Arnold Schwarzenegger, building on one of the themes of his historic campaign for governor, promised in his first State of the State address to "blow up" governmental agencies in a top-to-bottom overhaul of the state bureaucracy.

While other governors had been "moving boxes around to reorganize government," Schwarzenegger told lawmakers, "I don't want to move the boxes around. I want to blow them up."

A month later, Schwarzenegger created the California Performance Review and appointed Billy Hamilton, who had overseen a similar effort in Texas, as the co-executive director of the project aimed at eliminating wasteful duplication and making governmental agencies more responsive. And by all accounts, the large task force that the administration assembled is taking its work seriously, drafting a massive reorganization that would eliminate many agencies, merge programs and otherwise rewrite the state's overly complicated, highly duplicative superstructure.

During his campaign, Schwarzenegger implied that he could find enough "waste, fraud and abuse" to close the state's multibillion-dollar budget gap, but that vastly overstated the fiscal potential of the performance review. While the state might save $1 billion or $2 billion a year - substantial but only a fraction of the deficit - the real reason to make the effort isn't to save huge amounts of money but to keep faith with the voters who elected Schwarzenegger and, more importantly, offset the much-justified public cynicism about governmental lethargy and waste.

We should examine what each agency, from the largest to the smallest, actually does and decide whether it should be left intact, altered, eliminated or merged. It's tough work because, inevitably, it treads on someone's turf. Indeed, the plan's rollout has been delayed because of resistance among affected interests inside and outside the bureaucracy.

Governmental reorganization also faces another unique barrier: the state constitution. The existence of a separately elected superintendent of public instruction, for example, is clearly outdated, but to eliminate the position and place the Department of Education under the governor, as reality suggests, would take a constitutional amendment that many elements of the education community would stoutly resist.

The constitutional barrier could lead Schwarzenegger's governmental reformers to make a huge error on centralizing tax collection.

Collecting state taxes is now divided among four major agencies and many smaller ones. The Franchise Tax Board collects personal and corporate income taxes; the Board of Equalization collects sales taxes, oversees the administration of property taxes and handles appeals on income tax cases; the Department of Employment Development collects payroll taxes for unemployment and disability insurance; and the Department of Motor Vehicles collects property taxes on cars and boats.

There are credible reports that the reorganization commission, bowing to the constitutional status of the Board of Equalization, may make it the central tax-collecting authority, enfolding the Franchise Tax Board. The Board of Equalization consists of four separately elected members and the state controller; the Franchise Tax Board, an arm of the administration, consists of the governor's director of finance, the state controller and the current chairperson of the Board of Equalization.

The Franchise Tax Board, with a permanent, professional staff, has a national reputation for aggressive but honest tax collection. The Board of Equalization, with its political membership, has a long history of settling tax cases on grounds other than their merits, often in secret, and supports a corps of private attorneys and accountants who, for the right price, can make tax cases go away. Simply put, the Board of Equalization operates more like a political body - the Legislature, say - than a dispassionate court.

Even if it were to take a constitutional amendment, the right way to streamline tax collection would be to place it in a Department of Revenue under the governor's authority and accountability, with an independent tax court to handle appeals. Expanding the Board of Equalization's reach would be a scandal waiting to happen.