INSURMOUNTABLE TASKS ARNOLD HAS HUGE ROW TO HOE ON STATE'S WOES.

Byline: JILL STEWART  Capitol Punishment

THE governor just experienced the most sparkling weeks of his young administration, but now faces the worst. Because now that he's performed triage on California's most threatening potential mortal wound, the question becomes, ``Yeah, but what have you done for us lately?''

With his huge wins on Propositions 57 and 58, Gov. Arnold Schwarzenegger found a way to address the roughly $12 billion in loans taken out by Gray Davis and the Legislature in 2003. Proposition 57, a $15 billion bond to intelligently refinance those unfortunate loans, passed with support from a bipartisan coalition unlike anything I have ever seen in California.

Before the election, a Los Angeles Times poll showed the guv with a stellar approval rating of 71 percent among men and 59 percent among women. He is now viewed favorably even in the Bay Area - stunning, since San Francisco embarrassed itself by overwhelmingly opposing the recall.

The governor also lucked out when he lost a harsh critic from The Sacramento Bee, who left to work for the most outspoken anti-Schwarzenegger politico, State Treasurer Phil Angelides.

Editorial writer Mark Paul was so far left on taxes that the Bee had become the most pro-tax daily in California, and increasingly hit the Schwarzenegger administration.

Angelides' office refuses to say whether Paul was negotiating his $100,000-plus state job while firing off missives against Schwarzenegger. Angelides strenuously opposed Proposition 57, and the Bee was among the few dailies to strongly argue against it.

David Holwerk, editor of the Bee editorial page, which Paul quit while he awaits his state position opening in a few days, says he himself wrote the harshest attacks on Proposition 57. ``I would be more concerned if Mark had pushed me toward that direction,'' says Holwerk.

So, lots of good news for the governor. The bad news is he now must turn to the twin crises of workers' compensation and the embedded budget deficit. Are the two liberal Democratic leaders, Assembly Speaker Fabian Nuez and Senate President Pro Tem John Burton, going to listen to Schwarzenegger or ignore him - just as Democratic leaders last year ignored Davis?

``The governor's first, second and third choice is to work out workers' compensation with the Legislature,'' says his spokesman Todd Harris. ``But if he doesn't like the results, he'll go to the people.''

I suspect Schwarzenegger will hammer out a plan on workers' comp, but face a bloodbath closing the $7 billion budget gap.

This brings me to a curious revelation from the March 2 election: the big rejection of Proposition 56, which would have let the Legislature raise our taxes with a 55 percent vote instead of the current two-thirds. The landslide 66 percent vote against Proposition 56 is a powerful proxy for how Californians feel about new taxes. Even in liberal Los Angeles County, the message was: Don't you dare.

But I see signs of a gathering storm. Nuez and Burton operate in isolated Sacramento. They have already ignored the governor's January request for real-time cuts in current overspending, and millions of dollars have disappeared that cannot be recouped. Assemblyman Joe Canciamilla, a Democrat and rare moderate in Sacramento, laments, ``I have no idea why we are not cutting right now.''

Burton, now in his final 10 months in office, went on TV recently, joking that Schwarzenegger ``sends me bonbons'' and begrudgingly admitting to a good working relationship. But his foot-dragging on real-time cuts says he believes Schwarzenegger can be ignored.

Schwarzenegger is scouring government programs using a 150-person Performance Review Team to cut duplication, waste and fraud by billions. He wants to restructure some major programs, including Medi-Cal - and that means a pitched battle.

The governor also returned empty-handed from Washington, where he talked to President George W. Bush about money California needs to cover federal responsibilities. Moreover, state tax revenues recently dropped as California's economic recovery was dampened by business distaste toward California.

A survey commissioned by the respected California Business Roundtable found that nearly 40 percent of ``mobile'' companies, such as high-paying insurance firms, plan to leave California, mostly for Texas and Western states. Half have actual policies not to add jobs in California.

Our idiotic Legislature has been enacting an average of 15 new labor laws a year that tell businesses what they can and cannot do, some of which make sense, but many of which don't. In fact, California has enacted three times the number of labor laws as labor-conscious New York.

So as Schwarzenegger bounds around the Capitol, grinning and handing out cigars to people who don't smoke, you gotta wonder: What's a poor, big, strong, leader to do?

Can he close a $7 billion gap, get federal funds, deal with lame-duck theatrics, fix workers' comp, tax rich tribes, repair infrastructure and control partisan warfare?

If he can, I have a fantastic job for him after this. It's in Baghdad.

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(color) The passage of Propositions 57 and 58 was a cause for celebration for Gov. Arnold Schwarzenegger on election night.

Kevork Djansezian/Associated Press