Watch out, California!

California's New Budget Auditor May Target Social Services

California's $38 billion in health and social service spending is about to come in for a very hard look from the budget expert Gov.-elect Arnold Schwarzenegger has borrowed from Florida.

Friends and foes of the new auditor, Donna Arduin, describe her as a tough, smart fiscal conservative, totally loyal to her boss and more than ready to recommend budget cuts that anti-tax activists will love and the poor people's lobby will hate.

Arduin flew into Sacramento last week to begin work as Schwarzenegger's unpaid budget auditor. She's on loan from Florida after helping Republican Gov. Jeb Bush find ways to cut state taxes by $8.1 billion over the past five years. In the process, however, Florida eliminated money for eyeglasses, hearing aids and dentures for poor seniors and forced 55,000 low-income children onto health insurance waiting lists.

"In any state budget in this nation, when you have to start making cuts -- when you have to make big cuts -- you have to look at the percentage of revenues that are allocated to social services," said Jon L. Shebel, president of Associated Industries of Florida, the state's leading pro-business lobbying group. "You're in a major crisis there in California. There's no way to not take money out of social services, and that's what Donna does."

Shebel said Arduin was "very good at minimizing the negative impact" of Florida's social service budget shaving.

Advocates for that state's poor disagree. This year, they have railed against $26 million in state Medicaid cuts that eliminated the hearing, dentures and vision programs for 235,000 people. They also have sharply criticized the 4.3 percent reduction in state money for poor children's health insurance that resulted in the waiting lists in Florida.

"Her philosophy -- and it's at the direction of whoever her boss is -- was pretty strict along the lines of cut and slash on budget programs, particularly in the human services area," said Karen Woodall, one of Florida's leading social service lobbyists. "There have been lots of serious cuts proposed across the board in a lot of those programs, and that's going back several years. It was always done in the name of efficiency and streamlining, and the rhetoric always followed that it was not going to hurt the delivery of services, which in fact never was true."

People who've worked with her -- on both sides of the aisle -- describe the 40-year-old Arduin as a selfless workaholic with a good heart who takes her boss's policy prescriptions and finds a way to make them work.

In California, poor people's advocates see social service spending as square in Schwarzenegger's cross hairs. Given Schwarzenegger's campaign promises to balance the budget while protecting education, scrapping the state's $4 billion vehicle license fee and refraining from raising taxes, the advocates view social services as the leading programs exposed to the budget ax.

The state faces a shortfall in the next year's budget of between $8 billion and $10 billion, which could jump to $20 billion if courts rule against borrowing planned for balancing this year's budget.

Assemblywoman Lois Wolk, D-Davis, who chairs the Committee on Human Services, thinks Schwarzenegger will find it difficult to reduce the state's $9.3 billion social services budget. During this year's budget battles, neither Republican nor Democratic legislators were willing to go after social services in any dramatic way, Wolk said.

"I believe if he goes after the least among us, he won't have support," Wolk said of Schwarzenegger.

The new governor, however, will have plenty of backing when it comes to slicing perceived bloat from California's social services and health spending. Jon Coupal, president of the Howard Jarvis Taxpayers Association, said an improved fraud prevention program could trim $2.5 billion off the top of Medi-Cal's $29 billion budget.

Other areas also are ripe for some rigorous review, Coupal said, citing recent news reports detailing $200 million in food stamp overpayments, $127 million in unemployment fraud and eye-popping state expenditures on individual items such as $3,000 wheelchairs.

"The other interesting thing is that since the election, I've gotten calls from public employees saying, 'You want to know where they can really cut some spending?' " Coupal said. "I think they are going to be some of the best resources for identifying waste, fraud and abuse."

Despite Schwarzenegger's campaign trail commitments, a spokesman for the governor-elect's transition team said it is far from certain that social service and health programs are in for inordinate cuts.

For one thing, more tax revenues are coming in than previously anticipated. More to the point, Arduin just began her auditing duties last week and nobody knows what she's going to find before she finishes her job and returns to Florida by the first of the year.

"It is extremely premature," transition team spokesman H.D. Palmer said.

Others say she can be judged by her track record in finding soft spots in state spending.

As Florida's budget director, Arduin has been one of Gov. Bush's top advisers since she joined him at the beginning of his administration in January 1999. Her biography says that her efforts helped Bush maintain $2.7 billion in state reserves while cutting taxes by $8.1 billion.

Arduin, who declined interview requests placed through the transition team, had previously served for four years as acting budget director and first deputy director under Republican New York Gov. George Pataki. With Arduin playing a leading role, New York cut taxes by $10 billion while turning a $5 billion budget deficit into a $1 billion surplus, according to her biography. Arduin also presided over the trimming of 21,000 employees from state payrolls.

Before her post in New York, Arduin worked for three years as chief deputy budget director in Michigan, where the state cut taxes by $1 billion, wiped out a $700 million deficit and cut the work force 5 percent, her biography said.

The 1985 Duke University graduate also did stints in the private sector, working for Credit Bank of Japan, Bankers Trust Co. of New York and Morgan Stanley. She also worked as an intern with the federal Office of Management and Budget during the Reagan administration.

In Florida, Bush calls Arduin "a great asset." Arduin and the governor "are strong advocates of limiting government to the people's ability to pay for it," Bush spokesman Jacob DiPietre said.

"The nation has experienced some difficult economic times lately, but Florida has bucked that trend in large part due to Gov. Bush's and Donna Arduin's leadership," DiPietre said.

Florida Rep. Ron Greenstein, as House Democratic leader in budget negotiations with Gov. Bush's administration, has seen Arduin work up close.

Greenstein predicted Arduin will try to eliminate any state job that hasn't been filled for 120 days, attack administrative overhead and recommend privatizing as many programs as she can, especially in social services. He said Arduin will recommend tax cuts for business and less workers' compensation for people hurt on the job.

Greenstein said she will put in "endless" hours during her stay in California and that she will never say or do anything to upstage or undermine Schwarzenegger.

Arduin, he said, "is a good person" with "a good heart."

When it comes to the budget, however, Greenstein said his Democratic counterparts in Sacramento will find she's no pushover.

"Donna's a tough cookie," Greenstein said. "People are going to have to get used to hearing the word 'No.'"

By Andy Furillo

To see more of The Sacramento Bee, or to subscribe to the newspaper, go to http://www.sacbee.com

(c) 2003, The Sacramento Bee, Calif. 10/19/03

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