ARNOLD WANTS OFFICE-BUDGET HIKE GOVERNOR TRIES TO TIE SPENDING ON STAFF TO INFLATIONARY FORMULA.

Byline: KATE FOLMAR

Sacramento Bureau

SACRAMENTO -- Gov. Arnold Schwarzenegger wants to boost spending on his personal office next year by more than 5 percent, even as a lean budget prompts him to limit welfare grants and ask college students to pay higher tuition.

For the second consecutive year, the Republican governor is seeking to peg spending on his 185-person staff to an inflationary formula that dictates spending for the state Legislature and some courts.

In and of itself, Schwarzenegger's proposal wouldn't break the bank -- adding only $1 million to the $103 billion state budget.

But the notion galls some observers because it smacks of the formula-driven "autopilot" spending Schwarzenegger railed against in 2005 as he campaigned for the power to make unilateral budget cuts.

And Schwarzenegger's budget simultaneously expects others -- notably welfare recipients and public university students -- to take hits. California's revenue projections are cooling because of lackluster home sales and lower-than-expected tax payments.

"They don't think a cost-of-living adjustment is appropriate for the poorest people in the state, but it's perfectly fine for the people making $100,000 in the governor's office?" asked Mike Herald, a legislative advocate for the Western Center for Law and Poverty. "I just can't reconcile that."

Schwarzenegger aides recently revealed that most of the additional $1 million is earmarked for adding server capacity and redundancy to a seven-year-old information technology system, not for new staff.

Spokesman Aaron McLear said that, if raises were given, they would come from the existing personnel budget, not new funding.

Administration aides note that spending on the office -- now at $18.6 million -- is less than 0.02 percent of the overall general fund. The budget as a whole will grow by just 1 percent.

The budget comes together after "literally hundreds and hundreds of decisions," said H.D. Palmer, a spokesman for the governor's finance department.

Some parts of the budget, including corrections and Medi-Cal, will grow faster than the governor's spending in the proposed 2007-08 budget. "Other things are going to grow slower," Palmer said.

Palmer described the proposal as a matter of parity. It's "consistent with the growth in the other two branches of government. And we think that's appropriate."

But it's still "autopilot spending" to the state's nonpartisan budget hawk, the legislative analyst. Her staff concluded there's "no policy rationale" for budgeting the governor's office based on a formula, rather than particular needs.

Funding for the Legislature and parts of the judiciary grow annually by a formula that accounts for population growth and the cost of living. In budget jargon, that calculation is known as the state appropriations limit.

The legislative budget grows by the appropriations limit because of a term-limits measure voters passed in 1990. It slashed spending on the Legislature by more than one-third and capped it.

A few years ago, lawmakers agreed to have state trial court funding grow automatically by the limit, in part because court cases grow with the population. (Now the governor is calling for expanding that to the entire court system.)

During the past two years, the administration has sought to link the governor's office budget to the appropriations limit, although the term-limits initiative did not cut the governor's budget.

Last year, the governor's aides proposed, and later withdrew, a change in state law to make the increases automatic. This year, the governor's office wants the same percentage increase as the Legislature receives. But it's not asking for guaranteed increases in the future, Palmer said, and it's not an autopilot increase.

Although it's a tough sell, the governor's idea may have merit, said Tim Hodson, who directs the Center for California Studies at Sacramento State University.

For fear of voter backlash, he said, some elected officials and public agencies skimp on staff and spending. Still, Schwarzenegger should be sure to cap spending so the formula doesn't become a "blank check."

"Autopilot is like art," Hodson concluded. "It's in the eye of the beholder."

kfolmar(at)mercurynews.com

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