All eyes on Arnold as he peers into future

SAN FRANCISCO — The governor's office here is in the Hiram W. Johnson State Office Building, named for the early 20th-century Republican populist, arguably California's most consequential chief executive. So far.

Arnold Schwarzenegger, a Republican populist, practices what Leon Trotsky preached — permanent revolution. He is in perpetual campaign mode, wielding his celebrity and theatricality to keep the Legislature nervous about being bypassed by lawmaking-by-referendum, a constitutional weapon that is a Hiram Johnson legacy.

If Schwarzenegger successfully employs the plebiscitary mechanism this year, he will approach re-election next year ranked among the state's most transformative governors. And ripples raised by the boulders he is throwing into this nation-state's political pool will roll eastward across the country.

Placed in office by plebiscite — the recall of Gov. Gray Davis — just 16 months ago, Schwarzenegger has started the clock on a countdown to what could be a November to remember. He has submitted to the Democratic-controlled Legislature four proposals aimed at unlocking some interlocking political and economic irrationalities produced by a political class that has treated public office as private property. Because the Legislature probably will not act soon and affirmatively, ballot language has been drafted and fund raising for four ratification campaigns has begun.

One initiative would empower school districts to award teachers merit pay based on performance as the districts decide to measure that. Merit pay pits Schwarzenegger against the 335,000-member California Teachers Association and other teachers unions.

A second initiative would change the retirement system for state and local employees, now 2 million strong. The state, facing a deficit of at least $8 billion, will pay a $2.6 billion share of those employees' retirement this year, up from only $160 million just four years ago. Under Schwarzenegger's proposal, government workers hired after June 2007 would be enrolled in privately managed accounts akin to 401(k)s, with the state matching up to 6 percent of their salaries, 9 percent for public safety officers. Sixteen states have adopted or are considering private accounts as voluntary options. Opposition by government employees unions, who nationwide wield the investment power of many hundreds of billions of dollars in retirement funds, killed a similar proposal in California seven years ago.