations go to him for action.

By the numbers

* Cost: $9 million in state salaries and other expenses

* Report size: 2,504 pages in five volumes produced in five months

* Consultants, state workers who drafted the report: 275

* Recommendations: 1,000+

* Projected savings: $31.6 billion over five years

* State agencies and departments: 91 would be consolidated into 11

* State jobs: 12,000 would be eliminated out of 315,926

* Annual merit raises: $41.5 million would be cut

* State boards and commissions: 328 reviewed; 118 marked for elimination; 1,153 board members would be dropped

* State highways: 6,500 miles would be transferred to local governments

Commission members