Now that Gov. Arnold Schwarzenegger has received the California Performance Review, what will he do with it?

This massive report is thousands of pages long and contains about 2,500 individual recommendations. Many are no-brainers, some are clearly from some interest group’s agenda, and a few conflict with each other. As with every similar performance effort back to President Reagan’s Grace Commission of 20 years ago, the prospective cost savings to taxpayers is rigorously calculated.

It will be politically impossible for Schwarzenegger to move on all of the recommendations. Some of them require legislative support that is probably impossible to mobilize. But changes in the Legislature may give the governor an opening to use the Performance Review as a means of advancing some old ideas, especially those regarding streamlined review for housing and infrastructure development.

Amid the thousands of pages and ideas, the Performance Review focuses on two major themes that could affect planning and development trends in California significantly:

First is a reorganization of state agencies that would move water and energy out of the conservation-oriented Resources Agency to a new development-oriented Infrastructure Department.

The second theme is a streamlining of environmental review processes to facilitate development.

Neither of these ideas is exactly revolutionary. Both have been promoted in one form or another over the last decade. But they represent an opportunity for Schwarzenegger to promote a particular political agenda around planning and development – and probably to mix it up with Democrats in the Legislature. These ideas could be used to put all kinds of construction – especially construction of public infrastructure – on a fast track.

From the point of view of planning and development policy, the state government reorganization comes down to one idea: collapsing all development-related enterprises into one agency and all resource conservation-related enterprises into another.

The Business, Transportation, and Housing Agency (BTH) would be revamped into the Department of Infrastructure with the addition of most of the Department of Water Resources, the Energy Commission and other energy functions, and parts of the Governor’s Office of Planning and Research. Meanwhile, the Resources Agency would be revamped into the Department of Natural Resources, which would lose responsibility for many functions, including the State Water Project and water planning, energy planning and permitting, and the firefighting functions of the current Department of Forestry and Fire Protection. Among other things, Natural Resources would oversee the eight land conservancies, although all but the Tahoe, Santa Monica and Coastal conservancies would move to a more local governance. Natural Resources also would have the Coastal Commission (which would remain intact as an independent entity) and a new Water Rights Board that would take over the water rights responsibilities of the current Water Resources Control Board.

That is a great deal of shuffling, but the message is clear: The resources folks should get out of the way of building and maintaining important public infrastructure facilities and focus instead on parks and wildlife. As the state has fallen further and further behind in building infrastructure, this idea has gained more currency even among a lot of moderate Democrats. During the Davis years, for example, Caltrans sent a similar message by moving the environmental review function from the planning division to the project delivery section. But the reorganization ideas are likely to get considerable resistance from environmentalists, who believe water and energy should be managed as natural resources and not as infrastructure.

The ideas for streamlining environmental review have a similar theme, and one that is not especially new. Some of the CEQA ideas are good ones. One proposal calls for using online technology to speed up state agency review of local projects, while another calls for the creation of a state mitigation registry, an idea that was kicked around during the Davis administration but never went anywhere. Nevertheless, the phrase “streamline CEQA” appears any number of times in the Performance Review, especially in connection with promoting infill development and building state infrastructure projects. Again, the message is clear: Enviros and community activists who use CEQA to stall projects or hold them hostage should get out of the way.

It will be interesting to see whether Schwarzenegger decides to pursue these ideas, which involve taking on the environmentalists and their Democratic allies in the Legislature. Although the governor is a moderate Republican who appears sympathetic to some environmental causes, he is also a businessman and a real estate investor himself, and his closest political ties are to Pete Wilson.

These two ideas – reorganization of state government to favor infrastructure construction and streamlining CEQA – are essentially unfinished Wilson business. Operating in a tougher economic climate and at a time when the Democrats were not so dominant in the Legislature, Wilson could not get these things done. Still, things are different now.

Home prices have doubled, and BTH Secretary Sunne McPeak – perhaps the strongest personality in the Cabinet – appears to be on a housing crusade. Traffic congestion remains a huge problem and Caltrans is under tremendous pressure to deliver, even as transportation funding sources are dwindling. Davis already streamlined power-plant permitting during the energy crisis of 2001.

The old white environmentalists, notably CEQA defender Sen. Byron Sher (D-Palo Alto), are getting termed-out in the Legislature. The new Democratic majority is largely Latino and oriented toward labor, not the environment. They listen to the construction unions, and the core constituency of these Democrats is aspiring toward home ownership.

Of course, Schwarzenegger is remarkably popular. He is a governor who believes, as Reagan did, that he can go around legislators to the voters when he desires in order to get things done.

Schwarzenegger commissioned the California Performance Review because, like Reagan, he ran against the now-famous junta of “waste, fraud, and abuse” in government. Schwarzenegger has used the audit to identify possible actions. But, like his precedessors, Schwarzenegger will to use the recommendations selectively to promote his own political agenda. It seems likely that he will use the streamlining and reorganization recommendations toward the planning policy goal he appears to be moving toward as governor – removing impediments to both infrastructure development and housing construction he thinks the state needs.