SACRAMENTO -- Saying the state's college and university systems are a key driver in the California economy, state Treasurer Phil Angelides on Wednesday denounced the administration's plans to cut $700 million next year from higher education.

Angelides, who has emerged as one of Gov. Arnold Schwarzenegger's biggest critics, called the governor's plan to hike tuition and reduce enrollments shortsighted.

"As treasurer, my first priority must be to protect our economy today, and build our economy for tomorrow," Angelides said. "I believe we need to burnish the crown jewel that is this state's higher education system, not break it down into shards."

The treasurer, a probable candidate for governor in 2006, visited with teachers and students at campuses in Sacramento, the Bay area and Chico on Wednesday. The day before he spent time in Los Angeles, Fresno and San Diego.

Besides the funding cuts, Schwarzenegger is proposing raising undergraduate student fees 10 percent and graduate fees by 40 percent. He also wants to reduce the amount of financial aid available to middle-income students.

H.D. Palmer, a spokesman for the governor, said the size of the state deficit is such that all departments and agencies are being asked to contribute. He argued that the cuts aimed at higher education will not affect core operations.

Angelides, however, advocates a combination of spending cuts with tax increases.

"I'm saying that before you cut $700 million from the premier college and university system in the world, why wouldn't you think about closing some corporate tax loopholes," Angelides said. "Why wouldn't you ask the highest earners to pay higher income taxes."

Palmer said the governor does not believe higher taxes will solve the state's problems. "California is a high tax state," he said. "Because of the Legislature's inability to control spending, the governor walked into office having to close a budget gap of more than $14 billion."