Governor Schwarzenegger to Address State's Budget Problems in State of the State Speech

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Governor Schwarzenegger gives his State of the State address this afternoon in Sacramento and he's expected to say California's finances are in bad shape. KPCC's Julie Small says a looming $14 billion budget deficit has upstaged everything else on the legislative agenda.

Julie Small: In his State of the State address last year, Governor Schwarzenegger laid out an ambitious plan for reform and repairs: Medical care to California's uninsured; more capacity in the state's prisons; more water storage for dry years; and more repairs to the state's roads and bridges. California's budget crisis flattened the Governor's plan.

Don Perata: None of us anticipated the budget problem that we're in right now. So that's really changed the face of the earth.

Small: Senate leader Don Perata says he's waiting for that ground to settle. He's shelved the major water reform he's been pushing. He's also holding off a vote on the new healthcare bill that would cover California's uninsured. Senator Perata says all that stuff takes a back seat to stabilizing the state's budget. He's waiting to hear Schwarzenegger's proposals for how to do that.

Perata: I don't want to pre-judge anything he's going to do. He's got a hard job. This is a day that I'm sure he hoped never would come. It's here. So we want to wait. Give him the deference of listening to what he has to say, what he's proposing, why he's proposing it, and then we'll go to work.

Small: Perata's talking about specific budget cuts the Governor will propose later this week when he unveils his state budget. In his "State of the State" address, Schwarzenegger will focus on reforming the budget process itself.

He's likely to resurrect his effort to persuade the legislature to give him the power to slash the budget mid-year in a financial crisis. That makes sense to Assembly minority leader Mike Villines.

Mike Villines: Regardless of whoever's governor, he or she should be in a position that, if we have to do that and you're in an economic crisis, that you stem the tide early and that you have that ability. And I would support either party that that governor, he or she, could do that.

Small: Villines also favors passing a law that would require California to squirrel money away in plentiful years. But no Republicans would agree to nix the state law that requires a two-thirds majority vote to approve any new spending. That's a change Democrats want, and one that Schwarzenegger has said should be considered. But Republicans have been able to leverage their minority votes to hold up the budget to get cuts they want, and there's no way they'd give up that ace in the hole.