Schwarzenegger Campaign Faces First Rift

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Arnold Schwarzenegger (search)'s gubernatorial campaign rebuffed its brand new economic adviser Friday, saying the film star rejects Warren Buffett (search)'s recent suggestion that California's property taxes are too low and might need to be raised.

"There's a difference of opinion here on one single issue," campaign spokesman Rob Stutzman told Fox News.

Buffett told the Wall Street Journal (search) on Friday that he was amazed property taxes on his $500,000 home in Nebraska were so much higher than on his $4 million home in California.

Buffett said he pays $14,401 in annual property taxes on his home in Omaha, Neb., but only $2,264 on his property in Laguna Beach, Calif.

Buffett did not directly advocate higher property taxes, but he implied California's legendary Proposition 13 had to be revisited.

"It makes no sense," Buffett told the Journal, referring to Proposition 13.

California voters passed Proposition 13 in 1978 in what political historians now regard as the beginning of a nationwide taxpayer revolt that fueled Ronald Reagan's campaign for president in 1980. The initiative reduced property taxes by 30 percent and mandated increases of only 2 percent per year, regardless of the increase in the property's value.

Conservatives consider the initiative untouchable and a symbol of taxpayers rising up against the state's liberal establishment. Politicians in both parties have shied away from any criticism of the proposition, even though budget experts say it has deprived the state of millions in revenue and forced other tax increases to pay for state services.

"As governor, Arnold Schwarzenegger would be a fierce defender of Proposition 13," Stutzman told Fox News.

Asked if Buffett would remain the top economic adviser, Stutzman said: "Of course. It would be nonsense to not want to dwell upon the wisdom of Warren Buffett's ideas on how to revive California's economy."

Conservative Republican challengers jumped on Buffett's comments -- alleging that Schwarzenegger lacked ideas of his own and was open to raising taxes. Buffett was already mistrusted in conservative circles for his open opposition to President Bush's use of tax cuts to revive the economy and for his deep roots in the Democratic Party.

"It's time for Arnold Schwarzenegger to come out from behind the curtain and tell us what he believes," Republican gubernatorial candidate Bill Simon told Fox News in a phone interview. "I've taken a no-new-taxes pledge. I will not raise taxes. Period. It's time for Arnold Schwarzenegger to do the same."

Tom Feliz, campaign manager for state Sen. Tom McClintock, also a gubernatorial candidate in the Oct. 7 recall election, described their reaction as "stunned amazement."

"Californians are already facing a tripling of the car tax and with this talk it looks like property taxes could triple and if Schwarzenegger's elected Californians won't be able to sleep in their house or their car," Feliz said.

Schwarzenegger's campaign said the actor was the keynote speaker at this year's gala dinner celebrating Howard Jarvis, the author of Proposition 13 and a hero throughout conservative ranks in California.

Stutzman said Schwarzenegger has long been an "admirer" of Jarvis and has repeatedly called him "the original tax cut terminator."

As for Simon's call for a no-new-taxes pledge from the Schwarzenegger camp, Stutzman could not have been more dismissive.

"That is a matter of policy and the campaign will roll out specific policy positions on its timetable and not in response to calls from single-digit opponents," Stutzman told Fox News.

Schwarzenegger leads in the latest statewide poll with 51 percent. Simon's support was 6 percent. Simon was the GOP nominee in 2002 but lost to Democratic Gov. Gray Davis 47 percent to 42 percent.