By Dan Walters
Published: Sunday, Jan. 10, 2010 – 12:00 am | Page 3A

Arnold Schwarzenegger achieved fame and fortune by starring in celluloid fantasies, so it may be fitting that his final state budget proposal would be so disconnected from economic and political reality.

With the state still facing huge deficits, the governor bases his 2010-11 budget on such fanciful elements as persuading the federal government to cough up an extra $7 billion, asking voters to reverse themselves and shift money from protected pots for mental health and children’s programs, overhauling transportation financing, and persuading state employee unions to accept pay cuts and increases in workers’ pension and health care costs.

Even Schwarzenegger’s pal, Sen. Dianne Feinstein, throws cold water on California getting a big injection of federal cash to bail out the state.

“California’s budget crisis was created in Sacramento, not Washington,” Feinstein said last week.

As Schwarzenegger describes it, if the federal money doesn’t materialize, the severe cuts he’s proposing in health and welfare programs will become wholesale slaughter. But he’s largely shielding K-12 and higher education from deeper cuts – which has the effect, whether intended or not, of driving wedges among Democratic legislators and their allies.

The California Teachers Association and other elements of the “education coalition” may, under the circumstances, align themselves with Schwarzenegger while health and welfare advocates and other unions hammer on Democratic allies to cut schools to save their money.

The pressure would be lessened, of course, were the feds to cough up billions more for California, or were Schwarzenegger and at least a few Republicans to agree, as they did last year, to higher taxes. But the governor has now reverted to the no-new-taxes mode he adopted earlier in his governorship (except for a fee on insurance policies to offset firefighting costs), and Republican lawmakers are not likely to go there either.

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