From prisons to unions to schools, governor says crisis demands shake-up

SACRAMENTO — Gov. Schwarzenegger dusted off his first-term playbook Tuesday in a rare legislative budget address.

The Republican governor asked lawmakers to use the state's $24.3 billion deficit as a chance to "blow up the boxes" of state government and challenge public employee unions, dominant themes in his first two years in office.

Schwarzenegger requested a joint session of the Legislature after proposing the harshest cuts of his governorship. He recommended last month that the state end welfare-to-work, Cal Grants and Healthy Families insurance for children, as well as close 220 state parks and allow districts to end the school year seven days early.

"It's an awful feeling, but we have no choice," he said. "Our wallet is empty, our bank is closed and our credit is dried up." Schwarzenegger said the dire situation provides lawmakers the political opportunity to consolidate more than a dozen state boards, which would save only $50 million but is popular with voters.

The latest idea is a smaller version of the governor's California Performance Review of 2004, which proposed killing more than 100 boards but died under opposition from interest groups.

Schwarzenegger asked lawmakers to privatize some prison and school jobs, moves that would invite direct confrontation with unions.

The governor's return to his 2004 and 2005 priorities is notable after Schwarzenegger apologized in 2006 for having pursued a special election that provoked unions and Democratic constituencies. He put his earlier ideas on the back burner as he ran for re-election, and in 2007 pursued what he called a "post-partisan" approach.

The governor asked lawmakers Tuesday to consider having private firms run prisons. He cited the state's $49,000 per prisoner cost; the national average is $32,000.

The governor also said the state should allow school districts to cut costs by eliminating union maintenance workers in favor of private contractors to "mow the lawn or fix the roof or do the plumbing."

"Firing school custodians isn't exactly the way to fix the budget mess," said Marty Hittelman, president of the California Federation of Teachers. "The way to do it is to initiate some revenues, some progressive taxes that tax those who can best afford to help us create the society they grew up in and flourished under."

Adam Mendelsohn, the governor's political adviser, said Schwarzenegger hopes legislative Democrats challenge conventional politics.

Schwarzenegger "referred in the speech to the day of reckoning, and part of the day of reckoning is ending the control of special interests," Mendelsohn said.

Yet Democrats seem unlikely to roll back labor protections while they're being asked to approve huge cuts in health and welfare programs.

Assembly Speaker Karen Bass of Los Angeles and Senate President Pro Tem Darrell Steinberg of Sacramento said Tuesday they are prepared to move quickly on cutting $15 billion out of the $24.3 billion state deficit, but they prefer a "surgical" approach rather than wiping out welfare-to-work and Healthy Families.

They suggested that they would seek revenues in talks with Republican leaders and Schwarzenegger.

But Assembly Republican Leader Sam Blakeslee of San Luis Obispo and Senate Republican Leader Dennis Hollingsworth of El Cajon said they remain opposed to more taxes or even the borrowing Schwarzenegger proposed. They said they are generally on board with the governor's cuts, but that they hope to redirect them toward slashing administrative positions.