Governor Calls for Budget Reforms in State of State Speech

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Governor Schwarzenegger devoted most of his State of the State address on Tuesday to California's fiscal crisis. Schwarzenegger called for a constitutional amendment that would trigger mid-year cuts when revenues fall and stockpile surpluses in good financial years.

Julie Small: The governor offered a cinematic backdrop for his call to close California's looming $14 billion budget gap.

Governor Arnold Schwarzenegger: When I was last here, little did we know that California would be engulfed by the largest firestorm in its history. It turned the night sky an eerie disturbing orange, and the day sky black. It drove hundreds of thousands of our citizens from their homes.

Small: He recounted meeting a man named Paul, a volunteer at a San Diego evacuation center who found beds for 300 elderly people forced from a nursing home.

Schwarzenegger: What Paul and the volunteers did, what the police and the firefighters did, and what the state and federal agencies did was this: they responded to the needs of the people. They led. They acted. They did not wait.

Small: Schwarzenegger challenged California lawmakers to tackle the deficit with similar urgency. He implored them to support the budget he'll unveil this week.

It cuts state spending across the board by 10%. In response, Senate leader Don Perata said the Governor's rhetoric rings false in the real world.

Senator Don Perata: If you were to cut 10% from the people that responded to that fire, you wouldn't have 15,000 firefighters. You'd have 10% fewer. You'd have fewer airplanes. You'd have fewer fire trucks. I mean, when you take the rhetoric, and you stretch it out and look at it as it applies to the every day lives of Californians, they get hurt.

Small: Perata thinks California can't cut its way out of this deficit. He contends the state will need to temporarily increase taxes or fees to close the gap.

Neither does Perata favor the Governor's other proposal: amending the constitution to stockpile surplus revenue so California can draw on that cash in lean years. Republicans loved that idea.

Mike Villines: The things he talked about were excellent.

Small: Assembly minority leader Mike Villines.

Villines: No taxes, we have to live within our means, and we have to make real reform in the budgeting process so that we are not hurting Californians by overspending every year.

Small: As Villines entered the media tent on the capitol steps, assembly speaker Fabian Nunez teased him that Schwarzenegger's conservative fiscal talk might return the former action hero to a starring role in his party.

Fabian Nunez: The Governor once again today takes the mantle of leadership of the California Republican party. And once again the Republicans will follow his leadership.
Villines: Yes. Y'know, in December we thought he was going the wrong way on healthcare, and this year he's going the right way on taxes. So we feel good. (laughs)
Nunez: There you go.

Small: The Governor did say he still plans to press ahead on healthcare reform. He's trying to sell medical coverage for all Californians as a cost-saving plan.