IV Post

Sacramento, California - Well, thank you very much. Thank you. And thank you, Chief Spiegel, for the wonderful introduction. And I just want to also say thank you very much to Sheriff John McGinness for the wonderful work that he is doing. Both of them are champions. And I love working with both of you; you've been really great.

And I thank you also for inviting me to come here today. This is, of course, not the first time I've spoken to this crowd here - I think every year since I've come into office -- and it's always great to come back here. As a matter of fact, I just came from an environmental event. And that's why I always say that's what makes this job so fun, so much fun, because you go really to all these different, interesting things. And it kind of switches from an environmental conference to this conference here of the Peace Officers Association, the 88th conference now, annual conference.

When you go to Sacramento, I think it is key to recognize those two parties and the only way you get things done is by bringing both of the parties together. And so just the other night I was at an environmental conference, and then after that I went to an energy conference. And there at the energy conference they said, "You know, it's the same fight; the environmentalists and the people that want to build more power, and the Democrats versus the Republicans."

So I came up with an idea to bring them both together and to have something there for everybody. I said, "I propose a solar-powered electric chair." (Laughter) It was just an idea, you know? I said to myself, "Let's bring both of the parties together. There's something in there for everybody." It was a winner, I'm telling you. They all smiled, just like you do. But anyway -- this is the bottom line.

But anyway, I just want to say I am glad to be here today. And of course you have handed out awards here today to people that were very dedicated, and those are the best and the toughest and the most courageous. So I want to congratulate all of the recipients of the awards. And I'm sure some of them are sitting right here in front, so I want to say congratulations to all of you. And I think that the peace officers have made such an extraordinary contribution to California.

And I've told you many times that I'm very fortunate that I grew up with a father that was a police officer, so I grew up with law enforcement and I'm very passionate about this. And I think that we want to do everything that we can in order to work together. And I think that we have had a great, great relationship from the beginning, because I remember it was the Peace Officers Association that was right there in the beginning when I proposed Proposition 49, which was the After School Education and Safety Program Act. And they were my partners then and they helped me to make it win in 2002, to have after school programs and to have $428 million more for after school programs.

Because we all recognized -- and I think that the Peace Officers were the first ones to come out and say between three and six o'clock in the afternoon is the danger zone for our kids. This is the time when juvenile crime happens, teenage pregnancy and getting them involved with gangs and violence and drugs and alcohol and all those things. And I think that's why you became partners of that, and we won with 57 percent of the votes.

And then, ever since then, after I became governor, we have worked together very closely. I always protected you with the various different budgets. We have worked together on things like the Anti-Gang Initiative, then protecting the Three Strike Law. You remember Proposition 66, when they tried to take out the Three Strikes Law and we all came together and fought that, and were victorious in the end. Then we protected also Jessica's Law and enforced Jessica's Law.

Then the historic AB 900, the prison reform, which has been extremely important for all of us because we always said, and I always said, that we do not want to go and release any criminal, any prisoners, because we are running out of space. And so this is why it was very important, because we have 170,000 inmates there that are in an institution that was really built for 100,000 only. So it was very important that we all worked together, and it was because of you pushing the legislators and bringing them both together.

And I know in the end it was a very, very close call, but your push really put it over the top. And again we were very successful in getting AB 900 approved. And the legislators voted on it and we could move forward with it and have now almost the $8 billion available to build more prison space, 53,000 prison beds, so this was very important.

And also we worked together on DNA, Proposition 69, to make sure that we can start a DNA database. And of course up until a year ago it was always lagging behind, they were like 300,000 behind. But now they've caught up, because we funded it. So I think that all of this working together is extremely important.

But what is most important for us is that we have a budget system in place that works, because otherwise law enforcement -- as much as children and our school system and higher education and health care and all of those things -- always will be sent on a roller coaster ride. And this is what has happened for the last few decades. We have a dysfunctional budget system and it's one thing that I want to talk to you about, because we all have to work together on that.

No matter what we do here in this state, if we continue with the budget system that we have right now we will never have steady revenues for all of those various different programs. And we go through this, this year -- this year we have a $17.5 billion -- or a $17.2 billion deficit -- and it is not because the economy is sagging. The economy is down, yes. Yes, we have had the subprime mortgage crisis; yes we had the slowdown in our real estate and especially in the home market, and that had a spillover effect and all of those things. And yes, this year the revenues came in $5 billion less than anticipated, and the next fiscal year will be the same thing.

But that is just one of the problems. The major problem is that this state has a dysfunctional budget system, which means that every single time when we have good years, and we have a surge in revenues, all of that money is being spent. And then, when we have down years, we don't have enough money for all of the various different programs. So one year we spend a lot of money, much more than we should, and then the next year we don't spend enough. So it's a roller coaster ride for people.

And I think that governors in the past have tried to change that system but they were not able to, because there are a lot of special interests out there in California. They don't want to put us on a cap, or to say that if we make anything beyond a five percent increase in spending let's put it in a rainy day fund, so then in the down years we have money available. They don't want that, because they want to spend as much as you can, because then you raise the base. And then you have the responsibility the next year that you have to spend the same, even though you don't have the money. And in education that is the case, and in so many other programs, in health care and so on, and so that sometimes squeezes law enforcement out.

So, for the best interests of everyone, what I recommend is that we reform the budget system once and for all. It's not going to be easy, but this is what we are recommending in our May Revise. We are recommending to reform the budget system, because we asked the legislators to:

* Number one, make the midyear cuts,

* Number two, to go and fix the budget for this coming fiscal year, 2008-2009,

* And number three, to go and fix the system itself that always takes us on that roller coaster ride.

I think that's what cities do, this is what other states do. Except the sate of California is not doing it, and this is why we always have this kind of disastrous situation. If it is Pete Wilson went through that, Deukmejian went through that, Gray Davis went through that, and we are going that right now. It is because the system does not work.

I mean, it is absolutely irresponsible not to put some money aside when we have good years. And I think this is what we do, because on average over the last ten years we had an increase in revenues of five percent a year. So therefore, since we know that, let's go and take that five percent and send anything we make above five percent, let's put it away in a rainy-day fund. So we are fighting to get that done this year.

Of course, we made a budget proposal and we made it very clear that not all of the $17.2 billion can be done in cuts, which some of my colleagues want to do. They think it all should be done with cuts. I said, it can't be. And of course my Democratic friends, they think that we should raise taxes and solve the problem that way.  So I am in the middle. I said, okay, we have to make some cuts.

We made a lot of cuts, severe cuts, but we also introduced $5 billion in revenues by not really raising taxes but taking the lottery money. Because we have the lottery which is something that the people of California have voted on. The people of California are for the lottery, but it is only performing at 50% of its potential. It's making $3 billion right now; it potentially can make $6 billion. So this is why what we have done is securitized the future earning of that lottery, take that money, $5 billion this year, $5 billion the next year and $5 billion the year after that, and that will pull us through until the economy is coming back again so we don't have to make those severe cuts as some of the people recommend. But at the same time, like I said, not raise taxes, because I think that will be a mistake now. In the economy that we're in that is right now weak and vulnerable, we should not go and take more money away from people because it will really have a negative effect again on the economy. 

I think that this is a very good solution. Of course there are my Democratic friends in Sacramento that said that we're upset at the governor's budget because he's not raising taxes. And my Republican friends say we're upset at the governor's budget because he is not cutting enough. Well, you can't please everybody, that's clear, and especially when you're in the middle.

But now the budget is in their hands. You see what I'm saying? It's now in their hands. So now if they have a better idea, come and bring it to us. Let's find out if they really have a better idea or if it is just cheap talk to say and complain and point the finger and say, you know, this is a terrible budget. I say to them, I say if you have a better idea, come to us. We have open doors where everything is on the table. All your ideas, I don't want to go and say to anything no. Let's put it all on the table and now let's find out this next month, because they have a little bit more than a month they have now in order for us to have the constitutional deadline of the budget.

One thing I guarantee you, that I will be fighting for every penny for law enforcement. No one is going to take that away from you, not one single penny, that I can promise you right now.

So it's one of those big items, one of those big items that I have inherited, those big problems which need to be reformed, which is our budget. You know, when you take over an office like this, especially in 2003 when we were in an economic situation, it was disastrous where the state was almost in bankruptcy and the people were leaving the state and businesses were leaving the state and workers' comp was being the big problem, the poison of our economy and Democrats and Republicans couldn't get along and all this.

So we tackled those things. We reformed the worker's compensation and we knew that California needed to be rebuilt because for four decades we did not build any infrastructure and now we are rebuilding the infrastructure because both of the parties work together. So great things have been done since then, so this is one of the great things that need to be done still, which is reforming the budget system and also building more reliable water for the future which is part of the infrastructure and also to reform our health care system. Those are the big, big issues that we still have to tackle besides, of course, working on education and things like that.

But this is the year because we are in a crisis. This is the year where we have a good chance of doing that.

So I just again want to ask you for your help to fight for every dollar for law enforcement. It is extremely important because I see them already taking away and passing and debating over those kind of things. It's always in danger, but together I think we have been successful.

By us working together I think we can do it, and also to stay on top of it and to make sure that we follow through with AB900 to make sure that those prisoners stay locked up. Because as you'll remember, in my January budget I talked about releasing 22,000 prisoners early. Well, we solved that problem, we heard your voices loud and clear. Because as I have always said, that you are my partners. And I heard you when we had the meeting, we talked about it and you said under no circumstances go there. We don't want to have them back in our neighborhoods. So we made sure that we made the adjustments to keep them locked up and not to let anyone come out early. So we are all working together.

I want to thank you for the great effort that you have been making over the years and the great partners you have been. And thank you very much for your bravery, thank you for being so selfless in your job, for being so passionate and being tough. And thank you for being the best law enforcement in the entire world.

Thank you very much and I'll be back.  Thank you.