ANGELIDES HAS ANOTHER PLAN TREASURER ATTACKS MOVE TO SECURE $15 BILLION BOND.

Byline: David M. Drucker Staff Writer

SACRAMENTO - Taking the lead in attacking Gov. Arnold Schwarzenegger's fiscal recovery plan, state Treasurer Phil Angelides launched a statewide campaign Tuesday to kill the $15 billion borrowing proposal while seeking support for higher taxes.

The attack came as Schwarzenegger held the first of three public rallies to garner legislative and public support for a $15 billion deficit-financing bond and accompanying spending cap. The Democratic-controlled Legislature has until Friday to decide whether to put the measure on the March 2 ballot.

Several party leaders said they believe tax hikes are needed but have indicated their willingness to go along with the governor's plan with some changes - a position that has allowed Angelides to take the lead in attacking Schwarzenegger's proposal.

The Democratic treasurer urged voters to reject the Republican governor's proposals, while promoting tax increases and some difficult spending cuts as an alternative.

``The wrong thing to do is saddle our children, our grandchildren, with debt for decades to come because of our inability to come to a decision about what's right for California,'' Angelides, a probable gubernatorial candidate in 2006, said during a morning news conference.

The Schwarzenegger administration accused Angelides of playing politics, and other Republicans wondered why the treasurer was not more vocal in his opposition to borrowing earlier this year, when ousted Democratic Gov. Gray Davis signed a budget that included $12.6 billion in deficit financing.

``We're starting the '06 campaign for governor. And, unfortunately, I think, for Phil Angelides, he's offering a solution that the public said they didn't like in the last election, of raising taxes,'' said Richard Riordan, Schwarzenegger's education secretary and former Los Angeles mayor.

Almost 62 percent of those who voted in the Oct. 7 recall chose Schwarzenegger or state Sen. Tom McClintock, R-Thousand Oaks, both of whom campaigned against tax hikes and promised to repeal Davis' tripling of vehicle registration fees.

Angelides was vague when asked about his budget solutions, but he recommended a tax hike for the ``highest'' earners and criticized Schwarzenegger for lowering vehicle fees - a move immensely popular with the public.

Angelides has put himself at odds with many of his fellow Democrats, who might have problems with Schwarzenegger's fiscal package but fear the spending cuts they would have to make if the $10.7 billion bond included in this year's budget were ruled illegal in court.

A similar bond for $1.9 billion was thrown out because it was not submitted for voter approval. Schwarzenegger wants to replace those two bonds with one for $15 billion that would be put before the voters.

``We have to be realistic and understand the alternative would be cuts to vital services, and that would be far, far worse,'' said state Sen. Nell Soto, D-Ontario.

Angelides focused most of his attack on the $15 billion bond, which he claims would cost every household more than $3,000 during the next 30 years. But he also took issue with the proposed spending cap, saying it gives the illusion of a balanced budget and denies the state the flexibility to spend more in good years.

``I don't know of any self-respecting university, corporation or nonprofit that locks in a spending cap. They make the right decisions for the future,'' Angelides said.

Assemblyman Keith Richman, R-Granada Hills, backed by a bipartisan group of lawmakers, has introduced a fiscal package that includes a spending cap, which he said will prevent Sacramento from making long-term spending commitments based on one-time spikes in revenue.

David M. Drucker, [phone]

david.drucker(at)dailybulletin.com

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Treasurer Phil Angelides outlines his plan to defeat Gov. Arnold Schwarzenegger's budget plan Tuesday in Sacramento.

Rich Pedroncelli/Associated Press