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California's outsize problems won't be easy for Schwarzenegger to solve

By Dan Balz
Sunday, February 7, 2010; A02

SACRAMENTO People in the nation's largest state are in a sour mood. They are unhappy with the economy, unhappy with what has happened to their state, unhappy with Gov. Arnold Schwarzenegger (R) and unhappy with the Democratic-controlled legislature.

The recession here began earlier and went deeper than it did nationally, according to estimates. In December, the unemployment rate stood at 12.4 percent, making California the fifth worst state in the nation. The Legislative Analyst's Office issued a report in November forecasting a turnaround this year but projecting that unemployment would still average more than 10 percent in 2012.

Lawmakers here face a $20 billion state budget deficit, after closing an even bigger deficit last year. "It was monumentally difficult," Susan Kennedy, Schwarzenegger's chief of staff, said of last year's effort. "Everything that could be cut was."

This year, given what it took to pass the budget last year, solutions will be even more difficult. There are no easy options left on the table.

Schwarzenegger is looking to Washington for help. In his State of the State address a month ago, the governor said California gets back just 78 cents for every dollar it sends to Washington. When President Bill Clinton was in office, Schwarzenegger said, California got 94 cents on every dollar sent. "We are not looking for a federal bailout, just federal fairness," he said.

Schwarzenegger wants permanent relief, not just another temporary injection of money through the stimulus program. He has been working to prod California's congressional delegation to lobby harder. His advisers say at least $2 billion is in play in negotiations with Washington, perhaps as much as $4 billon to $4.5 billion.

But Uncle Sam is not likely to be California's savior. The problem is too big. Schwarzenegger called a special session of the legislature to begin to deal with the deficit, but there are low expectations. The real bargaining and decision making will come in the spring and summer.

The budget and economic problems have taken a toll on the governor's standing. Two respected state polls -- the Field Poll and the Public Policy Institute of California -- show Schwarzenegger at or near his lowest approval ratings ever. The Field Poll pegged his approval rating at 27 percent, with 64 percent disapproval. The PPIC poll had his approval rating at 30 percent.

Schwarzenegger came to office in 2003 after the voters recalled then-Gov. Gray Davis (D). His approval rating hit 65 percent in 2004 but tumbled 30 points by the next year because of political missteps that resulted in the rejection of several ballot initiatives for which he had campaigned.

He won reelection in 2006 and saw his approval ratings climb to around 60 percent. Since then, the decline has been steep. The Field Poll found that six in 10 Californians believe Schwarzenegger will leave the state in worse shape than he found it.

California has become almost ungovernable, whether for reasons of rabid partisanship or restrictions enacted through previous ballot initiatives that make it especially difficult to find political consensus on how to balance the budget. "Beyond the economic issues, you've got what many people are viewing as a political system that is not functioning," said PPIC President Mark Baldassare.

In the Field Poll, the legislature is held in lower esteem than the governor. Just 16 percent approve of the job the legislature is doing -- the fifth straight time since September 2008 that the public has put the legislature's approval rating in the teens.

Just 28 percent said last month that they believed Schwarzenegger and the legislature would be able to work together this year, with 65 percent saying they would not, according to the PPIC. Three years ago, the numbers were reversed, highlighting the rapid decline in confidence in the leaders of state government.

Schwarzenegger told Californians last month that he would seek to avoid any more cuts in education in the coming round of budget negotiations, a politically popular but not necessarily sustainable pledge. Voters here have seen the impact of recent budget cuts and are, in the words of one Democratic strategist, "numb" over the conditions they see.

Strategists who have been sitting in on focus groups say the mood is worse than it was just six months ago. "They're much more articulate about the pain and suffering their communities are feeling and they just have no sense that anybody is talking about anything real," said one strategist. "It's as bad as an environment as I've ever seen."

Mark DiCamillo, who directs the Field Poll, said that voters, whether Republican or Democrat, fear the worst in the next round of budget talks. "They didn't like it, and they expect more to come," he said.

Californians are more pessimistic about the state of their state than the situation nationally. About half say the country is seriously off track, but at least three-quarters of Californians say their state is heading in the wrong direction. On this there is partisan agreement: Republicans, Democrats and independents are almost equally pessimistic.

In November, Californians will elect a successor to Schwarzenegger. Former governor and current attorney general Jerry Brown is the likely Democratic nominee, though he has not announced his candidacy. Former eBay chief executive Meg Whitman is favored to win the GOP nomination over Steve Poizner, the state insurance commissioner.

In federal races, Sen. Barbara Boxer (D) faces a potentially difficult reelection campaign, with three Republicans vying for their party's nomination. Analysts here also say several House members could find themselves in trouble before November.

No one is making predictions with confidence at this point. As Baldassare put it, "The mood is very sour, and that means that it's very politically unstable time in California."

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