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State Of The State Preview

Audio

Aired 1/6/10

What does 2010 hold for California? We speak to John Myers, from "The California Report," about the top state stories to watch out for this year, and governor's State of the State speech that will be given later this morning.

MAUREEN CAVANAUGH (Host): I'm Maureen Cavanaugh, and you're listening to These Days on KPBS. After last year, you might think Governor Schwarzenegger could make a State of the State address and at least say the worst is over but nobody’s quite sure about that yet. As Schwarzenegger stands before legislators in Sacramento to give his assessment of California this morning, we already know the state faces another big budget shortfall and another painful round of budget negotiations. John Myers, Sacramento bureau chief for the California Report, is at the state capitol this morning waiting for the governor’s address. He joins us with a preview of the speech. And good morning, John.

JOHN MYERS (Sacramento Bureau Chief, California Report): Good morning, Maureen.

CAVANAUGH: Now we’re going to be broadcasting the governor’s speech in the next hour of These Days so give us an overview. What should we be listening for as the governor makes his address?

MYERS: Well, you know, I think it’s going to be interesting. This is Arnold Schwarzenegger’s seventh and final State of the State speech because, of course, he’s termed out after this year. And, you know, they – as you look back at them as a grouping of speeches and, you know, and senses of who he is as a politician, you know, you started out with a lot of lofty things in the beginning years and then it got, I would say, narrower and narrower and narrower because I think, you know, the reality of the state’s finances and the state government dysfunction, you know, set in, and some critics would say that the governor hasn’t done enough on that. So I think really out of the speech today, you know, what I’m going to be listening for are a couple of things. I mean, obviously specific ideas to get us out of the budget mess and the economic mess that we face here in California and I think some of those have been leaked in a couple of published reports today, a jobs package perhaps, and I think also just the tone of it, too. You know, it’s always interesting to watch the tone of these speeches. Is the governor reaching out asking for compromise? Is he humble or is he defiant? I mean, certainly, you know, the apex of the defiant Arnold Schwarzenegger was 2005 where he said work on these proposals or I’m going to the ballot and having a special election, and we know what happened.

CAVANAUGH: Right.

MYERS: He went to a special election and lost. So I think, you know, the tone of how he sets with the legislature and then the specifics of, you know, can he really give us some ideas. And don’t forget, we’re going to see his state budget proposal on Friday, so we’re really going to get a lot more substance then about what the governor wants to do to solve the problem.

CAVANAUGH: There are some people who’ve been saying that they expect this speech to be heavy on reform ideas. Do you expect to hear anything about tax reform and government reform proposals?

MYERS: I do. You know, a few sources close to the governor have said in the last few days that he will come back to the issues of tax reform and will remember that he had a bipartisan commission that he and the legislature convened last year to deal with tax reform. They didn’t really come to any consensus and there is one of the problems, is getting consensus on how to reform the state’s tax system. But I think we’re going to hear about that. I think we’re going to hear, according to a few people, probably a little bit about pension reform. We’ve talked an awful lot around California in the last year or two about public employee pensions and the unfunded liabilities that the state and local governments face to pay for those pensions through the years. I think we’re going to hear a little bit about that as well. And I think we’re going to hear a little about budget reform and I, you know, and so I think one of the challenges for Arnold Schwarzenegger always is how many things can he actually do at once. I think this is an incredibly optimistic person, a person who wants to aim high always. The question, I think, is, you know, how high can you aim and how many things does it look like you really can do versus you’re putting too much on the plate in your final 12 months.

CAVANAUGH: What is the state budget looking like for the rest of this fiscal year?

MYERS: Not good.

CAVANAUGH: Oh, yeah.

MYERS: I mean, you know, the estimates we’ve had so far, and we’re going to get new estimates again on Friday when his budget is released, but the estimates so far say about a $21 billion deficit over the next 18 months. That’s partially in the fiscal year we’re in now and then a good chunk of it in the fiscal year that begins in July. That’s on top of, you know, more than $60 billion of red ink that the legislature and the governor had to solve last year. So a lot of the easy choices have already been made. There are a lot of people, you know, you know, saying that it’s going to be even worse this year. You know, we’re hearing that the governor’s probably going to propose many more spending cuts. He’s going to ask for an awful lot of help from the federal government to try to solve part of our problem, possible extension of some of the temporary tax increases from last year. All those details we’re going to see later this week. But it’s another gloomy year, and I think layered on top of that is that it’s an election year. And so the legislature’s up for reelection, most of the legislature. We’re going to have a new governor, a governor’s race. It’s going to be a complicated year for, I think, politicians to focus on policy when there’s so many political ramifications this year.

CAVANAUGH: Well, one of the complications that has entered, perhaps may enter, into those budget negotiations is this ruling by a superior court judge that basically said the governor has no right to furlough thousands of state workers. He ordered them to halt that practice. Of course, that decision has been stayed while the state – the governor’s administration appeals that ruling. How do you think that story will play out? Because I know if it actually comes to fruition that the furloughs can’t go through, that sends shock waves through the idea of how California is going to save money.

MYERS: Yeah, well, let me put – I’ll even back up and put it this way. I think that since that budget deal was crafted last year with a lot of things that have been challenged in court, the Schwarzenegger administration has been basically playing what I would call a martial arts movie and they’ve, you know, five million moves to the left, to the right, a kick here, a deflection here in court, trying to keep that budget deal together and a huge part of it were the worker furloughs which are estimated to save, you know, between one and two billion dollars, depending on how you count it. There have been 24 lawsuits challenging the furlough policy of the governor. We were told that yesterday. Now, all of them haven’t been ruled on yet and they focus on different subgroups of state workers, whether they’re general workers, whether they’re prison guards, whether they are workers who are paid out of special funds and, therefore, not paid out of the general fund where the state’s deficit really exists. A lot of these groups have said that the governor acted illegally, he did not have the authority to do what he did. And there have been some court rulings so far that said that’s true, that the governor overstepped his bounds. We’re told that the administration is going to appeal all of them, anything that it’s lost, and that ultimately the administration believes the entire question of how much power the governor, as chief executive of the state, has over state workers and furloughs is going to go to the California Supreme Court. That’s what they believe. I think that’s what a lot of the labor unions and others who are pushing it probably believe at this point. And so we haven’t seen that play out completely but you’re right, if those lawsuits go against the, you know, the governor’s favor by the end, you are talking another billion to two billion dollars that you have to find solutions. And the governor’s office is very quick to say that if the furloughs don’t work, they will move to other things, also known as layoffs…

CAVANAUGH: Umm-hmm.

MYERS: …and lots of other things. And so, you know, you haven’t heard the end of what happens to state workers.

CAVANAUGH: Now, I know that one of the governor’s favorite themes has been getting the federal government to give California its rightful share of its – the money that it sends to Washington and to get more federal money to California. What kind of federal money is the governor seeking for California now in this desperate state we find ourselves in?

MYERS: Well, I will certainly say at the outset that we haven’t seen the full details of that yet so I will – we can – we’ll have to check back to see exactly how it goes…

CAVANAUGH: Sure. Okay. And that’s on Friday, right, John?

MYERS: …but – Yeah. Friday.

CAVANAUGH: Yeah.

MYERS: But from what I’ve heard so far, I mean, you know, I think it’s going to be a number of things. Certainly we’re looking probably for some temporary assistance. And I think also, though, the governor’s looking for a longterm reworking of the state and federal government relationship about money. For instance, the governor has been, you know, quite vocal about healthcare reform in Washington right now and how much money the state would be on the hook for when it comes to paying for the healthcare for low income Californians of which, you know, he has a concern that it’s going to cost us more and, therefore, the feds should cough up more money on that. If the feds did that, that would be a significant, you know, relief probably on the state budget because we do pay a fair amount of state dollars for some of that healthcare. I think also, too, the governor’s going to come back on some familiar themes. He and other governors have long talked about the fact that we don’t get enough money from the federal government to pay for the incarceration of undocumented immigrants who are in California prisons. That’s been a long running issue. But Arnold Schwarzenegger came into office in 2003 promising to be the collectinator.

CAVANAUGH: Yes, right.

MYERS: Saying he was going to get his money from the federal government. And I think it’s fair to say the governor has failed on that issue. I mean, he has not been able to do it for one reason or the other. He went back to Washington a couple of years after being sworn in, and I and other reporters went, and it was a great PR show but we didn’t get any real money out of that. And so here we are back again, asking the federal government to help. And I do think California has an interesting case. You know, we are a major part of the national economy and I have talked to some economists who do firmly believe that if California’s budget problems don’t get solved that we will be such a drag on the national economy as to slow down the national recovery, and you’ve got to think that that will be important for people in Washington to watch.

CAVANAUGH: Right. As you said, John, this is Governor Schwarzenegger’s last State of the State address and with that comes the idea of legacy. He’s been in office, as you say, seven years. And how much of that do you expect that we’re going to hear in this speech, the idea of him trying to seal up what his term in governor has been about?

MYERS: I don’t think we’ll hear a lot of it specifically and I think that’s because, again, this goes back to who Arnold Schwarzenegger is as a person. And this is not just him as a politician, it’s his entire career and how he got to where he was from where he started as a, you know, a basically a – from a poor family in Austria. And I don’t think the governor likes to look back. I think he likes to look forward. I don’t think he likes to kind of put an ending on things; he thinks things can keep going. As a matter of fact, a reporter asked him – I was at a news conference with him yesterday here in Sacramento and a reporter asked him something about this legacy issue, and the governor said, you know, well, I’m not ending, things are not over, you know…

CAVANAUGH: Umm-hmm.

MYERS: …and I’m in – you know, I prefer to be in denial about that, which got a good joke. But, he said, I’m going to keep working on these issues and working on things that matter to California even when I’m out of office. And so I don’t think you’ll see the governor – he doesn’t tend to be a very reflective person in public. I don’t think he’ll sit and talk about his accomplishments. I think he’ll speak as though the work goes on. And, in fairness, the work does go on even when he packs his bags and goes back home.

CAVANAUGH: The big Sacramento Delta Water Project, that $11 billion project that is going to be on the ballot this year, some people say that is Schwarzenegger’s legacy to California. Are we – is he expected to be talking about that? Or promoting that during the year?

MYERS: I think you’re going to hear a lot about that during the year. I think the governor strongly believes, and as do his advisors, that that’s crucial on two fronts. One, it’s crucial because they think of the policy as important in solving some the state’s water problems. But, yes, crucial because it does reflect on Arnold Schwarzenegger as a leader, his ability to solve a problem or at least theoretically solve it, but solve a problem that has vexed California for years, and water supply clearly is a huge issue and has been for decades. But I’m one of those observers of the governor who really believes that it’s – that’s very hard for the governor to avoid the budget as his real legacy…

CAVANAUGH: Uh-huh.

MYERS: …and the state’s financial and fiscal problems. That was what prompted the recall, after all, and the crazy deficit spending was the governor’s favorite term in the 2003 campaign. And, you know, here we are seven years later almost and we are still kind of facing crazy deficit spending. And so I think while water’s important and climate change issues that he’s talked about are important, those are all, you know, really viable issues but the fiscal problems of the state, you know, are going to continue to be part of the Arnold Schwarzenegger story.

CAVANAUGH: You alluded just a few minutes ago to the fact that, indeed, Governor Schwarzenegger is a lame duck. And I wonder, tell us how that may factor into his plans for California and anything that he offers during the State of the State address.

MYERS: I think that’s really, you know, one of those fascinating things and we haven’t had this in a while here in California because, remember, our last governor, Gray Davis, didn’t know he was a lame duck. I mean, was removed from office before he thought he was going to be leaving. And I think, you know, the lame duck narrative plays out in a lot of places nationally and statewide but it is very true, when you have a chief executive who is in those final months you do have members of the legislative branch, you have interest groups, you have others who know they’re going to be there after the governor is gone and, you know, know that the governor’s power is, you know, pretty much limited to January of 2011. And so I think it’s going to be very difficult for this governor. It’s going to be his biggest challenge probably in 2010 to continue to hold on to the power that he has wielded as governor, to continue to be at the center of these discussion about the budget, about long term reform, because some people are going to say, well, we’ll deal with the next governor on this, whether it’s Jerry Brown, Meg Whitman, Steve Poizner, whoever. But, you know, Arnold Schwarzenegger is not a guy who likes to take a backseat in a lot of things. I think he does sense that he has a role to play and so the question is how much power can he continue to wield and how much can he be at the center of those discussions versus people saying thanks, Governor, we’ll take it from here. And that’s, you know, that’s something for reporters like me to be watching.

CAVANAUGH: Well, John, I know you have to get ready to cover the speech but thank you for spending some time with us this morning.

MYERS: Thanks, Maureen. Always a pleasure.

CAVANAUGH: John Myers, Sacramento bureau chief for the California Report. I want to remind everyone you should stay with us. In the ten o’clock hour of These Days, I’ll be joined by KPBS political correspondent Gloria Penner. We will bring you the governor’s State of the State address. Coming up next, we’ll hear why the recession – what kind of a bite the recession is taking out of the county’s property tax revenue. That’s as These Days continues here on KPBS.

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