Full text of Gov. Schwarzenegger's address

Speaker Bass, Senate Leader Steinberg, Assemblyman Blakeslee, Senator Hollingsworth, my fellow Constitutional Officers and my fellow servants of the people:

Thank you for the gracious invitation to address you today and to address the people of California.

Today I want to talk to you about our financial crisis.

Three months ago, the members of this body came together set aside their ideological differences and did what they believed was best for California.

We solved $36 billion of a $42 billion deficit.

But as you know part of our budget agreement required us by law to go back to the people for approval right at the time the people wanted to send Sacramento a powerful message.

And that message was clear:

Do your job. Don't come to us with these complex issues. Live within your means. Get rid of the waste and inefficiencies. And don't raise taxes.

Now as I stand here today we are in the midst of the greatest economic crisis since the Great Depression.

In the past 18 months one-third of the world's wealth has vanished.

And because of that and because of California's outdated and volatile tax system, our revenues have dropped 27 percent from last year.

We are now back to the same level of revenues we had in 2003.

And when you adjust for inflation and population, we're back to the level of the late 90's.

Today, just three months after our February budget we once again face a $24 billion deficit.

California's day of reckoning is here.

In order to deal with our limited amount of money, I have proposed some dramatic changes in my May Revision.

Those spending cuts represent much more than the hard decisions necessary to balance our budget.

They represent a transformation of what services Sacramento can provide and how those services are delivered.

The immediate task before us is to cut spending to the money available.

And we have no time to waste.

The Controller has told us we have 14 days to act or California is at risk of running out of cash.

I have already used my executive authority to reduce the state's payroll.

And I have proposed the necessary cuts to the three largest areas of our budget: education, health care and prisons.

I know the consequences of these cuts are not just dollars.

I see the faces behind those dollars...I see the children whose teacher will be laid-off...

I see the Alzheimer's' patients losing some of their In-Home Support Services...

I see the firefighters and police officers who will lose their jobs.

People come up to me all the time, pleading, "Governor, please don't cut my program."

They tell me how the cuts will affect them and their loved ones.

I see the pain in their eyes and hear the fear in their voice.

It's an awful feeling. But we have no choice.

Our wallet is empty. Our bank is closed. Our credit is dried up.

I know for many of you, these will be the hardest votes you will ever make.

But the people sent us here to lead not only in times of prosperity but also in times of crisis.

We must make these cuts and live within our means, because what is the alternative.

If we don't act, the state will simply run out of money and go insolvent.

We are not Washington. We cannot print money. We cannot run up trillion-dollar deficits. We can only spend what we have.

That is the harsh but simple reality.

At the same time we cannot make this budget just about cuts.

There are also some great opportunities for structural reform. Winston Churchill said a pessimist sees the difficulty in every opportunity. An optimist sees the opportunity in every difficulty.

So let's use this crisis as an opportunity to make government more efficient and find innovative ways to stretch taxpayer dollars.

Can we find a way to provide these services at a lower cost?

For example, I have asked our State Board of Education to make textbooks available in digital formats.

We expect the first science and math books to be digital by this fall.

If we expand this to more textbooks, schools could save hundreds of millions of dollars a year.