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Associated Press
Feb 19, 2008 - 01:00 AM

by Aaron C. Davis, The Associated Press

Schwarzenegger orders spending freeze after office hiring - State faces $14.5 billion deficit

Gov. Arnold Schwarzenegger on Tuesday clamped down on state spending, ordering cuts that will cancel nonessential travel for thousands of employees and freeze hiring at most state agencies as California grapples with a $14.5 billion budget deficit.

The governor's executive order comes after he filled several positions in his own administration and appointed dozens of people to state jobs, boards or commissions since Jan. 10, when he announced a fiscal emergency.

His appointments during that time - more than 120 - come with a cost of more than $5 million a year.

Six of those have been hires to his own staff, with more than half making in excess of $110,000 annually. The governor has given another six current or former staffers jobs elsewhere in state government, including on boards and commissions where they make as much as $128,000 a year. The six hires to Schwarzenegger's office were more than he had announced in the previous three months combined.

"Clearly, he was doing what he could to preserve his own staff and then make the announcement once he had gotten things squared away to his satisfaction," said Assemblyman Chuck DeVore, R-Irvine, who advocates greater spending cuts.

Schwarzenegger spokesman Aaron McLear said dozens of the appointments were to boards and commissions that are required to be staffed and pay only $100 per diems, or less.

Some hires in the governor's office replaced essential staffers who had left, he said,
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including communications director Adam Mendelsohn. His replacement, Matt David, 28, was hired at a salary of $147,900, roughly equal to Mendelsohn's when he left.

"There have been positions that have gone unfilled since last year. But if it's a position critical to the mission of the office, then the position gets filled," McLear said.

Going forward, he said, the governor's office will be more judicious in its hiring.

"It's important to remember that this (order) was signed today," McLear said. "It will ensure that from today through the rest of this fiscal year, this administration will not spend a dime more than it needs to spend."

Schwarzenegger's executive order is aimed at saving $100 million before July and requires all state agencies and departments to reduce nonessential spending by at least 1.5 percent.

Cuts should not be made to public safety or public health activities, according to the order. But it suggests freezing hiring and canceling or postponing contracts to lease or purchase equipment.

It also says state employee travel costs should be reduced by canceling or postponing discretionary travel to all conferences, seminars and nonessential meetings.

But Steve Maviglio, spokesman for Assembly Speaker Fabian Nunez, D-Los Angeles, said the governor has not been practicing what he preaches when it comes to holding down spending.

"There's been no shortage of appointments to six-figure jobs in the administration," said Maviglio, who also makes a six-figure salary. "If you preach cut, cut, cut and then you add, add, add, that doesn't make sense to most taxpayers."

Separately on Tuesday, Republicans voted against closing a tax loophole that allows wealthy state residents to avoid paying sales tax on yachts, private planes and recreational vehicles.

It was the second time since Friday that Assembly Republicans had blocked the measure, which would bring in an estimated $21 million to the state annually.

Assembly Minority Leader Mike Villines, R-Clovis, said the added revenue was just a fraction of the $14.5 billion needed to close the deficit.

"This is not going to do it," Villines said. "This is a little thing. We need to do big things."

Assembly Budget Committee Chairman John Laird, D-Santa Cruz, said the so-called yacht tax was about fairness. He noted that the $1 billion in emergency cuts the Legislature approved last week reduced funding for schools and doctors caring for the poor.

"Everybody has to give," Laird said.

Schwarzenegger on Tuesday also called on the Legislature to complete a new spending plan by March, three months ahead of California's budget deadline. He said early action will be critical to helping close the state's estimated $14.5 billion shortfall.

Last year, a partisan budget battle in the Senate delayed a deal until late August, meaning cuts did not go into effect until September, at the earliest. That meant the state did not realize a full year's savings from the approved cuts.

Both parties said it was unlikely a budget deal could be reached by the end of next month.

In a warning to Democrats who have called for a balance of spending cuts and tax increases, Schwarzenegger said delaying budget action would not help the party's cause.

"I can tell you this right now, there will be no raising taxes," Schwarzenegger said a news conference.

Associated Press Writer Samantha Young contributed to this report.




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