Of The State Address
Governor's Wednesday night address...
[Arnold Schwarzenegger] 1/6/05
I look forward to working with you on the people's business.
We have a lot to do, and I believe we can do it.
these State of the State speeches, governors often begin by
listing their accomplishments of the past year. I will do the
year before I took office as governor, California had 300 days
of sunshine. Last year, under my administration, we had 312
days of sunshine. That's what true leadership is all about.
all seriousness, this last year we faced some dark days. The
shadow of 22 billion dollars in inherited debt loomed over
us. The great state of California, the sixth largest economy
in the world, the symbol of the American dream, faced economic
most important thing we did last year--we grabbed California
by the collar just before it slipped into a financial black
hole. We slowed the growth in spending, renegotiated contracts,
secured more than a billion dollars in new federal financial
support. We should feel good about what we accomplished together.
the greatest rescuers of the state are not those of us in this
room, but the people of California. They are the ones who passed
Prop 57, which issued the bonds to prevent the state's collapse.
They are the ones who passed Prop 58, which prevents the state
from borrowing money to cover future deficits. I want to thank
my fellow Californians for their confidence that together we
can turn this government and its finances around.
people saved the state from bankruptcy, but they were very
clear about one thing. They said, "We will do this once to
clean up the past, but do not let it happen again."
year we stopped the bleeding. This year we must heal the patient.
continue California's recovery, this year we must do two things.
solve the budget's continuing structural deficit, we must reform
the way the government spends its money. And to restore the
trust of the people, we must reform the way the government
friends, this is a time for choosing.
California have a government that encourages the dreams of
will the decline of recent years accelerate and further destroy
the people's faith in their government? We must not let that
get up every morning wanting to fix things here in Sacramento.
I ask you today: Help me fix them.
year, we worked together to avert a crisis. This year we must
address its causes.
I will convene a special session to address the financial,
educational and governmental reforms that civic responsibility
this special session, I ask you to work with me on four reforms.
first relates to the financial situation that we face.
going to tell you something that you know in your hearts to
every meeting I attend in Sacramento, there's an elephant in
the room. In public, we often act like it's not there. But,
in private, you come up to me--Republican and Democrat alike--and
you tell me the same thing, "Arnold, if only we could change
the budget system. But the politics are just too dangerous."
elephant in the room is a budget system that has removed our
ability to make the best decisions for California. It has taken
away the freedom and the responsibility of legislating. We
can change that.
colleagues, I say to you, political courage is not political
suicide. Ignore the lobbyists. Ignore the politics. Trust the
year, we had $78 billion in revenues coming in. The great news
is that this year, we have $83 billion coming in, over $5 billion
more than last year. Now that is terrific.
various budget formulas require us to spend over $10 billion
the math. Our revenue increases by more than 5 billion but
our spending increases by over 10 billion. We don't have a
revenue problem. We have a spending problem.
fact, the way the formulas now work, we will never catch up.
No matter how well we do, the current system is programmed
to spend even more.
is on automatic pilot. It is accountable to no one. Where will
it all stop? How will it stop unless we stop it?
truth is that we cannot fix the budget deficit without first
fixing the budget system. The Constitution requires that I
submit a budget to you, which I will do in a few days.
it sounds good, and it would get us through the current year,
but I do not like this budget at all. It does not solve our
ongoing structural problem, because our deficit the following
year will be even worse.
does not restore the integrity of the budgetary process. It
is a painful budget forced upon us by a broken system.
we all know what's going to happen. The special interests will
run TV ads calling me cruel and heartless. They will organize
protests out in front of the Capitol. They will try to say
I don't understand the consequences of these decisions.
me tell you something. I am well aware there are lives behind
the numbers. But I have a responsibility for the fiscal health
of this state and for the honesty of its finances.
lot of people say, "Arnold, why don't you just raise taxes
and be done with it?" Well, as I said earlier, we don't have
a revenue problem. We have a spending problem. We could raise
taxes by billions but that would only further drive up spending
by billions of dollars.
would never come out ahead. Our economy would suffer, jobs
would be lost and the people would be punished. Unless we go
to the root of the problem and reform the system, the budget
will continue to be one big fight, year after year after year.
I don't mind a fight, but if there is to be one, let it be
over new, important things that move us beyond the past.
in the special session, I will submit to you legislation that
cuts expenditures across the board when they grow above revenues.
must take back responsibility for the budget. We must have
a new approach that overrides the formulas, overrides the special
interests and overrides the forces that have turned some of
you from legislators into clerks.
related to this, is the second item we must tackle in our reform
the budget itself, our state pension system is another financial
train on another track to disaster.
pension obligations have risen from $160 million in 2000 to
$2.6 billion this year. Another government program out of control,
threatening our state. Accordingly, we must do what business
has been doing.
new employees, we must move from a defined benefit to a defined
contribution system. We need a public pension system that is
fair to employees and to taxpayers.
the third item relates to the education of our children.
will spend $50 billion on K through 14 education this year;
that's $2.9 billion more than last year. Nearly half the state's
budget is dedicated to education.
do we get for that money? We get many wonderful and dedicated
teachers. We get many children who are doing terrific.
$50 billion, and we still have 30 percent of high school students
not graduating. That is a human disaster.
billion and we still have hundreds of schools that are failing.
That is an institutional disaster.
billion and the majority of our students cannot even perform
at their grade level. That is an educational disaster.
where do we start? We start in the classroom. We start with
those who hold our children's learning in their hands. We start
with the teachers.
me say this to every California teacher who is opening the
minds of our children and nurturing their lives: I want to
reward you for your hard work. I want to reward you for the
sacrifices you make. I want to reward you for the learning
that you instill.
I cannot do so under the current system. Help me change it.
must financially reward good teachers and expel those who are
not. The more we reward excellent teachers, the more our teachers
will be excellent. The more we tolerate ineffective teachers,
the more our teachers will be ineffective.
in the special session, I propose that teacher pay be tied
to merit, not tenure. And I propose that teacher employment
be tied to performance, not to just showing up.
I want to say to every Californian who has a child: "Your child
deserves a good teacher. An educational system that rewards
and protects a bad teacher at the expense of a child is wrong.
And I intend to change that system."
colleagues, this is going to be a big political fight. This
is a battle of the special interests versus the children's
interests. Which will you choose?
will also introduce measures to further charter schools, vocational
education and fiscal transparency so people know how every
educational dollar is spent at their local schools.
we must make California's elections democratic once again.
I was studying to take my citizenship test, I learned about
gerrymandering and how politicians changed the boundaries of
a voting area to protect themselves. For a long time I thought
that was something that happened way back in the 1800's, but
the practice is still alive and well today.
is a telling statistic: 153 of California's congressional and
legislative seats were up in the last election and not one
kind of democracy is that?
will propose that an independent panel of retired judges--not
politicians--determine California's legislative and congressional
can draw fair, honest district lines that make politicians
of both parties accountable to the people.
current system is rigged to benefit the interests of those
in office . . . not the interests of those who put them there.
And we must reform it.
top of the reforms to be addressed in the special session,
we must also reform and reorganize the structure of government
itself. We need a 21st Century government to match a 21st Century
the past year, we streamlined the state's purchasing system,
consolidating our huge buying power into one entity rather
than splitting it among hundreds.
cut the average wait time at the Department of Motor Vehicles
from more than an hour to less than 20 minutes.
eliminated delays of up to 13 months for the state licensing
of nurses, barbers, contractors and many others.
management is crucial, but we need even bigger solutions.
year ago, I told you that I wanted to blow up the boxes. Well,
we have lit the fuse. The California Performance Review has
done an outstanding job.
people have worked for 9 months looking at how to eliminate
duplication and increase accountability in government. They
received the views of 10,000 Californians. They held public
hearings and produced a 2,000-page report.
to the Performance Review and the leadership of Secretary Rod
Hickman, the Youth & Adult Correctional Agency - an agency
with a $6 billion budget and 54,000 employees - will be the
first agency that we reorganize. Its need is the most urgent.
is an agency in which there has been too much political influence,
too much union control and too little management courage and
many months, you could not pick up a newspaper without reading
about a youth dying in prison, or codes of silence, or abuses
of force. I want to put the corrupt people in our prisons on
the same side of the bars.
I will send to the Little Hoover Commission our plan to reorganize
this agency. And I want to say this to the many honest and
hard-working people who work in corrections: thank you for
your perseverance, and thank you for your hard work. We will
free you from the prison of waste and mismanagement in which
you have been held.
was once the national leader, a pioneer, in corrections integrity,
innovation and efficiency. We can make it so once again.
reorganizations of other agencies will follow in the months
can also announce that we intend to wipe out nearly 100 unnecessary
boards and commissions, abolishing over 1000 political appointments
in the process.
one paid by the state should make $100,000 a year for only
meeting twice a month.
know the special interests will oppose all the reforms I have
mentioned. Any time you try to remove one dollar from the budget,
there are five special interests tugging on the other end.
Anytime you try to make something more efficient, there are
a half-dozen special interests trying to prevent it.
result is that nothing changes in Sacramento. This place is
in the grip of the special interests.
people of California demand reform. That is what the recall
election was all about. That is what the ballot process is
about. And that is what this special session is about.
special session will allow us to work together quickly, so
that people can vote on our reforms in an election by early
we here in this chamber don't work together to reform the government,
the people will rise up and reform it themselves. And I will
join them. And I will fight with them.
the reforms that I've outlined, we can build upon the progress
we've made in just the last year.
credit rating is up. Our business climate is improving. We
passed workers' compensation reform. We took action to curb
frivolous and shakedown lawsuits. We killed other measures
that would discourage businesses from creating jobs here.
record number of Californians now have jobs. Our state outpaced
the nation by creating nearly 150,000 jobs in the last year.
Our unemployment rate is the lowest since September 11, 2001.
a politician tries to take credit for job growth, don't believe
it. Ladies and gentlemen, I did not create this record number
created them. Small businesses. Large businesses. Women-owned
businesses. Minority-owned businesses.
have such great entrepreneurial drive in this state. All we
must do to enjoy its benefits is to let it loose and get out
of the way.
over the next year, we can continue moving forward, with more
employment, more businesses coming back, more revenues coming
we have other good news. We signed agreements with Indian gaming
tribes that should provide about a billion dollars for transportation
this year. Not only will this improve California's highways,
it will also create 16,000 new jobs.
I first came to California, the roads fascinated me. Californians
can't get from place to place on little fairy wings. This is
a car-centered state. We need roads.
Governor Pat Brown before me, I intend to see that the government
builds the roads that Californians need.
need roads and we need affordable housing. The median price
of a home in California is $460,000. That is too much. A home
of your own is part of the American Dream. I believe in such
dreams, so I will propose legislation that eliminates regulatory
and legal hurdles that delay construction and increase the
costs of new housing.
want a California where people spend less time sitting on the
freeway and more time in the homes that they own.
believe we can meet our transportation, our housing and our
business needs and still improve the environment.
year we made progress on launching the Hydrogen Highway, encouraging
green buildings, putting solar in more homes.
took steps to safeguard California's ocean and coastline. And
we also established the 25 million acre Sierra Nevada Conservancy,
the largest in the nation.
love riding my motorcycle along the Pacific Coast Highway -
the freedom of the road and the smell of the sea. That is the
related to the environment is energy. California has long been
the national leader in energy conservation. We must continue
that leadership, but we cannot conserve our way out of our
long-term energy crunch.
we need conservation. Yes, we need renewable energy. But California
also needs power plants and transmission lines. We need more
of them and we need them as soon as possible.
already increasing our reserves and encouraging long-term contracts.
I am pleased to report that we're beginning to see investments
that will put steel in the ground and power on the lines.
This is a modern society and a modern society must have abundant and affordable
Another thing every state needs is affordable health care for its citizens.
of Californians lack coverage for the prescription drugs they
need. Many of these people are the working poor who do not
qualify for assistance.
I am announcing a prescription drug discount card with minimal
costs to the state. We will make prescription drugs available
to nearly 5 million low-income Californians, at prices competitive
with those from Canada.
have so many good things in this state. Over the last year
I have traveled the world to let people know about those good
you know why California is so easy to sell? Do you know why
we attract the world's attention? Because California invents
the future. It's known for its innovation, its creativity,
are a forward-looking people, and we must have a forward-looking
me apply the natural innovation and imagination of our people
- to government, to education, to transportation, to the improvement
of our society.
is the job of those of us who serve the people. I welcome and
seek your ideas, but do not bring me small ideas; bring me
big ideas to match our future. Bring me reforms to equal our
I propose will demand political sacrifice from all of us, but
it is nothing compared to the sacrifice of thousands of Californians
in uniform. Many have left their blood and their buddies in
the sands of a foreign land.
we ask them to risk their lives for democracy over there, how
dare we not take the risk to reform our democracy here!
troops should come home to a government as noble as their sacrifice.
yourselves, what do they want from us beside our political
want jobs so that they can support their families and afford
health care and a home of their own. They want good schools
where their children are safe. They want an environment that
is clean. They want a society that cares for the sick and needy.
They want honest and responsive government.
things are not too much for the people to ask. These things
are not too much for government to provide.
these things will not happen without reform.
fellow representatives, in closing, I make this appeal to you.
Join me in regaining control of California's financial future.
Join me in restoring the trust of the people. Join me in introducing
a bold, new era of reform in California. CRO