Gov. Arnold Schwarzenegger won re-election in 2006 by selling himself as a problem-solver who boosted the economy and resolved the state's budget problems, all without new taxes.

He declared in January that "through discipline and through new revenues that come from economic growth, we reduced the deficit over time and got our fiscal house in order."

But less than a year into his second term, the narrative has run dry. An estimated $14 billion deficit looms, the housing market has become a drag, and the Republican governor can no longer count on a tax windfall to cover spending increases that he has approved since taking office.

Schwarzenegger is proposing an average 10 percent spending cut across the board, while Democratic leaders want a mix of cuts and new taxes.

"I think the problems were deeper and more structural than the governor realized when he was first elected," said Jean Ross, executive director of the California Budget Project, which advocates for poor and middle-class families. She says a fundamental imbalance between revenues and expenditures worsened the problem.

Budgets called disciplined

While in office, Schwarzenegger has characterized his budgets as disciplined enough to avoid the deficit problems of the past. He suggested that his own anti-tax policies led to California's growing economy and thus a boom in state revenues.

Budget experts say he has ridden the crest of the state's good economic fortunes and will be at the mercy of its impending slowdown. They say he has done little more than his predecessors, including recalled Gov. Gray Davis, to change the structural problems, which range from too much formulaic spending to single-year budgeting.

When Schwarzenegger ran for governor in 2003, he promised to "end the crazy deficit spending," a task he made sound as easy as conducting an audit and finding waste, according to his commercials. The audit — his 2004 California Performance Review — fell apart when multiple interest groups said recommended cuts would hurt the public.

To bridge the budget gap he had inherited, that same year he asked voters to approve $15 billion in bonds, which the state is still paying off. Proposition 58 prevented the state from using similar bonds to cover the deficit in the future. Schwarzenegger communications director Adam Mendelsohn said that ballot measure forces the state to cut spending responsibly rather than rely on more borrowing.

Under Schwarzenegger, the state's overall budget has increased 36 percent above Davis' most expensive year in 2002-03. That is nearly as much as the 42 percent increase in Davis' first term, a boost that resulted in a once-projected $34.6 billion deficit and sparked his recall.

McClintock critical

Sen. Tom McClintock, R-Thousand Oaks, said Schwarzenegger had plenty of opportunities to restrain spending in flush times to avoid the $14 billion deficit he now faces.

McClintock said he told the governor at a January caucus dinner that he was "on the same fiscal trajectory that wrecked the budget under Gray Davis." The senator said the governor told him that he was simply being a pessimist and that "people don't want to hear bad news."

Schwarzenegger in 2005 pursued an initiative to give the his office more power to unilaterally cut spending and weaken the Proposition 98 spending guarantee for K-14 schools, which accounts for roughly 43 percent of the general fund budget, according to the Department of Finance. But he came under attack from educators, nurses and other groups.