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State Of The State Speech And Local Analysis

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Aired 1/6/10

What issues should Governor Arnold Schwarzenegger address in his State of the State speech? We speak to KPBS Political Correspondent Gloria Penner about the key issues California faces in 2010. And, after the speech, we talk to San Diego Union-Tribune Political Writer John Marelius to get his reaction to the governor's address.

MAUREEN CAVANAUGH (Host): I'm Maureen Cavanaugh, and you're listening to These Days on KPBS. There are many who expect Governor Arnold Schwarzenegger to use his last State of the State address to focus on big issues, like government and tax reform, and a multi-billion dollar state water project. But those lofty topics, very much like the Schwarzenegger legacy, may be overshadowed by California's massive fiscal problems. This hour the governor will address the state legislature in Sacramento and the people of California with his plans and promises for the next year. Right now, KPBS political correspondent Gloria Penner is here to give us a preview of the governor’s State of the State address. And welcome, Gloria.

GLORIA PENNER (KPBS Political Correspondent): Well, thank you, Maureen. Good to be here.

CAVANAUGH: What are these – the major topics that you expect the governor to spend time on in this final State of the State speech that he’ll give us?

PENNER: Okay, well, I’d like to frame this a little bit for you…

CAVANAUGH: Please do.

PENNER: …because it’s hard for me to give a preview. I didn’t see a copy of his address and I would only be speculating. But I will speculate. I’ve never resisted that. I’d like to talk about his mood a little bit.

CAVANAUGH: Sure.

PENNER: Remember last year when his State of the State address was so short that it ended before it started.

CAVANAUGH: It was amazing.

PENNER: He was very combative with the legislators. This year, I don’t think that’s going to happen. I think he’s going to be much more conciliatory. In fact, he has invited every lawmaker in the chamber to have lunch with him at a restaurant after the speech. I don’t know who’s going to pay but, you know, if they all show up, we’re talking about 120 guests.

CAVANAUGH: They should go dutch considering the state of the state.

PENNER: Well, you know, he’s now a full fledged lame duck governor and he’s going to be term limited out at the end of the year. He says he’s in denial. Some believe that this is going to give him the power to make some hard decisions. He won’t be undaunted by approval ratings. His approval ratings are 27%, some kind of a record low, almost as low – in fact, lower than when we recalled Gray Davis. So, you know, that tells you something. But then that could leave him virtually free not to have any political – any sense that he has something to gain from whatever he does but it also might leave him with no political power over the legislature. And so I think we have to frame it that way. I mean, I could go into the heavy issues that he’s going probably going to have to deal with but we can talk about that as we go along.

CAVANAUGH: Absolutely. Well, we know, certainly, that the economy is one of the things that he’s going to talk about. State employment (sic) rates, still in double digits. We face another estimated $21 billion budget shortfall. What do we, if anything, do we expect the governor to say about jobs and the economy—his budget is coming out this Friday—but in this speech today?

PENNER: Yeah, I think it’s going to be jobs, jobs, jobs. I think we’re going to see the plans that he’s going to lay out to spend $500 million on worker training. He wants to try to create 100,000 jobs. You know, that’s all part of the legacy thing. If he can be remembered as somebody who jumpstarted the economy by creating jobs, and there’s something really wonderful about training people. It’s like giving back to education which he took so much from. I think he’s going to announce that this morning. After all, unemployment rate is at 12.3%. He’s got to do something. It’s part of a five-pronged proposal that Schwarzenegger has. It’s called the California Jobs Initiative and it will be legislative proposals to extend a tax credit for first-time homebuyers, reduced sales taxes for the green technology sector—because that’s where he really wants to see the jobs take off. He actually wants to limit lawsuits against businesses, make it harder for opponents to block big construction projects by environmentalists. You know, it’s like giving and taking away. You’re giving to the green community…

CAVANAUGH: Right.

PENNER: …but you’re also trying to restrict environmentalists. It’s going to be very interesting to see how he deals with that one.

CAVANAUGH: Well, if you’re correct, Gloria, and what we see here is the optimistic Governor Schwarzenegger, not the one we saw last year, he may return to the idea that he’s hammered for years and that is reform, reform California, reform our tax structure. How – What kind of reform do you think that he’ll talk about today?

PENNER: Well, he wants – he definitely wants to see permanent changes in California’s tax structure because, you know, our state has these boom and bust cycles. Some years we do so well the revenues just pour in, and then the last couple of years the revenues have shriveled up, and those are the bust cycles and that’s when he starts pulling money away from social services and education and he really angers – at least he angers the Democrats. He angers a lot of other people, too. So what he’d like to see is for a bigger, better reserve fund built that can deal with these fiscal catastrophes, and that would be the centerpiece of his reform.

CAVANAUGH: And a lot of people are talking about government reform. Is he going to be addressing, do you think, any of that in this speech?

PENNER: Well, he might because he does want election law changed. He would like to see primaries opened up. And I think the most interesting thing that he wants to see is limiting runoff elections to the top two vote-geters.

CAVANAUGH: Ah.

PENNER: Which means that you could have the top two vote-geters could both be Republicans or both be Democrats or both be Libertarians. You wouldn’t be forced to have people from different parties running in the general election, so that would be nice. Another thing we really have to mention—when I say it would be nice, I mean it would be an interesting turn of events if it came to pass. It’s going to take a lot. Another thing we should mention is this $11 billion water bond that he’s pushing for. That would be part of his legacy, too, to change California’s water delivery system, something that’s been tried now for decades. And, you know, if we suddenly found that when we had drought years that it really didn’t matter that much because our water system would bring water in from the Sacramento Delta and we wouldn’t have to be so concerned, I mean, that would be quite a legacy.

CAVANAUGH: One thing that the governor has never been shy about is talking tough about Washington and I wonder in this speech if you expect him to talk about getting more money from the federal government and more flexibility from the federal government. He talks about that a lot. What does that mean?

PENNER: Well, you’re right, he does want more money from the federal government. According to him, California only receives about 78 cents of every dollar we send to Washington, so that puts us behind the ball right away. He would like to see increased federal funding but who wouldn’t at this point? I mean, when you look at the 50 states, I think there are only 2 or 3 that are even running on an even keel; most of them are just where we are except California’s bigger, more people, so it becomes more obvious. In terms of flexibility, what he’s talking about, he wants to have a chance to sort of play or massage, I’ll say, MediCal reimbursements and eligibility. He wants to be able to lower the rates paid to persons who provide medical care under the program. He would like to limit benefits to patients. He would consider increasing co-pays. Now this is what he would like to see congress, the federal government, give to the states.

CAVANAUGH: Well, Gloria, I have to interrupt you. We’re ready to go with the governor’s speech. Here is Governor Arnold Schwarzenegger at the podium of the California Assembly Chamber, giving his final State of the State address. You’re listening to KPBS.

GOVERNOR ARNOLD SCHWARZENEGGER (State of California): Thank you. Thank you very much. Thank you Senate President Pro Tem Steinberg, Speaker Bass, Senator Hollingsworth, Assemblyman Blakeslee, Attorney General Brown, Treasurer Lockyer, Secretary of State Bowen, Controller Chiang, Insurance Commissioner Poizner, Superintendent of Public Instruction O'Connell, Members of the Board of Equalization, all my cabinet secretaries, my Chief of Staff Susan Kennedy, and members of the legislature. It's good to see everyone here together again.

And I would like to just introduce a few guests I have up in the gallery. First of all, my wife and First Lady, Maria Shriver with our four children, and my friend Secretary George Shultz and his wonderful wife, Charlotte, and another friend, Mayor Willie Brown, you know, who was Speaker Willie Brown at one point. And then Alice Huffman, President of the California NAACP, then Speaker Hertzberg. Where is Speaker Hertzberg? Over here, Hertzberg and his wife Cynthia. Also known as Hertzy. And then also we have Chancellor Jack Scott, a community college chancellor. A big hand to him also. Thank you for the pleasure. And then we have a very, very, very special guest here, Sara Granda, who overcame great obstacles to pass her bar exam and became an attorney. Let’s give her a special big, big hand for the great work that she has been doing.

Now, I want to begin with a true story from which we can draw a worthwhile lesson. As you may guess, the Schwarzenegger household is something of a menagerie: an Austrian bodybuilder, a TV journalist, four children, a dog, a normal goldfish, a hamster and so forth. And in recent years we added a miniature pony and a pot-bellied pig. Now, it's not unusual for me to look up from working on the budget or something to find the pig and the pony standing there in front of me and staring at me. Now, the dog's food, which we keep in a canister with a screwed-on lid, sits on the top of the dog's kennel. And the pony has now learned how to knock the canister off the top of the kennel, and then he and the pig wedges it into the corner. Now, there's this ridge on the lid of the canister, and the pig with his snout pushes this ridge around and around until it loosens up, and then they roll the canister around on the floor until the food all spills out. And then, of course, they go to town and they eat it. Now, it is – I have no idea how they ever figured all this out, to tell you the truth. I mean, it’s like humans figuring out how to create fire. But it is the greatest example of teamwork, and I love it. It’s about teamwork. So one lesson to draw from the pig and the pony story is of what we can accomplish when we work together. And last year, we here in this room did some great, great work together. And we had a pig and a pony year.

And I want to make sure now that before some reporters write that I compared the legislators with pigs and ponies that that is not the message. The message is about working together, teamwork. Together, as a team—as fractious and tentative and uncertain as it might have been—together, we got California through the front end of the worst financial crisis since the Great Depression. Although not without pain, we closed a budget gap of $60 billion plus. Now, these decisions were very hard for both sides of the aisle. On the Republican side, we had leaders who sacrificed their careers or put them at risk. On the Democratic side, we had legislators who were threatened by their own interest groups. To those on both sides of the aisle who took these risks for the good of the state, you have my deepest admiration.

We did what we had to do. We made painful spending cuts. We passed temporary tax increases. We permanently eliminated COLAs for most state programs, and we made major reforms in welfare and parole. And there are two accomplishments in particular that I want to recognize here today.

Just last night the Assembly passed major education reform, reform that once seemed impossible, but now will become law as soon as it hits my desk. For too many years, too many children were trapped in low-performing schools. The exit doors may as well have been chained. Now, for the first time, parents, without the principal's permission, have the right to free their children from these destructive schools. That is great freedom. Also in the past, parents had no power to bring about change in their children's schools but that will now change, too. Parents will now have the means to get rid of incompetent principals and take other necessary steps to improve their children's education. And to increase accountability, we finally broke down the firewall so that teachers’ performance can be linked to students’ performance. So those are great, great accomplishments and congratulations to all of you for this great work.

And another major accomplishment, for decades this state was in a literal war over water, with old and deep divisions, Northern California versus Southern California, Democrats versus Republicans, farmers versus environmentalists, businesses versus labor and the list goes on and on. But we here in this room made history with the most comprehensive water package in nearly half a century. We brought all the stakeholders together. By working together, we got it done.

And now we must work very hard so that they pass the $11 billion in water bonds that will be on the ballot this November. Democrats and Republicans will have to travel up and down the state to educate the people of California why those bonds are so important because some people say how can we afford those bonds in the current economic climate? I say, how can we not?

It is the law that you cannot build a school or that you cannot build a factory or that you cannot build an office building or a housing development without identifying first a source of water. As a result, huge projects and thousands of jobs have been put on hold. Our economy cannot grow without water. Our population cannot live without water. It is our state's lifeblood. Now is exactly the time to invest in it, so that when Californians turn on their faucet, there is safe and reliable and clean water coming out of that tap, and not just five years from now but 30, 40 and 50 years from now. That is so important.

Now, let’s talk about the coming year. If I had to summarize in one word our focus for the coming year, it would be the word ‘priorities.’ We have to get them straight and we have to keep them straight. The first priority for the coming year obviously is to get the economy and to get jobs back. Jobs, jobs, jobs. The people – The people and businesses of California are an engine of self-betterment and progress. As long as government keeps the engine oiled with prudent policies and, more importantly, does not pour sand in its gears, this state will persevere and prosper.

I will come to the main thing, what we can do to help the economy, in a moment, but there are four proposals to spur job growth that I will introduce. First, you will receive a $500 million jobs package that we estimate could train up to 140,000 workers and help create 100,000 jobs. Second, you will receive a measure to streamline the permitting of construction jobs that already have a completed environmental report. And, third, to stimulate other construction jobs, you will receive a proposal for homebuyers tax credits of up to $10,000 for the purchase of new or existing homes. And fourth, since we want California to be the dynamo of green technology, I ask you to pass our proposal exempting the purchase of green tech manufacturing equipment from the sales tax. That, too, means jobs. Those are jobs for the new economy.

Now, while we still have a long way to go, the worst is over for California's economy. And the real good thing is that we have the right economic mix going forward: high tech, green tech, biotech, Hollywood-tech, farmer-tech and so on and so forth. Our economy is well-positioned to take advantage of the future.

So let me just tell you the main thing that we here in this chamber can do to help the economy and to help to create jobs. We can be a better partner to the economy because the state and government has a responsibility not to be an obstacle to success but to be a partner in prosperity. To strengthen the economy, which is the foundation of all jobs, we here in this chamber must reform California's budget system and we must reform our tax system. That would be a huge stimulus.

The basic problem is that our tax system does not reflect our economy. In 2009, California's economic growth declined only by 2.8% but our tax revenues were down by more than 8 times that much. Our economy is diverse, whereas our tax system is not. 144,000 taxpayers pay almost 50% of all personal income taxes. Now, think about that. 38 million Californians have to rely on 144,000 people for their schools, their fire protection, their healthcare, their public safety and so many other services. That makes absolutely no sense. Now here is what we need to accept: our economy is 21st century, and our tax system is 20th century. It is stuck in the wrong century.

The Tax Reform Commission did its work and came up with a plan to reform, with a great way to reform that was praised by both Willie Brown and the Wall Street Journal. Now how often does that happen? The Commission proposed major, radical reforms. Now some people say right away that they are too bold and thus they would be too hard to enact. Now what do they mean by too bold? Bold is what we do in California. And what do they mean by too hard? If I had hesitated in my career every time I made a move because it was hard, I would still be yodeling in Austria.

We must begin work on those tax reforms because we simply cannot wait for the rich to bounce back. State revenues are not expected to return where they were until 2013 and 2014. I sent you a tax reform commission's plan. I sent you the plan in late September, but it seems that it has somehow disappeared under this dome. Where is it? Maybe the pig and the pony has taken it. That’s what it is. But, you know something, I am looking forward to working with the legislature to get this done.

And budget reform is just as important. This is something that I’ve been talking about since I have become governor of this great state. The budget crisis is our Katrina. We knew it was coming. We have known it for years. And yet Sacramento would not reinforce its economic levees.

And in addition to taking action on the tax commission's plan, I ask you to also take action on the Best Practices Budget Accountability Act, which has been drafted by the reform group, California Forward, under the leadership of Bob Hertzberg, of course. I especially support its proposal for the performance-based budgeting and applying one-time spikes in revenues to one-time uses, such as debt reduction, infrastructure and creating a rainy day fund. The leaders of this body have said, and they have said it many times, that the legislature should be given a chance to enact reforms before reforms go directly to the people. Well, here’s the chance. I urge you to take it.

And as we struggle to overcome our differences, what I ask you to remember is that the current tax and budget system is cruel and I’ll tell you why I say that. It is cruel because it is forcing us to make a Sophie's choice amongst our obligations. Which child do we cut? Is it the poor one or is it the sick one? Is it the uneducated one or is it the one with the special needs? That is cruel. We overcame the divisions on water. I know that we can also overcome our obstacles and divisions on tax reform, on the tax system and on the budget system. Let’s do it.

Now, I will address our immediate budget situation more fully in a few days when I present my budget, but let me just give you an overview. We face a $19.9 billion deficit, $6.6 billion for the rest of this budget year and $13.3 billion for the upcoming budget year.

Big picture, let me tell you what will be required here. First, as bitter as the words are in my mouth, we face additional cuts. We know what that means. We know the pain it entails. I mean, what can we say at this point except the truth? That we have no choice. But I am drawing this line. Because our future economic well-being is so dependent upon education, I will protect education funding in this budget. And we no longer can afford to cut higher education either. The priorities have become out of whack over the years. I mean, think about it, 30 years ago 10% of the general fund went to higher education and only 3% went to prisons. Today almost 11% goes to prisons and only 7½% goes to higher education. Spending 45% more on prisons than universities is no way to proceed into the future. What does it say about our state, what does it say about any state that focuses more on prison uniforms than on caps and gowns? It simply is not healthy.

So I will submit to you a constitutional amendment so that never again do we spend a greater percentage of our money on prisons than on higher education. And the way we get this done is to find more cost-effective ways to run our prison system and allows private prisons to compete with public prisons. Competition and choice are always good. I mean, California spends $50,000 per prisoner. By comparison to the ten largest states, they spend $32,000 only. They spend less, and yet they do not see federal judges taking over the prison healthcare system. Why do we have to spend so much more than they do? I mean, if California's prisons were privately run, it would save us billions of dollars a year. That's billions of dollars that could go back into higher education where it belongs and where it better serves our future.

Choosing universities over prisons is a historic and transforming realignment of California's priorities. If you have two states and one spends more on educating and the other one spends more on incarcerating, in which state's economy would you invest? So I ask you to make the right choices for California.

Now, another major item is this: federal funds have to be part of our budget solution because the federal government is part of our budget problem. When President Clinton was in office, California got back 94 cents on the dollar from the federal government. Today we only get 78 cents back. But in the meantime, Texas gets 94 cents, Pennsylvania gets $1.07, Alaska, with all its oil, gets back $1.84 for every dollar. And guess what New Mexico gets: $2.03. This should be much more fair and equitable. We are not looking for a federal bailout, just for federal fairness.

Californians carry also a special burden since we are a border state. The federal government alone controls immigration policy. It alone controls border security. And while acknowledging its responsibility, the federal government is not even funding a 50-50 split of the costs of undocumented immigrants. We no longer can ignore what is owed to us, or what we are forced to spend on federal mandates. We are currently owed billions of dollars by the federal government for various different programs. We need to work with the feds so that we can fix the flawed formula that demands that the state spend money that we do not have.

And now Congress is about to pile billions more onto California with the new healthcare bill. Now, as you know, while I enthusiastically supported healthcare reform, it is not reform to push more costs onto states that are already struggling while other states are getting sweetheart deals.

Healthcare reform, which started as a noble and needed legislation, has become a trough of bribes, deals and loopholes. Yet you've heard of the bridge to nowhere, well this is healthcare to nowhere.

California's congressional delegation should either vote against this bill that is a disaster for California or get in there and fight for the same sweetheart deal that Senator Nelson of Nebraska got for the Cornhusker State because he – because that senator got for the Cornhusker State the corn, and we got the husk.

Now, another priority related to the budget is pension reform. The cost of state employees’ pension is up by 2,000% in the last ten years. You heard me right, 2000%, while revenues have only increased by 24%. The pension fund will not have enough money to cover this amount, so the state—that means, of course, the taxpayer—has to come up with the rest of the money. Now we are already putting in there every year more than $3 billion to those pensions. That amount will go up to $10 billion, and this is money that is taken away from important government services. This is money that cannot go to our universities and our parks and other government functions. Now, for the current employees this pension cannot be changed, either legally or morally. We cannot break the promise that we already made. This is a done deal. But we are about to get run over by a locomotive and we can see the lights coming at us. We can see the lights coming. I ask the legislature to join me in finding the equivalent of a water deal on pensions, so that we can meet the current promises and yet reduce the burden going forward.

These are serious issues that our state faces. Now, every year, in spite of whatever challenges are before us, I stand up here and tell you how much I believe in California's future. I tell you how much I believe in the dream and how this is the greatest place in the world. And some people always say, yeah, yeah, yeah, this is just Arnold being so optimistic. But I am not alone believing those things.

I mean, Time magazine recently did an article about California that sounded just like one of my speeches. I would like to read you just a few sentences that Time magazine wrote: "California is still a dream state, in fact, the pioneering megastate. It’s still at the cutting edge of the American future economically, environmentally, demographically, culturally, and maybe politically. It is the greenest and the most diverse state, and the most globalized when the world is heading in all those directions.

It's also an unparalleled engine of innovation, the mecca of high tech, biotech and now clean tech. And in 2008, California's wipeout economy attracted still more venture capital than the rest of the nation combined."

So now do you believe me? Do you see what I’m saying? This is the greatest place in the world. California has the means and the mind power to solve all of its problems. Sometimes we are just too close to the problems to see the positives, and we just need to step back.

A couple of months ago, I was in Iraq visiting our men and women in uniform. It’s the second time that I’ve been over there and it was quite a great experience. And, of course, we have so many of our Californians over there serving. I had breakfast with them, we chatted, we worked out. I pumped them up, took pictures with them, and they told me all kinds of stories. They’ve seen an un – they’ve seen experiences that we cannot even believe. Many have served tour after tour after tour. And as a result, some have lost homes, spouses, limbs and even their lives. Too often our soldiers bring back the enemy with them in their heads.

We are seeing and hearing all about a lot of this post traumatic stress syndrome. The suicide rate is disturbingly high. I mean, this country cannot continue living in denial about those things. Those men and women need help.

California has more returning veterans than – California has more returning veterans than any other state, so our state, as well as the federal government, has a special responsibility. You will see that in our agenda. We have a fundamental obligation to anyone who has shed or risked blood for this country. That is a priority. Their sacrifice is extraordinary and it never fails to inspire me. And if you look up to the gallery, you will see some Californians wearing the uniform of our country that just came back from Iraq and Afghanistan. So to those men and women, those brave men and women, I say, welcome home. Welcome home.

No matter how big the problems are that this state is facing, no matter how harsh things may seem to us in the months ahead, those Californians in uniform will tell you that this is still the greatest place to come home to and the greatest place to pursue a better life. Just ask them how often they dreamt of being back here at home in the Golden State. So ladies and gentlemen, in closing, we in this chamber must fulfill our sacred trust to keep California the great place to come home to, for our men and women in uniform and for generations of Californians yet to come. Thank you very much and God bless all of you. Thank you.

CAVANAUGH: You have been listening to California Governor Arnold Schwarzenegger in Sacramento giving the State of the State address. It’s his last such address. His term as governor ends this year. Now we experienced a slight technical problem and lost a few minutes of the speech. We’ll be posting the speech in its entirety on our website, KPBS.org. I’m here with KPBS political correspondent Gloria Penner and with that final salute to the veterans of Iraq and Afghanistan, the governor ended what I would say is a pretty upbeat speech. Would you agree, Gloria?

PENNER: Yes, and I was going to say I told you so.

CAVANAUGH: Uh-huh, yeah.

PENNER: I said he would have a conciliatory tone. It was really a bit more than conciliatory, it was inspiring. And except for the fact that we know that his ratings are pretty low and he has faced this terrible economic situation, he has struck some notes that were kind of exciting. I mean, the whole idea of putting a control on prison spending so that prison spending doesn’t outspend what is spent for education is, for me, being an educator, a very inspiring thought, and he wants to propose it as a constitutional amendment. That certainly would memorialize it and it would make it part of our constitution. I found that exciting.

CAVANAUGH: I want to let our listeners know that we will be taking your phone calls at 1-888-895-5727. We want to hear what you thought about the governor’s State of the State address, what didn’t you hear that you wanted to hear, what did you like? Give us a call with your questions and comments, 1-888-895-5727. And, you know, I know his budget is coming out on Friday but he did talk about the hard times that the – California has faced and also that there are hard times ahead, Gloria.

PENNER: He did but he did say there would be no cuts to education, no more cuts to education. So it seems to me as though a lot of this State of the State speech and what we’ve been hearing lately, the Assembly passing a major education bill which will now go to the State Senate, which, indeed, is kind of revolutionary. It would give parents the right to pull kids out of schools that they consider underperforming and it would also give them that right without seeking the principal’s approval. There seems to be more and more focus on this, and he did say he would sign this bill once it gets to his desk. The Senate has to approve it first. So I agree. I mean, I just think that there are tough times ahead but I think he’s putting the right tone on it. Of course all this could change because he’s calling the state legislature into special session and that in itself is fascinating because according to Proposition 58, which was passed by the voters, they have 45 days in which to work out his – the budget solution, only 45 days, and if they are unable to after 45 days, they are not allowed to deal with any other issues. They can’t pass any laws, they can only work on a budget, which is kind of a tough thing to do.

CAVANAUGH: Well, we will continue and talk more about the governor’s calls for tax reform, pension reform, budget reform and also a hint about privatizing some state prisons, and we’ll talk more with Gloria Penner, and John Marelius will join us, political writer for the San Diego Union-Tribune but we have to take a short break. We will be taking your calls as well at 1-888-895-5727. You’re listening to These Days on KPBS.

CAVANAUGH: I'm Maureen Cavanaugh. You're listening to These Days in San Diego. I’m joined by my guest, Gloria Penner, who is, of course, KPBS political correspondent. And we’ve just listened to Governor Arnold Schwarzenegger’s State of the State address. We’re taking your calls at 1-888-895-5727 if you want to share your opinions about what you just heard. And we’re also welcoming a new guest right now, John Marelius, political writer for the San Diego Union-Tribune. John, good morning.

JOHN MARELIUS (Political Journalist, San Diego Union-Tribune): Morning.

CAVANAUGH: Now, I suppose I will not be the first or the last to say that the governor brought something of a pig and pony show to the podium up there in Sacramento today. What did you think of the governor’s speech? Did – Is this what you were expecting? This tone, this demeanor that he presented in the speech?

MARELIUS: Oh, yeah, very much so. I have to say the pig and the pony metaphor got a little tired after awhile.

CAVANAUGH: Yeah.

MARELIUS: But – but, no, it was Schwarzenegger, his typical optimistic self that we always see.

CAVANAUGH: And did he address all the issues you expected him to?

MARELIUS: Pretty much, yes. I mean, he talked about, you know, what he and the legislature were able to accomplish last year in terms of water and education reform. He outlined some things he wants to do this year. The major one, I guess, was about a $500 million job training program. He addressed the budget deficit, which is going to be about $20 million – $20 billion dollars, excuse me.

CAVANAUGH: Yes.

MARELIUS: But it was also kind of interesting to me that he talked about several major areas that he’s been talking about as long as he’s been governor that have just completely eluded him. He just hasn’t been able to get anything done, reform of the budget process, reform of the tax system, prisons, reform of the pension system, and collecting more money from the federal government. I mean, you’ll recall when he took office in 2003 after the recall election, he called himself the collectinator.

CAVANAUGH: Yes.

MARELIUS: He said he was going to go to Washington and collect all this money. And that’s something that every governor complains about, about being shortchanged by Washington, but he hasn’t had any better luck wringing any more money out of Washington than any of his predecessors have.

CAVANAUGH: Now, John and Gloria, I want to ask you both, and, John, I’ll start with you, this seems to be an awfully big agenda for a governor who, by some measures, has not been able to do much since he has been in Sacramento on these very big issues and also who is a lame duck this year. Were you surprised by the sweep of the issues that he wants to handle according to the State of the State address?

MARELIUS: Not really. Typically, the State of the State address is a governor’s wish list and usually it bears very little resemblance to what actually happens during the coming year.

PENNER: You know, that’s interesting, John. Hi, John, it’s good to speak with you.

MARELIUS: Hi, Gloria.

PENNER: That’s interesting. I was having the same feeling. You know, this is his opportunity to kind of show off a little bit. I don’t mean that in a negative, demeaning way. I mean, that’s what State of the City, State of the State, State of the Nation are all about. But when it comes down to the nitty gritty, when he really has to start dealing with, oh, this new fiscal year that’s coming up with this huge budget shortfall and the one that – the budget shortfall from 2009-2010, then he’s going to have to get into some of the nasties and he, you know, the budget proposals will come down on Friday. There will be that special session that I mentioned in which the legislature cannot adjourn and they can’t pass any other laws until they’ve come to some kind of a budget understanding and a budget agreement. At that point, I think that’s when he is really going to once again feel the public anger at some of the things that I believe he is going to propose.

CAVANAUGH: Now, John, this equation between the education budget and the prison budget was sort of especially telling considering that California is under a court order to either release prisoners or spend more on state prisons. And I’m wondering, have you heard the idea of the privatization of prisons expounded by the governor…

MARELIUS: Oh, yeah, he’s talked about that before. I mean, none of these are new ideas. They just, you know, sort of defy fixing.

CAVANAUGH: Uh-huh. But that equation between the education budget and the prison budget, is that particularly telling considering what the state faces from the courts?

MARELIUS: Yeah. I mean, I thought that was sort of interesting and I – frankly, I have no idea how this constitutional amendment he proposed is going to work. I mean, if the governor chooses to do so, he can submit a budget on Friday that spends more on higher education than it does on prisons.

CAVANAUGH: Umm-hmm.

MARELIUS: You don’t need a constitutional amendment to do that.

PENNER: But he wants to memorialize it as something that’s…

MARELIUS: Yeah.

PENNER: …permanent in the constitution. But when we get to Friday, I mean, I think we’re going to see some pretty painful stuff. We’re – we may very well, John, see some tax maneuvers that are designed to tap money from local transit agencies. He didn’t mention that at all in his speech, did he? Did he talk about transportation money and which part he would have to pull out of local agencies?

MARELIUS: No, that’ll all come Friday. But I think it’s safe to assume that, you know, all the things they had to do to cut $60 billion last year, to cut $20 billion more is going to require a lot of the same kinds of maneuvering.

CAVANAUGH: John, I know that you have to leave us soon. I wonder if you could leave us with anything you were perhaps surprised about at this speech because it sounds as if you heard mostly what you expected to hear.

MARELIUS: Well, I was a little surprised at the – his talk about that he wants to balance the budget this year without any further cuts in education. That’s obviously music to Democrats’ ears and the public education community but that’s a big chunk of the state budget. And it’ll be interesting to see the details on Friday of just where this $20 billion is going to come from.

PENNER: Well, the sad part might be that it may come out of social services, I mean, more out of social services like the in-home support services, which he seems to be leaning more and more toward dumping the whole thing.

MARELIUS: Yeah. They made some pretty severe cuts in those last year and it would not be surprising to see additional ones.

PENNER: And also CalWORKS, the…

MARELIUS: Yeah.

PENNER: …the welfare system, that might – that might also be further decimated. So it’s kind of sad because when you think about it, yeah, we would keep the money on the front end, the education end, but on the back end to those people who have really lost out like those who can’t find jobs or those who are disabled or poor or elderly, they’re going to lose out.

CAVANAUGH: And I think the governor’s already prepared us for that by calling the present tax and budget system cruel, so we have to see whether or not it actually turns out to be that way. John…

MARELIUS: One thing that was sort of telling, unless I missed it, I don’t believe he ruled out raising taxes this year.

PENNER: In the – in the State of the State, he didn’t.

MARELIUS: Yeah.

PENNER: No, he didn’t although somewhere along the line I’ve been reading that he said there will be no new taxes or raising taxes. You know, there’s…

MARELIUS: Yeah.

PENNER: …a difference between raising taxes and new taxes. So, we don’t know, he might not raise taxes but we may see some new taxes.

CAVANAUGH: John, I know you have to go. Thank you so much for joining us. We appreciate it.

MARELIUS: My pleasure.

CAVANAUGH: John Marelius is political writer for the San Diego Union-Tribune. And here with me, Gloria Penner, KPBS political correspondent. And we have some people who’d like to join our conversation. We’re taking your calls at 1-888-895-5727. Jamal is calling from San Diego. Good morning, Jamal. Welcome to These Days.

JAMAL (Caller, San Diego): Good morning. How’re you doing today?

CAVANAUGH: Just great, thank you.

JAMAL: The governor – I’d like to make one comment on the governor breaking – or, excuse me, making the prison system private.

CAVANAUGH: Umm-hmm.

JAMAL: I think with the large prison union in this state that’s just going to be a non-starter. But, okay, let me ask my question. The governor gave an inspiring speech but how does he propose to pay for his agenda without raising taxes? I noticed that when they were trying to fix the budget loophole the last time, he was really not giving much support to the Democrats’ proposals with the fee structures and the actual – the limited fund – fund generating that they tried to push through. So how exactly does he propose to pull the money out?

CAVANAUGH: Thank you, Jamal.

PENNER: Well, you know, Jamal, that the state workers, many, many, many thousands of state workers have been given three days of furlough per month, a 14% pay cut, and now that’s in court and may possibly, you know, turn against the governor here. But what he’s saying he would have to do is have severe cuts of state workers or cut salaries of state workers. That would save considerable money and that’s money that might, indeed, go to bolster the various programs that he is touting. Also, there are some temporary tax increases that were passed last year, a vehicle tax, a higher sales tax, what, one percent?

CAVANAUGH: Umm-hmm.

PENNER: And then…

CAVANAUGH: It expires in 2011.

PENNER: But it may not.

CAVANAUGH: Ah.

PENNER: And, you know, they could simply say let’s keep that tax going.

CAVANAUGH: Umm-hmm.

PENNER: And then there’s the tax on higher income people. So these are all temporary taxes that could be kept and if they are kept, they would help not only to close the budget hole but also to pay for some of these programs.

CAVANAUGH: Let’s speak with Michael, calling us from the South Bay. Good morning, Michael. Welcome to These Days.

MICHAEL (Caller, South Bay): Good morning. Thank you for taking my call. I have a comment about the governor’s speech besides his blame game with the State of the State address. The fact that we spend more money on prisons than on education is because of the Republican platform that consistently cuts spending to education and their position of being tough on crime versus tough on crime prevention. Investing in education, not just spending on education, actually shows direct parallels with reduction in crime. And privatizing prisons, like Jamal was mentioning before, has, in the past, inspired lobbyists to author laws to keep prisons populated. These two things are in direct contrast with each other and I’d like to hear a response on that and I’ll take my comments off the air.

CAVANAUGH: Well, thank you so much.

PENNER: Well, you know, the response is obvious. Yes, there are powerful forces, not only political forces but, as you say, union forces that really don’t want to see major changes that would depopulate the prisons. However, we are under federal court order and we have to do something. And so what they’re doing now are looking for ways to reduce the prison population or else they’re going to have to find more money. But, you know, so, ideally, it would be wonderful if we could reduce prisoners because we reduce crime but once we put three strikes into effect, we actually increased the prison population and now what we’re looking at is what shall we do about those prisoners who are over 50, may not be considered a risk anymore to the public and who are costing more than the younger prisoners. These are all things that are being looked at. And I’m just going to give a little push for the fact that we are going to deal with this very specifically on KPBS on our web, on radio, on television as part of our Envision series. So we’re really looking at that hard and I appreciate all the interest in this that’s coming from the community.

CAVANAUGH: Let’s take another call. Norm is calling from Imperial Beach. Good morning, Norm. Welcome to These Days.

NORM (Caller, Imperial Beach): Hello. Yes, I have never heard more hypocritical flap-de-doodle than I heard in that speech. I mean, that man has cut all help to the elderly, he has line item vetoed any kind of compensation to people related to their property taxes, he has line item vetoed a deferral of taxes for the elderly who are certainly the people that saved his personal butt from being drafted into an army in Austria or some such, which may or may not be true. But at any rate, yeah, I mean, the man does not really have any heart.

CAVANAUGH: Well, Norm, thank you for that comment.

PENNER: Norm, you forgot to add the fact that he also wants to reduce state worker compensation which, you know, state workers are not happy about that at all. So, you know, there are a lot of people out there that would probably agree with you. But we have to be fair about this, and that is that he inherited this economy just the way governors throughout the nation have inherited these – this battered economy. And he is dealing with it in a way that doesn’t feel good to a lot of the people who are on the receiving end of all of the cuts. And I, you know, I can understand the anger. That’s the reason that his approval rating…

CAVANAUGH: Umm-hmm.

PENNER: I think this is the third time I said it on the show, 27%. But I think if you look throughout the nation, you’re going to find that there are lots of governors who are also on the receiving end of the anger that people are feeling as they watch whatever assets they have slowly disappear or they can’t find jobs.

CAVANAUGH: You know, Gloria, I’d like to just talk in the few minutes we have remaining. This, of course, the governor says he’s in denial about this being his final year in office. He’s termed out. He cannot be governor of California again. And this is the final time we shall see him giving a State of the State address with his peculiar use of the English language at times and his idiosyncratic way of putting things to legislators. What is it – it’s too early to write the, you know, the obituaries on his administration but what is it that you will miss from seeing Governor Schwarzenegger give an address like this?

PENNER: Well, if I were to look back on all the governors that I’ve known in California and I were to say, you know, do I miss any of them, I don’t. They served their time, they did their public service. Some of them contributed more than others.

CAVANAUGH: Umm-hmm.

PENNER: Some of them helped to destroy what – the pride that California had in its education system. So what I will miss about Governor Schwarzenegger, probably his wife.

CAVANAUGH: Uh-huh.

PENNER: I mean, I love her face. And so, you know, if I’m really going to get into it on a very superficial level, it’s interesting to see how Maria Shriver has sort of negotiated being the governor’s wife while still a Kennedy and part of the Kennedy clan.

CAVANAUGH: And, also, you know, one of the reasons some people say that the gov – Arnold Schwarzenegger was elected in the first place was because of this movie star panache that he brings to…

PENNER: Not…

CAVANAUGH: …to the governor’s office.

PENNER: Not the first California actor who has been elected to major office. We had Ronald Reagan and this may be before your time, Maureen, but how many of our listeners remember actor George Murphy, who actually became United States Senator. And so, yeah, we have that history. We have several prominent actors who became mayors of cities. And, you know, it’s really easy. There’s sort of a relationship, I think, between being an actor and being a politician. I won’t go farther than that because I want to keep my fair and balanced point of view.

CAVANAUGH: Now most of this year you and I are probably going to be talking about the people who want to replace Governor Schwarzenegger, so this really was perhaps the last time that he will be the full focus of our view on what’s going to happen to the California state. Do you think that this State of the State address was too loaded too much? Does he want to do too much in this lame duck term that he faces?

PENNER: Well, those people who were Schwarzenegger fans will say this was wonderful. I mean, it gave an idealistic view of what the state could become again. For those people who have been disappointed by Arnold Schwarzenegger, they’re going to say this is just more of the same, a lot of hyperbolic speech signifying nothing. A little bit of Shakespeare in there. But I think the whole point is that this was his last opportunity and he could’ve pulled what he pulled last year which was sort of the passive-aggressive approach, you know, I’m really mad so I’m not going to say anything? And this time he said something.

CAVANAUGH: Well, I want to thank you so much for joining us and listening to this speech with us. Gloria Penner is KPBS political correspondent, host of Editors Roundtable and San Diego Week where you’ll probably be speaking a little bit more about this speech.

PENNER: I will. And thank you very much. Yes, Friday, on Editors Roundtable.

CAVANAUGH: John Marelius, political writer for the San Diego Union-Tribune, joined us as well. And thank you for your phone calls. You can listen to the governor’s State of the State address in its entirety on our website, KPBS.org/TheseDays. You’ve been listening to These Days on KPBS.

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