ESCONDIDO -- Appearing none the worse for wear in the long, frustrating campaign to balance the state budget, California's actor-turned-governor said Friday he is not the least bit discouraged by Sacramento's chronic fiscal woes and bitter partisan fighting.

And don't think for a moment that Republican Gov. Arnold Schwarzenegger wishes he had never tossed his name in the hat during the historic 2003 recall of former Democratic Gov. Gray Davis that led to his ascendancy to the pinnacle of California politics.

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"I love what I'm doing -- still. Every minute," said the Austrian-born bodybuilder and action-movie star, who was dressed in a gray suit and cowboy boots when he met with the North County Times editorial board. "And the more I operate, the more complex it gets, the more difficult it gets, the more challenging it gets, the more I enjoy it."

Schwarzenegger said he is not afraid of how the drama now playing out in Sacramento over a $24 billion shortfall will conclude. As unsolvable as the crisis may seem, the governor said his vision for balancing the books is off by only a few billion dollars from the approach Democratic legislative leaders are taking.

And he is optimistic the Legislature will deliver a balanced budget around July 1, the start of the new fiscal year.

Actually, Schwarzenegger said, the uphill climb to balance the books in a state perpetually teetering toward the red fits nicely with his adventuresome approach to life.

"When I go skiing, I'd rather go down a mogully run than to go down a groomed slope," he said. "I always look for the challenges. If I wouldn't have looked for the challenges, I wouldn't have decided to be a body-building champion when I grew up in Austria. You would have wanted to be a soccer champion or a ski champion (instead)."

If he had wanted to avoid challenges, Schwarzenegger said, he wouldn't have come to the United States seeking to be a leading man.

Just the thought of that triggered hearty laughter upon his arrival in Hollywood, he recalled.

"Every agency says, 'Forget it. With your body, with your accent, with your name -- what is it? Schwarzen-schnitzel? -- I can see it already on a billboard. Forget it. It would never happen. You know, maybe we can get you a job as a Nazi officer or as a bouncer.' "

Similarly, he said, in Sacramento he constantly encounters opposition from ambitious politicians, unyielding lawmakers, lobbyists of all stripes, feisty unions and aggressive news reporters, but that has only served to motivate him to work harder to get a budget passed.

Schwarzenegger said he doesn't view his opponents as annoying obstacles.

"I see this as one big play," he said. "And everyone is a different character in the play. And you've got to let it play out. You can't take characters out of the play or else you have no drama."

As it is, the task to balance the budget is characterized by nothing but drama.

No sooner had California voters turned thumbs-down on a $6 billion package of budget solutions last month, the Capitol's number-crunchers revised their estimate of the size of the budget hole upward yet again.

Projections are that the state will bring in $82 billion during the fiscal year that begins July 1, down from $88 billion in the current year and $101 billion the year before, said Mike Genest, the state's finance chief, who accompanied the governor on his trip to North County.

To close the gap, Democrats, who control both houses of the Legislature, have proposed a new tax on oil drilling in the state, a boost in the cigarette tax and a repeal of the corporate tax break they adopted a few months ago.

Schwarzenegger is holding the line against taxes, while proposing to trim funding to schools, health care, welfare and prisons, and cutting state employees' pay.

Schwarzenegger also proposes to save money by deporting thousands of illegal immigrants being held in state prisons and selling off prime state-owned real estate -- including the Del Mar Fairgrounds -- to raise billions in cash.

The governor maintained all sales will be handled carefully to make sure properties fetch their money's worth and that the public can continue to benefit from the facilities.

"We are not saying, 'Tomorrow, let's just dump all this for 20 cents on the dollar and do a garage sale,'" Schwarzenegger said.

To set the state up for a brighter future, he has proposed rewriting tax laws so state income tax returns don't fluctuate wildly with the ups and downs of Wall Street.

The current system is heavily dependent on the capital gains of wealthy Californians. Schwarzenegger appointed a bipartisan tax commission that is exploring alternatives, including a flat income tax, and is scheduled to deliver a report at the end of July.

About the same time, Genest said, the state is on track to run out of money. Genest said the state will need a signed budget well before then, around July 1, to make arrangements to obtain cash through short-term loans and continue paying its bills.

Whatever may come of the tax system and next year's budget, Schwarzenegger said he believes he has accomplished much. He cited his workers' compensation reform efforts of a few years ago and the recent launching of one of the biggest public works projects in California history, including $20 billion in transportation projects that accelerated the expansion of Interstate 15 in North County.

Elected in 2003, and re-elected in 2006, Schwarzenegger has about a year and a half left in office.

But the governor, who was sporting a large blue lapis ring he said he received from an American Indian community while promoting a national fitness campaign in the 1990s, said he doesn't know what he is going to do next.

"I don't know if I'm going to go and do more government stuff, or if I'm going to do some foundation work, or if I'm going to go and write a bunch of books, or if I'm going to go back into the movies," he said. "But I'm very fortunate that I have all the doors of opportunity open."

Call staff writer Dave Downey at 760-745-6611, ext. 2623.