Audio: Schwarzenegger’s budget solutions

Gov. Arnold Schwarzenegger met with Times editors and reporters Wednesday to discuss the state’s worsening fiscal crisis and proposals for long-term reform. An audio recording of the meeting is available below, along with a guide for listening to the discussion.

Click here to download and listen to the MP3 file.

0:01 -- Thanks for having me. The state’s budget situation has worsened a great deal.

1:13 -- The state’s current crisis is the worst since the Great Depression.

1:34 -- The message voters sent the Sacramento with the May 19 election: “Don’t come to us with your problems”.

3:00 -- Most of the state’s problems are “self-inflicted.”

3:42 -- Kudos to the L.A. Times for catching a “mistake” made by his Finance Department.

8:03 -- How the Legislature approaches crisis budgeting (“The nature of the Legislature is always to assume that it’s going to get better than worse”).

9:14 -- “We are now at that point where we run out of cash and we cannot borrow cash if we don’t have a budget in place.”

9:43 -- This crisis “gives us a good opportunity to once and for all show that we can get our act together and solve this problem no matter how severe it is.”

10:52 -- Question from L.A. Times Op-Ed page editor Sue Horton: Should you have developed a “Plan B” before the May 19 ballot measure failed? The governor’s answer: “No, because what would have changed?”

13:25 -- Question from L.A. Times Deputy Editorial Page Editor Nick Goldberg: Should the state still set aside money for a “rainy day fund” during this budget crisis?

15:09 -- Fire season’s coming up, and we need to have money set aside to deal with disasters, Schwarzenegger says.

16:03 -- “The state has done it over and over, that we live beyond our means, and also what we have done is to not deal with reality, and what we also have done is we’re never able to fix what is broken.”

16:45 -- California’s economy didn’t crash, but the state’s revenue did because of our broken tax system in which the top 1% of income earners pay about 50% of the state’s taxes.

19:06 -- Question from L.A. Times editorial writer Jon Healey: Can the state really change its tax system without actually adding new taxes, an idea that would never fly with Republicans who have “taken this blood oath of ‘no new taxes’”? Schwarzenegger’s answer: There’s a difference between new taxes and tax increases.

20:35 -- Question from L.A. Times editorial writer Robert Greene: What in the budget proposal does the governor consider long-term reform as opposed to emergency temporary cuts?

22:15 -- The state could save hundreds of millions of dollars by having public schools switch to “digital textbooks.”

22:40 -- Now’s the time to look at the best ways for the state offer services and “not to get hung up with the status quo.”

23:40 -- One of the questions to consider when making budget cuts is if we would rather protect the service providers (state employees) or the people who are supposed to get the services. “I’d rather protect the people that get the services, and there will be other forces in Sacramento that want to protect the status quo and the people that provide the services.”

25:21 -- Question from Shane Goldmacher, L.A. Times reporter: Are you saying that Democrats would rather serve public employee unions than Californians who receive state services? Schwarzenegger’s answer: “To just give you an example, Darrell Steinberg said to me the other day that he wants to protect the middle class. So that’s the new spin, which is perfectly fine with me; he can call it whatever he wants. But the fact of the matter is ... he has to ask himself that question: Does he want to make sure that that is protected, that the state employees are protected, to hold onto that even though in the private sector we have 11% unemployment, but we shouldn’t have any unemployment in the public sector?”

26:53 -- In this crisis, state legislators must make decisions they never thought they’d have to, and they’ll have to cut programs for which they had fought to expand.

27:20 -- Question from Healey: Do you agree with the sentiment that all the state has to do is get back to spending levels from a few years ago? Schwarzenegger’s answer: We do need to look back several years and see where the budget increases occurred, but people don’t know that we’ve already done that. When you account for inflation and population growth, we’ve cut back to lower than 1999 levels.

32:05 -- Cutting in the right places is matter of will. Democrats say they were elected to protect the programs in trouble.

32:42 -- Mike Genest, Schwarzenegger’s finance director, says the governor’s May budget revision is about 18% below what it should be, accounting for inflation and population growth.

34:05 -- Schwarzenegger takes on Tom McClintock.

35:12 -- Question from Greene: Looking back, do you have any second thoughts about those 2006 infrastructure bonds? Schwarzenegger’s answer: Hard-core conservatives see that infrastructure investment as just spending, but to me there’s a difference between spending money on a house and spending money on furniture.

36:10 -- It’s a great investment to build roads and universities and fix levies in need of repair.

38:10 -- I don’t regret the infrastructure bonds at all. “If it is up to the McClintocks, they would continue living in the stone age with all of those things.”

38:40 -- But we need people who think like McClintock.

39:03 -- Open primaries and redistricting will greatly help California.

39:45 -- Question from Goldberg: Do you think the state is structurally flawed in its governance system? Schwarzenegger’s answer: “I’m a believer in a constitutional convention.”

41:34 -- I haven’t seen the kind of determination from legislative leaders that suggests they’ll attempt real reform urgently.

41:52 -- Truly committing to fixing California “will be ballsy to do.”

42:30 -- The initiative process is great, but it needs to be brought up to date.

43:15 -- The people are sick of voting on budget matters. An initiative to do away with the two-thirds vote requirement will never pass.

44:00 -- California needs to elect its constitutional officers differently.

45:40 -- What Sacramento could learn from the Lakers and other great sports teams.

46:47 -- Question from L.A. Times Publisher Eddy Hartenstein: How do you summarize what you think needs to be done to fix California?

48:02 -- Sometimes, people don’t know how complicated the problems are. People don’t understand what it means to “fix the budget” and “get rid of the illegals.”

48:40 -- California is the best state in the best country in the world, but there are many dysfunctional aspects of the state that are holding back our potential.

50:20 -- The choice for California is give real reform a chance or stay dysfunctional.

51:50 -- If the Legislature doesn’t pass a budget on time, the state will stop paying its bills.

52:25 -- If it fails to act, the Legislature deserves to taste what it’s like for the state to completely shut down.

53:00 -- Question from Greene: Wouldn’t that cost the state irreparable damage to its credit? Schwarzenegger’s answer: Any damage pales in comparison to the importance of having the problem fixed once and for all.

55:20 -- I despise taking money from local governments, but I absolutely couldn’t find any more money to cut.

57:50 -- We have a lot of work ahead of us, but this is a good opportunity to rethink how the state is run.