Friday, 07/03/2009 Print Version |
Governor Holds Press Conference in San Francisco to Discuss State Budget Crisis
DARLENE AYERS-JOHNSON: Good morning, everyone. My name is Darlene Ayers-Johnson and I am a proud native of Oakland, California. I have with me this morning my great-granddaughter, Savanna, and we consider ourselves one of California's 'real families'. This morning we also have joining us other real families of California who are being negatively impacted by the economic crisis facing the state of California.
Governor, I applaud you for putting forth a budget that reduces waste and reforms poor government practices. Won't you all please join me in welcoming our governor to San Francisco, the Honorable Arnold Schwarzenegger, governor of the state of California.
GOVERNOR SCHWARZENEGGER: Thank you, Darlene, for your introduction. It's great to be back in San Francisco.
And I just want to update you on our budget negotiations and on our fiscal crisis. As you know, four weeks ago I addressed the joint session of the Legislature, and I warned that swift and serious action needs to be taken in order to deal with the whole $24 billion deficit and, that if we don't deal with the entire budget deficit, that we will run out of cash by the end of July.
I presented my proposal, which was the May Revise, and asked the legislators to make the tough and necessary cuts. I also asked them to use this crisis as an opportunity, an opportunity to get rid of government waste and to streamline and make Sacramento run more efficiently.
I’m sorry to say that in the four weeks since that address to the joint session the legislators, instead of coming up with some solutions and negotiating and coming up with a compromise, they have had endless amount of debates and hearings and more debates and more hearings and finger-pointing and assigning blame.
So at the end of the day nothing was really accomplished. The only thing that was accomplished was a partial solution that lacked both the necessary cuts and also the long-term reforms. So I sent the budget back and I vetoed it, of course, forcefully and without any hesitation.
Their response to the budget problem that we have was really not a response at all; it was just really an invitation to create even a bigger budget crisis. They refused to deal with the entire $24 billion budget problem that we have which is, by the way, now $26 billion because of having not met the deadline.
They also refused to streamline government. They refused to consolidate the agencies, they refused to cut unnecessary boards and commissions and they refused to undertake reforms to root out the massive waste and fraud that we see in some of the largest programs that we have here in California.
To give you an example, almost 80 percent of California's welfare recipients aren't meeting simple work requirements, which is that they get a job, or they look for a job, or they're being trained for a job, or they get education, or they do some form of community work. They don't meet any of those kinds of obligations, yet year after year they're receiving their checks and also their benefits. I proposed simple reforms to curb this abuse, but the legislators refused to do that.
Or, for instance, another example here is in-home support service programs. That's also riddled with fraud and abuse, yet the legislators rejected simple safeguards like fingerprinting and background checks to prevent people from getting benefits in multiple counties or under multiple identities.
They refused even minor changes to the pensions for new employees -- we're not talking about taking anything away from any employees that are right now employed, absolutely nothing, just the new employees -- in order to make ends here. That would have saved tens of billions of dollars, money that would have gone to education, to health care or to public safety. The legislators failed to act on those also.
And they refused to act on these proposals, and when they do that they basically send a message to the California people that says, You the people have to make sacrifices, but we in Sacramento don’t want to make any sacrifices and create any changes whatsoever. And I think that the people in Sacramento basically forget that government is always meant to be the servant of the people, not to make the people the servant of government.
So anyway, back in 1967, when you look at the history, they already struggled with those kinds of problems. Governor Reagan said that, "The time has come to match outgo with income, instead of doing it the other way around." And that was, like I said, 42 years ago. Sacramento still today has not changed and hasn't learned. For decades, Sacramento has pushed their financial problems down the road. For decades they have spent more money than we have taken in. But pushing the problem down the road doesn't help anybody. So what I say now is the road has stopped here. We're not going to push it anymore down the road. This is a dead-end street.
Yesterday, in order to deal with this financial crisis, I issued the executive order imposing a third day of furloughs for our state employees. I also called the Legislature into a Proposition 58 special session so that we can get back to work and negotiate this budget and come up with a solution. And, until we get the job done, I also told the legislators that I will not sign any legislation unrelated to the budget that is not urgent or absolutely necessary, because we want to make sure that the legislators stay focused on these problems, rather than debating over cow tails and other kinds of things, or Blueberry Commissions and so on.
So I'm very much committed to this, to get this done. I think the state deserves to address this entirely and not to piecemeal the approach or to go and just push it off to the future. So I urge the legislators, let's focus our energy on getting this done. Let's make sure that we work together, let's make sure that we can compromise here, and I think that we have to get a responsible and a balanced budget.
And to the people I say you are the true authority in this state, so I ask you to stand with me in this call to action. I’m absolutely convinced that if we stand strong together we will get through these very difficult days and weeks and months and we will come out on the other side a better, more honest and a more civic-minded state.
Thank you very much. And now I would like to hear if you have any questions about any of this, I will be more than happy to answer those.
QUESTION/ANSWER:
QUESTION: Governor, you gave this almost exact same speech two days ago in Sacramento. Has anything changed? Have you made -- you've now repeated this speech and repeated it again 48 hours later. Are we any closer in those 48 hours? It sounds like you're doing the speech again in hopes it's going to move things closer. Has it shown any progress?
GOVERNOR: First of all, it is always very important that you communicate with the people. I think that Sacramento is not the only town, even though some people in Sacramento think it's the only town in California. But the fact is there are many towns and many wonderful cities and I think that always when we have anything, good news or bad news, it's very important for me to go up and down the state and to communicate with the people, and to let people like you, the journalists, that communicate then to the people out there through TV, radio, newspapers, magazines and so on, to let them know. And so this is why I make myself available to question and answer sessions like this and talk to the media, and to the people also through town hall meetings. And I will go and go up and down the state with this message as long as necessary.
But in the meantime, I have also good news, and that is that we are negotiating, that immediately the next day after we could not reach an agreement I called the legislative leaders and we got together the following day. We've gotten together again yesterday; we had good discussions and I think that everyone basically wants to get this done.
Look, no one, Democrats or Republicans, want to have IOUs out there. They don’t want to have the whole world watch us go through these real difficult times -- not that we are the only state, may I remind you. There are many other states that have had a deadline and have just started a new fiscal year and don't have a budget. There are countries all over the world that are struggling with this crisis because, as I said, this is a different world and one-third of the wealth in the world has vanished, so I think we all are going to fight through that.
And these are difficult times for California, but I think where there is a will there is a way. And the key thing is not to piecemeal it, to have a total budget. Deal now with the new number, which is the $26.3 billion. Get rid of the fraud, waste and abuse, because taxpayers hate to pay taxes and know that one-third of the money is being wasted for things that we don’t need. And so let's root out all of this. And also, let's make sure that we don’t kick that can down the road, as they have done for decades.
Yes, please.
QUESTION: I'm not really sure who these people are and what they have to do with your message.
GOVERNOR: Oh, these are ordinary folks that all get basically affected by us not having a budget. These are people that are concerned, that are worried, that wanted to be here today at the press conference, and that come from all walks of life. So they're family people that are concerned about themselves, they're concerned about their family members. They're concerned about their children, you know, with us having to suspend probably Proposition 98. What does that mean to education, us having a lack of money and having already cut education by $10 billion, what does it mean to them? We just had conversations just beforehand about their concerns, about all of this. Can they keep their job? You know, it's just there is a lot of uncertainty, and especially now with the IOUs going out. So I think it just shows that ordinary folks are concerned in California.
And I think it's important, because of that, to resolve this issue as quickly as possible, and for everyone to have the will. Because, as you know, I think everyone knows what needs to be done. It's just very difficult to make decisions when you have tried to protect certain services, and then all of a sudden you have to make certain cuts to those services -- not because you want to, but because of necessity. The key thing is always to know that we have $26 billion less than we are spending on programs, right now. And so every day, as we don't get that budget done, we are spending $20, $30 million a day more than we take in. So that's the key thing.
So no one wants to go and cut education. No one wants to cut in-home services. To root out the fraud yes, and the abuse, but not to cut. No one wants to cut welfare. People need some of this money and they're relying on it. But the bottom line is, when you don't have the money, it is ludicrous to promise the people, don’t worry, we're going to go and keep paying for that, when you don't have the money. So it would be not really honest.
And so this is why, to make the rest of the legislators and everyone just settle in and just say OK, that's all we have for right now, so let's live within our means. That is a very challenging thing. And I recognize that, and I always tell that to the legislators, but we have to do it, nevertheless.
Yes, please.
QUESTION: Democrats are saying that you're bringing up some of these reforms, some of these ideas rather late in the game. And they're up against the wall just trying to pass the budget, and it takes time to analyze exactly in detail how they're going to get rid of, or reform. So you're actually just bringing this up too late in the game for them to respond the way you want.
GOVERNOR: If you would hear that just one time, you would say maybe you're right. But the fact of the matter is that every single year when we talk about reforms they say, "But can't we push this off until next year? I think it's kind of late. It's very complex, what you're talking about here. It needs endless amount of debates, it needs discussions. We've got to bring the public in, we've got to have hearings," and they go on and on with the drama because all they really want to do push that can down the road again.
So we have done that, as I have just said. Ronald Reagan, four decades ago, has dealt with these same problems, and that's what they do, just kick that can down the alley and not deal with it right now. They want to just solve the budget for right now, but lets not worry about next year and the year after that. Those reforms, as I mentioned in my joint address more than a month ago. I said, "Listen, let's use this time to make government more efficient. We have a limited amount of money, and therefore it's very important and only fair to the taxpayers that we live within our means and also get rid of the waste and the fraud we all know exists. Let's get in there.
So that was more than a month ago. I think that it is just the way Sacramento operates. You know, they just didn't want to focus on that, didn't want to deal with it. And then they wanted to come five days before the budget deadline and said, "Look, let's start negotiating now. But now it's too late to do any of those things." It's not. We have written up -- as a matter of fact, we created the luxury model, which is that we have it all written up for the legislators, so that you take the language and vote on it. That's how simple we made it for them, so it's all there, there's nothing new, they can do it.
You know how long it took to get the increase, for instance, in 1999, when they increased the pensions for the state employees? You know how long it took, the debate? One minute. They debated one minute on the Floor, and then they voted, and they increased on the pensions. So I said, "Look, now we know we can't afford anymore new employees having this kind of a pension package. We can't afford it. We have $300 billion and we need $600 billion to afford all of those things. So let's go and again spend 30 seconds on debating it and then vote on it, to take it off and get rid of it." So why would it all of a sudden be so complicated, the whole thing?
What I'm saying is if there's a will they can do it very quickly, all of those kinds of reforms.
Yes?
QUESTION: Governor, yesterday Senator Barbara Boxer, in characterizing the budget process, characterized the Democrats as having walked a certain distance toward Republicans, but that now you weren't budging, and it was time for you to budge and end what she was calling "A political nightmare." I wonder if you could --
GOVERNOR: Well, obviously, she's not spending enough time in California to know the reality, because the reality of it is that I have given. Remember, in the last budget round when the Democrats said, "Governor, please can we go and raise taxes, can you support us?" I supported them to the biggest tax increase in the history of California -- the biggest, with $12.5 billion. Isn't that giving? I have gone all the way. As a matter of fact, we have a $26 billion problem, and I'm asking them to do real cuts only of $14.5 billion. Isn't that giving? We are meeting in the middle here.
So I think they know we're meeting in the middle, so I don’t know what she's talking about. If she really has so many good answers why does the federal government fall all over the place and step over each other and can't get things done? So I don’t take this criticism as a fair criticism at all.
Yes, please.
QUESTION: Given this recurring problem, how concerned at all are you of businesses leaving California or not wanting to move to California?
GOVERNOR: First of all, I think it is extremely important that we always make it a business-friendly state, because businesses and the economy needs to boom in order for us to hire people and to have jobs for everybody and also to create more revenues for our state so we can afford the programs. Now there are, of course, a lot of things that we still need to do in order to make it more business friendly. But at the same time, I have to say that we also should look at it in a different way, and that is that sometimes people criticize and say we are the worst state to do business in, which is not true, because we are 16th in the nation when it comes to economic activities. There are many of our states, neighboring states, that are much worse than California. I wouldn't switch out with that at all.
I can guarantee you that California is doing great compared to other states. We have had an increase in economic activities even in the biggest recession since the Great Depression we have had an increase in economic activity of 0.4 percent, whereas other states fell a percent or 2 percent or 3 percent, we did not fall; we just increased by 0.4 percent. So I think California is doing well. And we are, without any doubt -- even though in this crisis -- we are the best place simply because we are a diversified economy. I mean, what sate has the entertainment, music, agriculture, biotechnology, nanotechnology, green technology, high technology, and the list goes on and on and on. I mean, we have so many things to offer in this state. It is unlike anything else. I mean, look at other states. Iowa; potatoes. Texas; oil. Florida; old people. Whatever. They all have their things to offer. We have a whole bunch of things.
So I think that California is doing well. We just have to get out of this crisis. What we need to do is we need to reform our tax system so we get rid of this volatility that we have, because even though we have increased our economic activity by 0.4 percent, our revenues dropped by 27 percent. So as you could see, there is something wrong with the tax system, that it's too much of a roller-coaster ride. So we have to create more stability, which other states have.
And we have to have a rainy day fund. And I thinkt hat from then on, I think we have much more stability. And make sure that we always live within our means.
Yes?
QUESTION: As you know, some of these programs are riddled with fraud. What kind of help are you getting, for example, from the attorney general -- he's always interested in rooting out fraud -- to help make your argument?
GOVERNOR: Well, we are working with them. But, you know, it's very tough to go and change those laws, because there are some people that we have come to our office, legislative leaders, legislators, that say, "How can you start fingerprinting patients or people that provide the services? That's an insult."
So I said to them, "Wait a minute. An insult? I was just fingerprinted the other day when I had to sign a notary public book, and the notary public took my thumb and rolled it in the ink and I had to put it next to my signature to verify that it was me that signed the signature. Teachers have to go and be fingerprinted. Anyone that deals with kids' issues have to be fingerprinted. When you get a house and you get a loan you have to be fingerprinted. I mean, the list goes on and on and on of people that get fingerprinted. But they said this is an insult, that is terrible to have patients or people that provide those services get fingerprinted.
So those are the kind of obstacles that you face. Or there are some people that believe that if welfare recipients, even if they don't go and look for a job, they still should get for five years their money. Even though they don’t want to do community work, even though they don’t want to go to job training, even though they don't want to get any education or participate, to get on their feet, that they still should get for five years the money. And then, if they have kids, that money should be switched over to the kids.
So they believe those kind of things, so it makes it, of course, difficult. But you know, that's the way it always is in Sacramento, or in politics. And so it is for us now to use this time of crisis. That's why I said when you have a crisis like that it's a good time also for opportunity, to go and say look, it's more important now than ever, since we have a lack of money. Let's get rid of those problems.
We could save -- I wrote an editorial in the LA Times, which is today out, and it talks exactly about that issue, how we could save $2 billion. Now, does that $2 billion save the budget? Not at all. That's not what we are saying, because the budget deficit is $26 billion. But here's $2 billion. What does $2 billion get us? We now all of a sudden can afford the entire Healthy Family program and insure all the kids. We can go now and have more in-home services. We can have more money for education. So this money is available for other things that are very important to the state.
QUESTION: (Inaudible) not raise taxes again? That seems to be the major sticking point with Democrats. If they made the pot sweet enough, would you still say no? Because they have, obviously, blasted you for what they are saying is an all or nothing approach.
GOVERNOR: As I have said many times, we just had and agreed to the biggest tax increase in the history of California. We increased our taxes by $12.5 billion. We all agreed during those budget negotiations in February that we will never go back again to a tax increase, that this is it, no matter how bad the situation gets or the economy gets, and everyone agreed to that.
So I have only stuck to my word. And I have helped in these very difficult times and I was the first to come along in 18 years to go and say yes, let's do a tax increase. We need more revenues. But now we have that. We have the $12.5 billion, so now we have to make the necessary cuts.
Thanks very much. Thank you all. Bye-bye.
