The Republican governor next week will take up the findings of the California Performance Review, the task force he created to make recommendations for overhauling state government.
Its 2,500-page report will be "hugely important," said Joel Fox, a task force commissioner and president of the Small Business Action Committee. "It'll set the course for a remodelled government."
If its proposals are implemented, the state could save an estimated $32 billion over five years, said a consultant who was involved with the report. That would help Schwarzenegger close projected shortfalls in future budgets without raising taxes, analysts said.
Senior administration officials have pegged the next fiscal year's budget gap at about $4 billion, compared with a $14 billion shortfall in the current year budget.
California's Assembly and Senate endorsed a $105 billion budget for the current fiscal year on Wednesday and on Thursday, respectively, after Schwarzenegger and top lawmakers reached a deal on Monday following long and often bitter talks.
Schwarzenegger will sign the budget on Saturday and receive the task force report on Tuesday, aides said.
Sacramento has been eagerly awaiting the report, compiled by consultants and some 275 state employees who audited California's sprawling government.
Their findings have been closely held and even sympathetic lawmakers have been kept in the dark. "These guys are keeping it airtight," said Assemblyman Tony Strickland, a Republican.
However, some leaked details suggest the report points to a much leaner state government.
It proposes scrapping 118 boards and commissions and 1,153 appointed jobs, realigning 11 agencies and 66 departments and eliminating a third of the state's work force through attrition, according to the consultant familiar with the report. Additionally, the report will recommend that the state sell unused real estate.
"There is no reason we couldn't sell between $1 billion and $2 billion in (state) assets in the next year and in successive years," according to the consultant. "That's just from selling no-brainer stuff and avoiding controversial stuff."
But that is easier said than done, said a legislative aide: "The problem is it will be political because all these properties will be in someone's district."
Meanwhile, state workers fear the report will lay the groundwork for outsourcing jobs to the private sector.
"We have already seen many examples in Texas, Florida, Virginia and elsewhere of the failure of privatisation. And we doubt the people of California want to turn over their government to the likes of Enron and Halliburton," according to J.J. Jelincic, president of the 140,000-member California State Employees Association, said in a statement.