Gov. Arnold Schwarzenegger sat down this afternoon with Kevin Yamamura and Jim Sanders of The Bee Capitol Bureau to answer questions on the state budget impasse. Read the transcript of his remarks:

Q: You campaigned on the idea of no new taxes. Do you feel that you broke that promise? Some are accusing you of doing that.

A: "I look at that as being realistic and not getting stuck in ideology but doing what is right for the state at this time. There are others that believe differently, others that will want to borrow even though they have said they will never borrow again for ongoing programs. So they just see it differently. Of course, with Republicans, I think it has been difficult up until now because we have never seen their numbers ... I want to see where they are going to make all those cuts and where they are going to get the money to fill the hole. Are we going to go to local government? Are we going to go to transportation? All of those things they have not laid out anywhere. So we're talking about something that doesn't yet exist. That's why I say (to Republicans), 'The Democrats have put up their budget and we know there is $9.6 billion increase in income tax, and the rest is some cuts they have proposed. Put your budget up. Let's see what that is.'"

Q: Do you see the sales-tax proposal as a tax increase, tax decrease or a neutral proposition? How do you define it in your own mind?

A: It doesn't matter how I define it because it has nothing to do with definition as it does with what time you're talking about. If you talk about a year into it, it's a tax increase. If you talk about 12 years after, it is revenue neutral. If you talk about 20 years from now, it is a tax decrease. It really depends on what time you're talking about. The idea is to look at the whole budget process and look at it in the long term rather than doing a get-out-of-town budget. There are some people who just want to fix the problem this year and kick the can down the alley.

Q.: Past governors have closed deals with minority-party lawmakers by offering enticements, perhaps spending in their districts or future appointments. Other governors have tried to play hardball and threaten them. Are we at the point where that is the only option available to you?

A: Well, there were systems used. But first of all, I would never exchange a job for anything like that. It's two different issues. If someone is qualified for a job and they want a job, they should come to me and I will tell them, 'You're a good, smart person, you can have this job.' That exchanging of gifts is not something that I'm interested in. The second thing is, yes people, governors in the past, have said, 'We're going to stop the public works projects in your neighborhood and building roads and all of those things.' Who are we going to punish? The politicians or the people? ... So what you're really doing is punishing the people. So if I'm a public servant, that's not the direction I want to go. In the end, I want them to see that this is the best way to go and move forward in the way I recommended.

That's why I went public to say, 'Look, I'll step out there and take the risk of getting attacked, but it's O.K.' You've got to have political courage to move the agenda forward rather than always being scared about your own political career, what does it mean, and all of those kind of things. These are all people that admire our great men and women who go to Iraq and Afghanistan. Look at what they risk; they risk their lives. That's heroic. To be afraid of what the consequences are, that's quite the opposite."

"And we have a problem with experience ... when you take all the legislative leaders today that I am dealing with, the four, they have 26 years of experience. And Deukmejian and Wilson, when they dealt with the leaders, they had 80 years of experience."

Q: Would you have a budget by now if Fabian or some more experienced leaders like John Burton were in leadership at this point?

Call Kevin Yamamura, Bee Capitol Bureau, (916) 326-5548.