Gov. calls on state to borrow and build more

Gov. Arnold Schwarzenegger called for another multibillion-dollar wave of borrowing Tuesday for new reservoirs, courthouses, classrooms and prison beds -- core public resources that, he said, are strained by California’s growing population.

In his annual State of the State speech, the governor laid out a plan for $43.3 billion in bonds over the next three years to pay for a round of public construction that would surpass what voters approved in the November election.

If Schwarzenegger can persuade lawmakers to bring his proposal to the ballot -- no easy feat, given widespread worries about state finances -- voters would be asked to approve the new borrowing in the 2008 and 2010 elections.

The new construction would amount to a second installment in what Schwarzenegger says will be a continuing effort to prepare California for an anticipated 30% surge in population over the next two decades.

Worried that negotiations over how to spend the money might descend into a free-for-all, Schwarzenegger urged lawmakers to put California’s broad interests first.

“Will the process turn into a pork-fest as it did in Washington with all the earmarks and the backroom deals?” Schwarzenegger said to a joint session of the Legislature gathered in the Assembly chamber. “Or, when we have allocated the spending, will the people say, ‘They spent our money wisely’? “

Still recovering from a broken leg suffered in a Dec. 23 skiing accident, Schwarzenegger entered the front of the chamber on metal crutches. Looking thinner, he gingerly walked the length of the room as lawmakers applauded.

The state’s new lieutenant governor, Democrat John Garamendi, introduced the governor, calling him “courageous.” Reflecting the new political dynamics in the Capitol, Democrats applauded the remark as Republicans largely stayed silent.

Schwarzenegger has angered fellow Republicans with his turn to the left, evidenced most recently by his call for expanding healthcare coverage through levies on doctors, hospitals and businesses.

Early reaction to the governor’s speech suggested deep Republican dismay.

To get his borrowing plan to the ballot, Schwarzenegger will need a two-thirds vote of the Legislature -- something that can be achieved only with Republican consent.

GOP Senate leader Dick Ackerman (R-Irvine), citing Schwarzenegger’s contention that he is now a “centrist,” said: “The governor deserves credit for identifying problems and trying to get resolution.” But his idea of the political center “is different than our idea of center.”

In his 24-minute address, Schwarzenegger touted an ambitious agenda.

A day earlier, he had laid out his plan for extending health insurance to all Californians. On Tuesday, Schwarzenegger said he was not wedded to any particular method of reaching that goal.

“So all ideas, regardless of origin, are still on the table,” he said.

Schwarzenegger also said that he would ask the Legislature for money to put in place a law aimed at curbing global warming.

And he said he would renew his effort to invigorate California’s elections system by stripping lawmakers of the power to carve voting districts, giving the job to an independent commission.

The State of the State speech was Schwarzenegger’s fourth. In the first two, he was clearly influenced by the 2003 recall election. He cast himself as a political outsider intent on redeeming a promise to upend Sacramento.

No more. In Tuesday’s speech, he said he wanted to work within the system, not remake it.

“Usually, when a governor gives his State of the State address, he talks about his vision,” the governor said. “This year I want to talk about our vision, because I think we all want the same thing for Californians.”

But not all lawmakers -- whether Republican or Democrat -- want to borrow and build on the scale Schwarzenegger envisions. Schwarzenegger had sought to do much of the job a year ago, but the Legislature cut his plans approximately in half before putting the proposals on the ballot.

“We have to cautiously wade into all of this,” said Mike Villines of Clovis, leader of the Assembly’s Republicans. “Infrastructure’s important. We went through a lot of work last year. There’s a lot we can do this year. But I don’t think Californians are ready to step up and say let’s go borrowing all that money.”

In the November election, voters approved $42.6 billion in borrowing to build 10,000 classrooms and renovate an additional 38,000, among other projects.

With the governor’s proposal, California would add 15,000 classrooms to those and renovate 40,000 more.

Worried about overcrowding in state prisons, Schwarzenegger also would use $10.9 billion in new borrowing to add 78,000 prison beds. At present, thousands of inmates are crammed into dining rooms, TV rooms and hallways, he said.

The infrastructure bonds that voters approved in November did not include money for prisons.

With the federal courts demanding an end to the overcrowding, the governor said, the state’s choice was stark: “We build more prisons or we release criminals.”

Senate President Pro Tem Don Perata (D-Oakland) said state officials would be smart to demonstrate that they had accomplished something with the money already approved, before going back to voters for more.

“If you want to give confidence to the voters to do more, fix a highway or two,” Perata said.

Schwarzenegger’s plan would prolong a recent spate of heavy borrowing.

The rule of thumb on Wall Street is that states should avoid borrowing so much money that repayment eats up more than 6% of their budgets.

California had never broken that barrier until this decade. By 2009, 8.4% of the state budget will go exclusively to paying off debt -- much of it the result of a multibillion-dollar bond sale that Schwarzenegger pushed in 2004 as a means to balance the budget.

“I’m extremely reluctant to entertain the idea of more bonding,” said Assemblyman Chuck Devore (R-Irvine). “I’m very concerned that we’ll get into a situation where future governors and legislatures will have an untenable debt and repayment burden.”

Some of what Schwarzenegger proposed were not new ideas but a repackaging of old ones. In 2005, Schwarzenegger endorsed a ballot measure that he said would make California elections more competitive.

The initiative would have empowered a panel of retired judges to draw voting districts, removing the Legislature from the picture.

Voters defeated the measure. But Schwarzenegger is not giving up. He now wants a commission chosen by a panel of county clerks to draw the districts.

“In the past three election cycles, only four of California’s 459 congressional and legislative seats changed hands,” he said. “There was more turnover in the Hapsburg monarchy than the California system.”

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peter.nicholas@latimes.com

Times staff writers Evan Halper, Nancy Vogel, Dan Morain and Jordan Rau contributed to this report.

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Excerpts from State of the State speech

“We are a big state and we have big needs. And we made a big down payment. But the job is not finished.”

“This is a test for those of us in this chamber.... Will the process turn into a pork-fest as it did in Washington with all the

“Our prison system is a powder keg. It poses a danger to prisoners, a danger to officers and a danger to the well-being of the public if -- as the federal courts have threatened -- we are forced to release prisoners because of overcrowding.”

“One area where we definitely need the climate to change is the national government’s attitude toward global warming.”

“I propose that California be the first in the world to develop a low carbon fuel standard that leads us away from fossil fuels.... Let us blaze the way, for the U.S., for China and for the rest of the world.”

“California’s medical care, its medical knowledge, its medical technology is as strong and vibrant as a bodybuilder. Yet our healthcare system itself is a sick old man.”

“That small child with the sticky hands starting the first day of kindergarten is the foundation of California’s economic power and leadership. We must invest in education.”

“Rebuilding California is not a burden. It is not a chore. It is a privilege.... It is a privilege to be able to help future generations fulfill their promise. And when they look back, they will see you in this room, and they will be grateful for what you have done.”

“I am not asking you not to be a Republican or not to be a Democrat or to give up your principles. I am asking you to be Californians and to work out a solution that is the best possible answer to the challenges we face.”

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Source: Times reports