Gov. Arnold 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 during his first two years in office.

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

The governor's speech – and his budget – suggested a return to his fiscal conservative roots. But Schwarzenegger emphasized that he took no pleasure this time and pursued this tack more out of desperation than ideology.

"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 state's dire situation provides lawmakers the political opportunity to consolidate more than a dozen state boards and commissions, which would save only $50 million but is popular with voters.

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

Schwarzenegger also asked lawmakers to privatize some prison and school jobs to save money, moves that would invite direct confrontation with the state's most powerful unions.

"All of these proposals I have talked about for years and yet they never got done," Schwarzenegger said. " … Now we're in a crisis, and we are running out of excuses, and we have run out of time."

The governor's return to some of his 2004 and 2005 priorities is notable after Schwarzenegger apologized in 2006 for having pursued a special election that provoked labor unions and Democratic constituencies. Schwarzenegger 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 to governance.

"The calendar says June 2009, but this is a speech he could have easily given in November 2003," said Bill Whalen, a research fellow at Stanford University's Hoover Institution who wrote speeches for former Gov. Pete Wilson. "That said, it didn't strike me as particularly strident. In other words, he cited problems, he cited failures, but he didn't assign blame."

Schwarzenegger already faces criticism for his proposed cuts to virtually every sector of state government. Residents who rely on public services from AIDS medications to dialysis have testified in the Capitol, sometimes tearfully, about the impacts the cuts would have. Unions have held protests daily outside the building, including those representing state workers, who stand to lose another 5 percent of their pay on top of the 9.2 percent reduction they took in February .

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

In essence, Schwarzenegger asked lawmakers to defy the powerful California Correctional Peace Officers Association, which helped lead the fight to defeat measures in a special election he called in 2005. Among its tactics that year: circling the Capitol with an unflattering billboard of the governor wearing a Speedo.

"I think this is the next shiny thing, and our governor often suffers from adult attention deficit syndrome," said Lance Corcoran, spokesman for CCPOA. "We've seen this before. I don't think it has a lot of support in the Legislature. We've seen private prisons in other states go belly up, only to move them back to public prisons."

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. But it's kind of a cheap shot to go after those low paid workers in our schools to balance the budget."

Adam Mendelsohn, the governor's political adviser and former communications director, said Schwarzenegger hopes legislative Democrats challenge conventional political dynamics because the budget situation is so dire.

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 at the same time they're being asked to approve massive cuts in health and welfare programs.

Assembly Speaker Karen Bass and Senate President Pro Tem Darrell Steinberg 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 altogether.

They did not say how they would eliminate the remainder of the deficit, suggesting that they would seek revenue in talks with Republican leaders and Schwarzenegger.

But Assembly Republican Leader Sam Blakeslee and Senate Republican Leader Dennis Hollingsworth said they remain opposed to any 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 as much as possible.

"We have an economy in intensive care," Blakeslee said. "Another round of taxes would put that patient into cardiac arrest."

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