Were Arnold Schwarzenegger playing poker instead of the Capitol's budget game, the revised spending plan he unveiled Thursday could be characterized as "betting on the come."

The new Republican governor outflanked the Democratic Legislature by negotiating an unprecedented series of agreements with major budget factions - K-12 schools, higher education and local governments, principally - that curb spending now but promise more later, when finances have improved.

The agreements, when coupled with a modest surge in revenues and some proposed spending reductions and creative bookkeeping, allowed Schwarzenegger to claim that he's closed a $15 billion gap in the 2004-05 budget. And on paper, at least, he has.

"It's a responsible budget that protects essential programs, enforces spending discipline and does not raise taxes," Schwarzenegger said as he unveiled the revised scheme to dozens of reporters. "We will balance the budget this year."

The agreements, coupled with Schwarzenegger's strategic retreat on slashing health and welfare spending, would appear to lessen, and perhaps eliminate, the prospects for a lengthy battle with Democrats. He's telling them that they can pass a budget on time without either raising taxes or incurring the wrath of major constituent groups. And chances are they'll do more or less what he suggests, although there may be a modicum of breast-beating to demonstrate that they're not entirely subservient to the popular governor.

Some Democrats wanted a showdown with Schwarzenegger over health and welfare cuts, using them as a springboard to demand higher taxes - but the governor said he wanted to use the new revenues, about $2 billion, to restore much of the social spending, saying he always felt "very uncomfortable" about hurting the poor.

If Schwarzenegger pulls off an on-time, balanced, no-new-taxes budget, it will add another victory to an already impressive string of achievements during his first half-year as the state's governor. There are, however, caveats because the all-important "stakeholder" agreements are based on an assumption that austerity now will be lifted later when a rising economy produces a bumper crop of revenues.

With personal income taxes accounting for half of the state's revenue stream, even a modest uptick in the economy tends to produce a major boost in revenues, while a modest decline can send revenues into a death spiral, as recent history attests.

Schwarzenegger's promises to educators and local government officials and his implied pledges to health care advocates for future growth in spending are contingent on the economy continuing at least a mild recovery from recession, with a concurrent boost in employment and therefore in taxable personal income. If the Iraq war, an oil price explosion or some other traumatic event were to depress the economy and the stock market, the state's promises could turn to dust and Schwarzenegger might be compelled to seek higher taxes just as he was gearing up for a 2006 re-election campaign - a step he clearly does not want to take.

"I remain firmly opposed to tax increases," he said, "because no state can tax its way to prosperity or financial health. A more positive business climate will pour revenues into our state treasury and that's what I want to see."

At the same time, however, he and his budget advisers appear to be hedging their bets by low-balling revenue numbers for the 2004-05 fiscal year. If the economy remains in recovery, the state could easily see another $3 billion-plus in revenues, which would fill any leftover holes from portions of the overall plan that do not materialize - such as renegotiation of state employee contracts or a deal with Indian tribes for a cut of casino income.

Schwarzenegger acknowledged this low-ball approach to revenues. "We always come in with the low number, rather than the high number," he said.

Is it a perfect budget? Of course not; none ever is. But compared to the gimmick-and fantasy-filled budgets that former Gov. Gray Davis and the Legislature enacted during the last three years, resulting in tens of billions of dollars in deficits, it's a relatively straightforward and rational approach. There may be light at the end of California's dark fiscal tunnel.