One might think that Monte Hall, rather than Arnold Schwarzenegger, is the governor of California these days.

Schwarzenegger is playing "Let's Make a Deal" with unions, Indian tribes, local governments and others in hopes of paring down the state's enormous budget deficit and, perhaps, avoiding new taxes.

Schwarzenegger was elected governor a half-year ago on his pledge to clean up Sacramento's fiscal mess, created when predecessor Gray Davis and the Legislature squandered a one-time revenue windfall on unaffordable tax cuts and spending programs. The state has rung up tens of billions of dollars in budget deficits so far, and Schwarzenegger's administration has acknowledged that it faces another $14 billion gap between income and outgo for the 2004-05 fiscal year that begins July 1.

The moment of political truth is drawing near. Schwarzenegger must produce the May revision of the budget soon, and clearly the neophyte governor wants to reduce the gap to manageable proportions before then by concluding a series of specific agreements with budget "stakeholders," worth a billion or two dollars each.

The underlying notion is that if the 2004-05 gap can be closed to a few billion dollars, it can be covered with some borrowed money - a portion of the $15 billion bond issue that voters enacted at Schwarzenegger's behest in March - and the state can slide through another year without a tax increase, then hope that a rising economy will fill in the revenue holes in subsequent years. Administration insiders liken it to a workout plan for a private corporation that might otherwise be forced into bankruptcy.

The strategy got a jump-start when the GOP governor did a deal with the California Teachers Association for a $2 billion reduction in state school aid. The administration is close to a deal with local government leaders for them to absorb an indirect reduction of $1.3 billion a year for two years (by shifting some of their property taxes to schools), in return for which Schwarzenegger would support a constitutional amendment protecting local government funds from future depredation. Simultaneously, Schwarzenegger is seeking a multiyear deal with Indian tribes that operate casinos for a slice of their revenues, and hammering state employee unions, especially the California Correctional Peace Officers Association, for concessions.

If those efforts were to succeed, they would, in combination with Schwarzenegger's proposed cuts in higher education and health and social services, cut the projected deficit at least in half. Administration officials are cautiously optimistic, meanwhile, that an improving economy will add a few billion dollars to the revenue side of the ledger. As tax officials process personal and corporate income tax returns, they see revenues running at or above projections, and a new amnesty program for taxpayers involved in abusive tax shelters appears to be yielding a small windfall, perhaps a billion extra dollars.

If specific deals and rising revenues cut the deficit to $10 billion or so, the bond issue could be tapped for the remainder without raising taxes. But there's an ironic catch: The entire deficit would have been $10 billion had Schwarzenegger not, as his first gubernatorial act, reinstated a $4 billion per year slash in the taxes that motorists pay on vehicles. We may wind up borrowing money to pay for a tax cut - not exactly the most responsible fiscal policy.

There are no guarantees, of course, that all of this will happen. All the deals may not materialize, and a Democratic Legislature is balking at reductions in health care and social services spending. And the deals Schwarzenegger is seeking are, in some cases, good for only a year or two, which means that the state could face big future deficits if revenues don't surge.

Ultimately, therefore, Schwarzenegger may not avoid the issue that lies just beneath the surface: whether to raise taxes. He has said he doesn't want to do it, but has never taken an absolutely no-new-taxes pledge and has hinted that he might be open to new levies if the budget gap can't be closed without them. A new Los Angeles Times poll, in fact, indicates that California voters would support new taxes on the wealthy, on cigarettes and on liquor.