Arnold Schwarzenegger's celebrity is such that he could make an appearance before a gathering of county supervisors last week and get a standing ovation just for showing up - the first governor in memory to do so - even though his budget proposals would treat local governments, especially counties, rather harshly.

County officials beamed as the governor praised them for being on "the front lines providing the local services that are most important to the people of our state" and kept on smiling even though he didn't offer relief from a budget that would take $1.3 billion in property taxes from local governments - $900 million of it from counties - and saddle counties with additional burdens as health and welfare spending is also reduced.

The governor's appearance belied the increasingly contentious relationship between state and local governments, one that could reach a climax in November with a ballot measure that would, if enacted, make it more difficult for the state to periodically raid local treasuries.

The city-county coalition backing the ballot measure, however, is not rock solid. By happenstance or design, Schwarzenegger's proposal drives a significant wedge between the two local government factions. By proposing to take 70 percent of the property tax bite from counties, the governor would hit cities and their redevelopment agencies rather lightly. County government lobbyists are floating an alternative that would reduce the hit to $800 million, make it temporary rather than permanent, and take it evenly from counties, cities, special districts and redevelopment agencies.

The county effort has city officials in a dither, and the supposed allies are fighting each other over the 2004-05 budget as they try to put together a joint campaign for the ballot measure. City officials want to resist the entire $1.3 billion property tax shift, rather than seek a compromise, but if it happens they want to retain Schwarzenegger's division of pain.

A fundamental difference between cities and counties lies at the heart of the split, and also explains why the ballot measure coalition may be shaky.

County officials have long-standing structural and financial ties to the state, having traditionally operated state-financed health and welfare programs. They see themselves as stepchildren of Sacramento, and are less aggressive about confronting the Capitol, since the state controls so many county purse strings. Cities, on the other hand, view themselves as independent, with relatively few official connections to the state and with broad latitude in state law to adopt their own policies. Unlike counties, moreover, cities have mayors who are often influential political figures in their own right.

Those differences have made it difficult for the two local government factions to agree on a strategy to stop Sacramento's depredations, with cities generally wanting to be more confrontational than counties. Just working out the wording of the proposed ballot measure has taken years.

City officials see the Schwarzenegger property tax shift proposal - an expansion of a fiscal ploy first enacted a decade ago and now amounting to $5 billion a year - as an opportunity to rally popular support for the ballot measure and also fire up the local government unions whose financial support will be critical for the campaign. Any compromise, such as the one being floated by county officials, would undercut the ballot measure campaign by ceding the fundamental question, the city folks contend.

However, it's easier for cities to take an aggressive stance because they have more secure and flexible local revenue sources and have relatively little dependence on state aid.

The need for reform of the state-local relationship is self-evident. No matter how much Schwarzenegger and other politicians may butter up local officials, the fact remains that state politicians of all ideological stripes tend to see local treasuries as their emergency bank accounts, to be tapped whenever things get tight in Sacramento. That's not only morally suspect, but impractical. It discourages local governments from adopting long-range fiscal policies and pulls them, however reluctantly, into the state's boom-and-bust budget mode.