ARNOLD TO STUDY STATE REFORM PLAN REPORT PROJECTS SAVINGS OF $32 BILLION.

Byline: David M. Drucker Sacramento Bureau

SACRAMENTO - Gov. Arnold Schwarzenegger vowed Tuesday to give Californians back their government, promising the most radical overhaul of state bureaucracy since 1911 as he accepted a panel's 2,500-page plan for a sweeping reorganization of California government.

Reigniting one of his 2003 campaign themes, Schwarzenegger claimed the legacy of reformer Hiram Johnson - the early 20th century populist governor responsible for the recall and ballot initiative - as he formally took possession of the California Performance Review, a proposal he commissioned but did not draw up.

``Of course, there will be the special interests that will be screaming, they will be complaining, and they will be squawking about the recommendations, calling them unfair and impractical, or maybe even worse,'' Schwarzenegger said. ``But this is because their agenda is not the people's agenda.''

Democrats reacted with skepticism to the 6-inch-thick report on reorganizing state government, which would centralize more authority in the Governor's Office and save taxpayers a projected $32 billion over five years.

``They are clearly biting off more than anyone can chew,'' state Senate President Pro Tem John Burton, D-San Francisco, said.

Statewide public hearings are set to begin Aug. 13 at the University of California, Riverside, with the report likely to face stiff opposition in the Legislature and among interest groups.

After Schwarzenegger reviews the report, he will decide which of the 1,000-plus recommendations to support and move forward - acting with executive authority in some instances and through the Legislature when required. Anticipating tough resistance from lawmakers and interest groups, he is also prepared to seek voter approval for some reforms.

``I'm asking every citizen: How can we make our government work better for you? I want everyone to know you will be listened to. I want to listen to your ideas,'' Schwarzenegger said. ``You don't have to be a Sacramento insider to have your voice be heard.''

The process is expected to be a multiyear effort, according to the administration. When asked, Schwarzenegger declined to offer a timeline for implementation of the overhaul but his aides said the first package of concrete proposals would probably move ahead beginning in January.

Controller Steve Westly, who congratulated Schwarzenegger for commissioning what he called the first comprehensive review of state operations in 20 years, expressed concern about some of the report's recommendations, including one to abolish county boards of education and others to consolidate and eliminate environmental regulatory bodies.

``Many legislators are concerned about real checks and balances. So am I,'' added Westly, a Silicon Valley Democrat who serves as the state's chief financial officer. ``This cannot appear to be a power grab.''

Schwarzenegger took possession of the CPR in a building the administration offered as an example of the wasteful spending he wants to end: a 187,500-square-foot warehouse of outdated and obsolete computer equipment and used office furniture, for which the state pays $93,750 in monthly rent to store.

The Republican governor announced that a ``yard sale'' has been scheduled for Aug. 27 to help liquidate the warehouse stock, a move that became a priority of his after he was shown slides of the facility by Fred Aguiar, his State and Consumer Services agency secretary.

Schwarzenegger commissioned the California Performance Review this year as part of his campaign promise to root out waste, fraud and abuse in government and provide a thorough audit of state spending.

The CPR was led by Chon Gutierrez, a California state employee for 30 years, and Texas Deputy Comptroller Billy Hamilton.

Hamilton worked on similar efforts to streamline government in Texas and at the federal level under former President Clinton, and said California is more inefficient and problem-plagued than most states.

``I think a lot of the problems ... are born from just years of inaction on improving the government, or budget difficulties. These are not unusual in states, it's just that California is so large, and what it does affects so many people, that to me it's magnified.''

Schwarzenegger decided this week to put his planned overhaul of Medi- Cal, the taxpayer-funded health care system for the poor, on hold until January, saying Tuesday that the issue needs more study and that he wants to do it right.

But the CPR contains its own, separate suggestions for changing how Medi-Cal is administered and delivered.

One recommendation would scale back Medi-Cal eligibility, affecting recipients who are not poor enough to qualify for taxpayer-funded CalWORKS and Healthy Families welfare services. Another would take counties out of the business of caring for indigent patients, possibly resulting in the layoffs of 17,000 county employees statewide.

Health Access, a consumer group that focuses on health care issues, called these ideas, and a proposal to eliminate the state official charged with protecting Medi-Cal recipients' access to health care, troubling.

``We have real concerns of people facing barriers to getting the care and coverage they need,'' Health Access Executive Director Anthony E. Wright said.

David M. Drucker, [phone]

david.drucker(at)dailybulletin.com

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