EDITORIAL SHADES OF GRAY ARNOLD'S PROPOSED SPENDING PLAN RAISES CONCERNS.

`THIS budget continues California on the path of fiscal responsibility and economic recovery.''

So says Gov. Arnold Schwarzenegger of the first draft of his new $125.6 billion budget, which includes a spending increase of 7 percent. We hope he's right, but upon first glance, the numbers don't seem too promising.

Schwarzenegger has increased spending across the board, while remaining resolute in his opposition to tax hikes. He manages to balance the books by taking funds from this year's surplus, but that's one-time money, and the new spending he backs is programmatic, meaning it will be with us forever.

Isn't this the kind of financial planning that got Gray Davis into trouble?

Add to the mix Schwarzenegger's ambitious plans for rebuilding state infrastructure, which will require bonds that will need to be repaid from future budgets. In total, this seems to be a recipe for a massive structural deficit for years to come.

Of course, this being an election year, we shouldn't be surprised. But politics aside, the state's leaders have a responsibility to manage the public's money wisely.

In subsequent revisions, both Schwarzenegger and Sacramento's legislative leaders are going to need to get tough and practical in devising a spending plan that truly does put California on the path to fiscal responsibility.