A recent poll shows the born-again "moderate" Republican governor has gained back some popularity, especially in the Bay Area, and is now in a dead heat with Democratic competitors. But it comes at a high cost: The Legislature's nonpartisan fiscal expert reported the budget is headed in the "wrong direction" because it spends so much in deficit-plagued California.
"Our survey demonstrates that Schwarzenegger's retreat from the more conservative rhetoric and agenda he brandished during the latter part of 2005 has paid off among middle-of-the road voters," said Melinda Jackson, director of the Survey and Policy Research Institute at San Jose State University.
The governor's job performance rating among voters in a Democrat-leaning state has climbed from 36 percent positive and 53 percent negative in September, to 40 percent positive and 51 percent negative this month.
The poll was released as Legislative Analyst Elizabeth Hill criticized the governor's proposed 2006-07 budget a sweeping issue that could complicate his re-election bid.
The spending plan taps economic growth and a cash carryover from this fiscal year to invest billions more in state programs such as education and transportation, while raising no taxes and doing little to cut the ongoing, multibillion-dollar deficit.
"The overall plan moves the state in the wrong direction in terms of reaching its longer-term goal of getting its fiscal house in order," Hill said.
"Instead of using the current unexpected revenue increases which are primarily from more volatile revenue sources such as business profits and capital gains to reduce outstanding obligations, the budget ratchets up ongoing spending by about $2 billion," she said.
Given the gap between revenues and spending, along with outstanding debt obligations, Hill says he believes the budget should focus more on paying down existing debt before making expansive new commitments.
Schwarzenegger and his aides discount such assertions.
"This budget continues California on the path of fiscal responsibility and economic recovery," said Schwarzenegger.
But one of the state's leading fiscal conservatives, Sen. Tom McClintock, R-Thousand Oaks, is among those criticizing the governor for proposing to spend more than the state takes in. "The budget is seriously out of balance and the budget gap is widening," he said.
The state is expecting $91.5 billion in general fund revenue and spending $97.9 billion, resulting in a $6.4 billion operating deficit.
The difference is being made up by about $7 billion that is expected to be left over from the current year because of higher-than-expected revenues and other factors.
At the same time, liberals are howling over the few spending cuts Schwarzenegger made, mostly in the health and welfare sector.
Hill's conclusions were embraced by Treasurer Phil Angelides, a Democrat running for governor. "Her report card shows that Gov. Schwarzenegger continues to fail to balance the budget, which was his central promise to the voters," he said.
Schwarzenegger's approval rating is at its highest point since June, but still a long way from the popularity he enjoyed a year ago, when his approval among California adults was 59 percent positive and just 26 percent negative.