Nearly six years after Gov. Arnold Schwarzenegger vowed to "blow up the boxes" of state government, he is ready to declare partial victory from the budget package lawmakers will consider today.

Schwarzenegger pushed for numerous changes to "business as usual" in state government – from eliminating various commissions to killing automatic cost-of-living increases in welfare grants – as part of the deal to close a $26.3 billion shortfall.

"Of course, it's a never-ending process, so we should not think we're finished with it, and we should continue reforming," Schwarzenegger said in a telephone interview Wednesday.

In a massive package of more than two dozen bills, however, containing more than $15 billion in cuts ranging from public schools to social services, the changes cited by Schwarzenegger represent only a small slice of the budget-balancing pie.

"The stuff that's being talked about is picking at nits," said Darry Sragow, a Democratic strategist. "It's playing around the edges."

Many of the most far-reaching operational changes discussed inside and outside the Capitol in recent years, from overhauling the state's tax structure to tightening campaign finance laws and imposing strict limits on state spending, were not debated in budget negotiations.

"They had to focus on details of government programs and how significant the cuts were going to be – it's impossible to do that kind of long-term thinking when you're triaging," said former Assembly Speaker Robert Hertzberg, co-chairman of California Forward, a nonpartisan group that is developing numerous government-altering measures for a future ballot.

Schwarzenegger, facing opposition from Democratic leaders, tabled his most ambitious proposal, which would have created a two-tier system promising reduced pension benefits to future state workers. The issue will be reconsidered next month.

What Schwarzenegger touts as fundamental operational changes and necessary cost-cutting in the budget deal – from health and human service programs, for example – some criticize as targeting the state's most vulnerable residents.

"There's a very strong argument that what some people would choose to label as reform, others would argue is cutting off the lifeline to the people who need government services the most," Sragow said.

Schwarzenegger dismisses claims that what he calls reforms are window dressing, touting them as a victory for taxpayers and a strong message about eliminating waste, fraud and abuse.

"It stops the madness of continuously promising people things that we can't deliver," he said. "We have to make sure when we sit here in this Capitol building that we deliver the best services for the tax dollars."

The operational changes would save more than $2.2 billion this year and billions more in the future, according to state finance officials.

The deal would eliminate or consolidate more than a dozen state boards, commissions or bureaus – including the Integrated Waste Management Board, a high-paying haven for political appointees.

Besides welfare grants, automatic cost-of-living increases would end for the University of California, California State University, and the state's court and prison systems.

Rather than allow each county to oversee enrollment into welfare, food stamp and Medi-Cal programs, the proposals call for a more centralized process, which critics contend could jeopardize thousands of county jobs.

The state also would sell various assets and property, increase management of health care services for various Medi-Cal recipients, and discourage fraud in the state's In-Home Support Services program by requiring fingerprinting of providers and recipients.

To push welfare recipients to be aggressive in seeking jobs or schooling, the state would alter how long grant recipients could stay in the program, tighten eligibility procedures, and increase sanctions on those who fail to meet requirements.

"The only one it will hurt is the cheaters, the rip-offs," Schwarzenegger said.

But Frank Mecca, executive director of the County Welfare Directors Association of California, said that some of the changes seem contradictory – for example, the state would be pushing more welfare recipients to get jobs while cutting funds for child care, transportation and job training.

"It just seems like he's undermining his own policy goals," Mecca said.

Assemblywoman Noreen Evans, a Santa Rosa Democrat who chaired the Legislature's joint budget conference committee, said money saved by cracking down on In-Home Support Services for the frail elderly could be illusory if it forces people into nursing homes costing much more.

Dan Schnur, director of the Jesse M. Unruh Institute of Politics at the University of Southern California, said Schwarzenegger's legacy could benefit from the changes required by the budget deal.

"There aren't any magic fixes to what ails California state government, and it would be hard to argue that this is huge progress, but they've taken some important steps in the right direction," Schnur said.

Jaime Regalado, director of the Pat Brown Institute of Public Affairs at California State University, Los Angeles, countered that a budget deal crafted shortly before Schwarzenegger is termed out is not likely to alter how voters already perceive him.

"But he's going down, at least symbolically, swinging," Regalado said.

Call Jim Sanders, Bee Capitol Bureau, (916) 326-5538.