A New Day Dawning

By Mark McGuigan
Staff Writer

Oct 8 – On the morning after actor-turned-politician Arnold Schwarzenegger swept into the state’s top job, Santa Monica city officials questioned how the new governor will help cities sweep the streets.

“If local government receives less and less revenue, we’re going to see a reduction in basic services -- police, fire, street sweeping -- everything the city does will be impacted,” Mayor Richard Bloom told The Lookout.

“I understand the unpopularity of the vehicle license fee, but that $4 billion is shoring up local government budget,” he said. “So when you talk about removing $4 billion and not replacing it with anything else, that will have a dramatic impact.”

Riding a wave of public frustration over the lackluster economic recovery and a $38 billion state deficit, Schwarzenegger ousted Gov. Gray Davis in Tuesday’s historic recall election.

Some city officials expressed concern about state funding of cities following an election campaign heavy on Hollywood rhetoric but light on practical solutions.

“It’s hard to know how Arnold’s ideas will affect Santa Monica because he hasn’t specified many,” said Mayor Pro Tem Kevin McKeown. “This was a campaign of image, not substance, with a decision based on celebrity, not ability to govern.”

“Santa Monica and other cities rely on state revenues for vital services like police, fire and paramedics, so his threatened cuts are an immediate worry,” McKeown said. “In the longer run, our local quality of life efforts may become even more essential if, as suggested, Arnold dismantles the California Environmental Protection Agency and disempowers the Coastal Commission.”

“I don’t think Schwarzenegger understands the complexity of governing a state like this,” said City Councilmember Ken Genser. “His victory speech was amazingly simplistic.”

“No one knows where the new governor will stand on anything,” he continued. “We’re going to need to remind him when he says he’s going to represent all the people that he’s going to have to represent people who need affordable housing in high rent communities.”

During his election night victory speech in a packed hotel ballroom in Century City, the governor-elect promised the people of California that he would work to return the state to prosperity.

"I will not fail you,” Schwarzenegger told the cheering crowd. “I will not disappoint you, and I will not let you down.”

But questions remain as to just how the new Governor-elect is going to achieve his goal of “rebuilding California’s economic engine” without access to the proper tools, namely money.

Even after Schwarzenegger joined the governor’s race nine weeks ago, his camp offered little by way of an alternative financial solution to the state’s fiscal crisis.

Although the tripling of vehicle license fees is hugely unpopular, supporters of the increase contend it is necessary to provide some much-needed revenue to the cash-strapped state budget.

While city officials worry about Schwarzenegger’s fuzzy prescription for the state’s fiscal crisis, they wonder about other plans the governor elect has in mind.

“I would challenge the governor elect to be true to his stated promise that he wants to govern for all Californians,” said Council member Michael Feinstein. “In Santa Monica that means legislation that allows our city to utilize the tools it needs to both preserve and increase the amount of affordable housing.

“My concern is that given some of the financial backers of his campaign, those needs may not be respected,” he said. “Our ability to preserve and increase affordable housing could be undermined.”

Schwarzenegger’s cadre of political backers includes some of the most powerful men in America, among them billionaire investor Warren Buffett, chairman of Berkshire Hathaway.

Buffett -- a registered Democrat -- was appointed senior financial and economic adviser to the Schwarzenegger campaign in early August despite having raised the issue of tax reform in an op-ed piece for the Washington Post in May.

The piece, criticizing President Bush’s proposed cut in the dividend tax as a change that would only benefit the rich, has been hushed by Schwarzenegger’s camp. This could be cause for alarm, some city officials say.

“To honestly deal with our state’s fiscal crisis we need to revisit the tax code, including both a more progressive personal and corporate income tax so that the wealthiest among us pay at least as much as those of the middle and bottom of the economic ladder,” Feinstein said.

“The governor-elect’s silencing of his advisor Warren Buffett when Buffett rightfully raised this structural inequity at the beginning of the campaign gives me cause for concern,” he said.

Nevertheless, few can doubt the acumen of Schwarzenegger the Businessman, a facet of his life that wooed voters to his side. His tax returns in 2001 show that the movie star earned $26.1 million and paid $7.4 million in state and federal taxes.

Although most of his earnings come from movies, his portfolio also includes investments ranging from shopping centers to high-tech investments to movie theaters. With a slew of Schwarzenegger’s business concerns located in the heart of Santa Monica, some city officials hope he keeps the city in mind.

“We need to focus on job creation in Santa Monica,” said Executive Director of Santa Monica Chamber of Commerce Kathryn Dodson.

“He’s talked about decreasing the burdens on business in California and worker’s comp is one of the biggest issues right now,” she said. “We hope that he will have a positive effect (on the city). Santa Monica is a great place in California to do business but it’s also incredibly expensive.”

Bloom agreed, saying that Santa Monica “can be a good resource for the governor and hopefully he will look to us as a resource.”