GOV. ARNOLD SCHWARZENEGGER'S lack of leadership is stunning.

The state is facing a $15.2 billion budget shortfall. We have entered yet another fiscal year without a spending plan in place. And, although six months ago Schwarzenegger proposed a 2008-09 budget, he has yet to put forth a realistic plan.

This is the person who first won election during the 2003 recall election by promising to cut up the state's credit cards and demonstrate fiscal responsibility that his predecessor lacked.

Yet, since he has been in office, he has spent as lavishly as Gov. Gray Davis did. And all Schwarzenegger has put forward this year is a silly and costly plan to borrow from future state lottery revenues and a lazy, irresponsible proposal for across-the-board cuts in all state agencies that shows no ability to prioritize.

The governor doesn't seem to appreciate the seriousness of the situation. When asked at a news conference last week whether the state would be running out of money soon, the wealthy movie star pulled out his money clip stuffed with cash and said, "Not at this point. As a matter of fact, I still have some left." He just doesn't seem to get it.

As state Controller John Chiang has noted, if the budget impasse lasts past this month it will create a serious financial strain on "real people with mortgages to make, employees to pay and families to feed."

Things are so bad in Sacramento that Senate and Assembly leaders from each party have opted to hold talks without the governor, who is traditionally the leader of budget discussions. It appears members of his own party don't trust him. But this is no time for the governor to sit on the sidelines and sulk. He needs to engage — and quickly.


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Believe it or not, thanks to term limits, Schwarzenegger is the veteran of the budget confab, with this being his fifth annual round of budget talks. Assembly Speaker Karen Bass, D-Los Angeles, and Senate Republican Leader Dave Cogdill of Modesto are rookies at budget negotiations. Assembly Republican Leader Mike Villines of Clovis is working on his second budget. The only experienced legislator in the group is Senate President Pro Tem Don Perata, D-Oakland, who is negotiating his fourth budget.

Thus, it's Schwarzenegger who needs to lead before this year's budget crisis deteriorates further with serious consequences. For starters, there are the very real short-term effects of running California without a budget.

The controller cannot make payments to school special education programs, community colleges, local governments and vendors doing business with the state.

The longer-term pain will be the cost of cash to keep California afloat. The state typically borrows money early each fiscal year to help pay its bills and then retires the loans the following spring when income tax revenues come in. Some of that borrowing is internal, but, as state finances have tightened, there are fewer funds to tap. And some of the borrowing is on the open market. But without a budget, lenders will demand higher interest rates, costing the state hundreds of millions of dollars — money that could be better spent on much-needed services.

Yes, somehow, at some point, the governor and legislative leaders will reach a deal on a budget. But right now, Republicans insist that it contain no new taxes, and Democrats can't see a solution that doesn't involve more revenues. If ever there was a time for Schwarzenegger to step in with a rational compromise, this is it.

This isn't just another year where lawmakers can sit on their butts in Sacramento for weeks or months waiting for a miracle solution to manifest itself — and then break down and use a bunch of gimmicks to paper over a structural imbalance. Lawmakers have run out of gimmicks. Real solutions are needed.

Meanwhile, the longer the impasse goes on, the more costly it will be. Time is literally costing us money. Come on governor, show us some leadership.