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Bustamante unveils 'tough love' budget plan for California

Recall race intensifies

California Lt. Gov. Cruz Bustamante points to his budget plan during a Tuesday news conference.
California Lt. Gov. Cruz Bustamante points to his budget plan during a Tuesday news conference.

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LOS ANGELES, California (CNN) -- Lt. Gov. Cruz Bustamante, the leading Democrat on the October 7 recall ballot, on Tuesday unveiled his "tough love" budget plan for California and said, if elected governor, he would call the Legislature into a special session to address the state's fiscal woes.

"It is time for everyone to stop blaming everyone else," Bustamante said as he outlined his plan of spending cuts and tax hikes during a speech in the Sacramento suburb of Elk Grove.

"All at once and once and for all, we will either get out of this mess together or we will have no one to blame but ourselves," Bustamante said.

Bustamante's plan includes $7.9 billion in taxes and fees, and $4.5 billion in cuts and savings. The tax hikes would primary be on wealthier residents and corporations, Bustamante said.

Bustamante, who was elected independently of Davis in 2002, described his proposal as "a real plan to close the $8 billion ongoing budget deficit."

California had a $38 billion deficit in its nearly $99 billion budget for the current fiscal year. A recent budget agreement -- hammered out after months of wrangling between Democratic and Republican legislators in Sacramento -- eliminated the deficit through cuts and borrowing, but created an expected shortfall of at least $8 billion for the next fiscal year.

Bustamante's call for higher taxes could get a frosty reception from Republicans in the Legislature, who have resisted raising taxes to solve the state's fiscal problems.

The state's lackluster economy and budget woes helped fuel the drive to oust Gov. Gray Davis. Voters will face two questions on October 7: whether to recall the embattled Democratic incumbent and who should replace him.

Davis himself plans a major speech Tuesday in which he will acknowledge his shortcomings while saying Republicans are bent on circumventing elections they can't win, according to campaign sources familiar with the speech. Davis' speech is scheduled for 5 p.m. (8 p.m. EDT). (Full story)

Schwarzenegger's ad

Meanwhile, Arnold Schwarzenegger, the leading Republican in a field of 135 possible replacements, released his first television ad of the campaign.

In the upbeat 60-second ad, the movie star vows to "work honestly without fear or favor to do what is right for all Californians."

Addressing the camera, Schwarzenegger says, "This historic election has come about because there's a tremendous disconnect between the people of California and the leaders of California. We the people are doing our job -- working hard, raising our families and paying taxes. But the politicians are not doing their job."

Schwarzenegger does not offer any specific plans in the ad.

The body builder-turned actor, who has been criticized for failing to disclose his thoughts on key policy issues, is planning to hold a summit Wednesday in Los Angeles with his top economic advisers, including Warren Buffett and George Shultz, and other business leaders.

Aides say the venue for Schwarzenegger's summit could be the University of California-Los Angeles or a hotel near Los Angeles International Airport.

Aides said Schwarzenegger has no immediate plans to respond to radio ads GOP rival Bill Simon began broadcasting Monday. In his ads, Simon calls Schwarzenegger a liberal and compares him to Davis.

"I'm Bill Simon," he says in the ad. "Gray Davis tripled our car taxes, and now Arnold Schwarzenegger's team wants to triple our property taxes, which just goes to show you, don't send a liberal to do a tax-fighter's job. I've signed the pledge not to raise taxes. Isn't it time Arnold told us where he stood?" (Full story)

Peter Ueberroth, a Republican businessman who brought the Olympics to Los Angeles and later was baseball commissioner, is expected to formally unveil his campaign Wednesday.

At the same time, he is to kick off a series of roundtable discussions across California. Ueberroth will be in Los Angeles on Wednesday and travel to San Jose on Thursday.

A Field Poll released over the weekend showed Bustamante holding a slight lead over Schwarzenegger, 25 percent to 22 percent.

Four days after the latest Field Poll showed that 58 percent of likely voters support the effort to oust the governor, Davis aides said they recognize the need to fight the campaign more aggressively.

Meanwhile, a federal judge said Monday that he would try to rule by Wednesday on a lawsuit filed by the American Civil Liberties Union that requests a delay of California's gubernatorial recall election.

The ACLU filed the lawsuit earlier this month arguing that as many as 8 million California voters could be disfranchised by what it described as defective machines that still use punch card ballots. The state argued that the October 7 election would be fair and should be allowed to proceed. (Full story)

--CNN Political Editor John Mercurio contributed to this report.

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