Gov. Gray Davis on Tuesday appointed Leon Panetta, President Clinton's chief of staff and budget director, to lead a new effort to find broad-based solutions to the state's fiscal woes.
But Panetta said that the real work won't start until voters decide on Oct. 7 whether Davis should continue as governor.

Panetta, a Democrat, said he hopes to put together a bipartisan team. Republicans who might take part would be unlikely to commit as long as the Governor's Office is in question, he said.

Once he assembles a commission of seven or eight members, Panetta said, he wants to work quickly to come up with recommendations by the January State of the State address, assuming Davis wins or that his replacement endorses the effort.

Last January, Davis said when he released his spending plan that he would not sign a budget that didn't include long-term solutions to the state's cycle of fiscal booms and busts. His budget proposal included a number of possibilities, although the Democratic governor stopped short of endorsing any one strategy.

Davis backed away from that commitment in the course of fierce partisan wrangling over an unprecedented $38 billion deficit, promising instead to appoint a team after the budget was signed.

In ensuing talks, Panetta persuaded Davis to allow him to appoint the other members of the commission, rather than the governor. Panetta said he wanted the flexibility to put together a bipartisan team that considers solutions from both ends of the political spectrum.

"All I know is that we would make a serious mistake ... if we excluded any area," he said.

State Sen. Dick Ackerman, R-Irvine, said that Panetta clearly has the credentials to lead the effort. But Ackerman questions whether Davis has given Panetta free rein to consider structural changes that don't include tax increases.

"I'm just concerned about the direction he's getting from the governor," Ackerman said.

Davis said in a press release that "our challenge now is to make California's revenue more stable and reliable" -- a phrase that Ackerman called Democratic code for increasing taxes.

But Panetta said he has not come to any conclusions yet.

"There are no simple or magic answers here," he said. In general, California's budget, he said, is a "very complex and disjointed system" in which spending is constrained by voter-approved initiatives and a hodgepodge of legislative priorities.

He said he was skeptical about measures such as spending caps, arguing that they don't take into account growing needs in certain areas and the necessity of making hard choices.

Several other panels have tried to overhaul the state's fiscal system. After the state's last fiscal crisis a decade ago, at least two major commissions tackled the budget. But few -- if any -- of their recommendations were put in place.

Panetta said he would take previous recommendations into account. He said he's looking for good ideas but wants a plan that stands a chance of political success.

Panetta said he believes that Davis is committed to long-term reform.

But Assemblyman John Campbell, R-Irvine, said he was skeptical, citing Davis' broken promise to demand long-term fixes in the budget signed in July.

"It seems like structural reform is something that feels politically good to him at some times and not at others," Campbell said.

"It does not inspire confidence."

Panetta represented the Monterey Bay-area 16th Congressional District for eight terms, and was the chairman of the House Budget Committee.

He was also the director of the U.S. Office for Civil Rights.