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Schwarzenegger Talks About Budget Reform

Governor Schwarzengegger was Tuesday’s KVML ‘Newsmaker of the Day”. Here are his words:


“Hello, this is Governor Arnold Schwarzenegger with another California Report.

Today I want to talk about the historic budget reforms that were included in our state budget agreement.

Throughout my Administration I have been through seven budget negotiations.

That’s putting it nicely. They were more like budget brawls.

The fights were always the same: cut spending, or raise taxes? And you know what? That is the same fight Ronald Reagan and Jerry Brown had.

It’s the same fight George Deukmejian, Pete Wilson and Gray Davis had.

That is because for decades California has suffered from a broken budget system. I’ve been talking about this for years.

The heart of the problem is California lacks a true rainy day fund.

When the economy is strong, Sacramento never sets money aside for the inevitable downturn.

You know the saying “what goes up must come down.”

The same is with the economy.

Now, in a perfect world, Sacramento would restrain itself from spending all the money.

That’s like asking Rush Limbaugh to not talk about conservative issues.

In 2000, for example, during the dotcom boom, revenues spiked 23%.

That was a sugar high. Sacramento had so much fun spending every dime. All that money was spent.

But then came the economic downturn.

The sugar was gone and we came down off our high.

We didn’t have the money to pay for all the programs that are important.

With this feast and famine approach, the elderly and disabled live in constant fear their benefits will be slashed.

Parents worry whether their child’s music or sports program will be cut – or teachers will be laid off. Businesses never know when the next massive tax increase is coming.

Our budget is like a roller coaster ride where people have to hold on for dear life.

This is no way to run a family.

It is no way to run a business.

And it is certainly no way to run a state.

Finally, this year we got the budget reforms I have been fighting for.

But that is only half the battle, because now the voters have to approve it.

Our constitutional amendment – to go before voters in 2012 – will smooth out our spending once and for all.

It forces Sacramento to save money in good years to cushion the blow in bad years.

It creates a rainy day fund up to 10 percent the size of our General Fund.

So if our General Fund is $100 billion, we have to set aside $10 billion.

Transfers to the fund would be mandatory, not voluntary.

And money could only be taken out when there is truly a rainy day.

If this had been in place over the last ten years, we would have had an extra $12 billion going into this economic downturn.

It would have saved so many wonderful programs.

This is the reform that will end the budget chaos.

This is the reform that will put our finances on solid ground for generations to come.

For too long California’s government has been tumbling down the path of financial ruin and despair.

But let me tell you something.

I don’t want to tell you that this will solve it all.

There are other things that need to be done.

For instance, tax reform, to create more stability in our revenues.

Then the pension reforms that we have just approved- those will have to kick in to have an effect on our budget.

And after all, the legislators have to stop spending money we don’t have- because continuously they promise more than they can deliver.

So those are the things that still need to be done.

But with the approval of this reform, California will move a step closer to fiscal sanity- and be able to stand up again, dust ourselves off and start the slow but steady march back toward prosperity.

That’s what it’s all about.

Thank you for watching and thank you for listening.”


The “Newsmaker of the Day” is heard each weekday morning on AM 1450 KVML at 6:47, 7:47 and 8:47am


Written by mark@mlode.com