Schwarzenegger Seeks Huge Spending Increase

By John Pomfret and Sonya Geis
Washington Post Staff Writers
Friday, January 6, 2006

LOS ANGELES, Jan. 5 -- Arnold Schwarzenegger proposed extensive new spending for highways, schools, air quality and ports Thursday as he attempts to move to the political middle and regain his footing after a disastrous second year as California's governor.

In his second State of the State address, Schwarzenegger proposed a $70 billion bond issue, the biggest in California history, which over the next decade would pay for new schools, roads, better ports and improved air quality, as well as new levees and jails. He also backed a dollar increase in the minimum wage.

"We must build a California eager to meet the challenges of the 21st century without reluctance or fear," Schwarzenegger said in unveiling his plan, which would amount to twice California's annual budget.

"I say build it," Schwarzenegger, 58, repeated throughout his speech as he outlined a vast "strategic growth plan" to rebuild the state's crumbling infrastructure.

The proposals mark a change for the Republican governor, who took office in 2003 after a dramatic recall election in which he defeated Democrat Gray Davis. Democratic and Republican lawmakers agreed that Schwarzenegger's proposals -- which also include new funding for solar power projects -- are designed to appeal to Democratic voters, who are critical to his reelection hopes.

"He's hitting all the Democratic notes in the song," said Fabian Nuez, the Democratic speaker of the Assembly from Los Angeles. "There's no question that his tone has changed dramatically."

The speech in Sacramento signaled an about-face from the confrontational tone Schwarzenegger took in his first State of the State speech last year. He then called for merit pay for teachers, lowering pensions for state workers and a far-reaching change in the way legislative districts are drawn.

That speech was the start of a partisan brawl that led to a special election in November and the failure of all four ballot initiatives the governor backed. Schwarzenegger's popularity plummeted and, vanquished on election night, he apologized to voters. He told them he should have listened to his wife, Democrat Maria Shriver, and, with Thursday night's speech as the clearest example, committed himself to building bridges, not burning them.

"I thought a lot about last year and the mistakes that I made and the lessons that I learned," Schwarzenegger said in his speech. "It was true that I was too much in a hurry. . . . I barreled ahead anyway when I should have listened."

"To all Californians I say: message received."

Since the special election, the governor has offered olive branches to the Democratic Party and the public service unions who hold sway in Sacramento.

Schwarzenegger moved to smooth relations with the California Nurses Association, whose demonstrators dogged him throughout last year, by dropping his quest to overturn state nurse-patient ratios. He announced his intention to give schools about $1.7 billion extra this year -- an important step toward patching relations with state teachers unions. And, on Wednesday, he announced he will ask the legislature to cancel a tuition increase planned for all state universities.

Last month, Schwarzenegger began an internal shake-up. He replaced his chief of staff, Patricia Clarey, a veteran Republican, with Susan Kennedy -- a Democrat, a lesbian and a pro-choice advocate who served as Davis's chief of staff. Kennedy's appointment touched off a firestorm among the Republican Party faithful.

"Susan Kennedy has spent her life fighting against the principles I believe in," said Ray Haynes, a Republican assemblyman from Riverside County. "To say that she's going to change her principles is either naive or foolish. The governor is hurting himself more than he truly understands."

Haynes said Schwarzenegger's lurch to the left is alienating voters in his district, the fastest- growing in California, and is ruining his chances for reelection. "If my folks don't vote," he warned, "Republicans don't win."

Analysts said Schwarzenegger really had no choice. "If he'd continued on his tack to the right, he was going to go off a cliff," said Bruce Cain, director of the Institute of Governmental Studies at the University of California at Berkeley. Cain said Schwarzenegger actually benefits from conservative criticism now.

"The fact that conservatives are unhappy helps," Cain said. "You can be sure that Arnold will spin his inconsistency as 'I am a non-politician politician,' and he's already done that." Cain said Schwarzenegger's problem is that "he acts like he goes with the advice of the last person in the room. If that's what he's doing, he's going to zigzag all over."

Nonetheless, Cain and others predicted Democratic legislators will be eager to work with Schwarzenegger even though it could boost the governor's reelection prospects. The two Democratic candidates, State Treasurer Phil Angelides and State Controller Steve Westly, haven't succeeded in capturing much attention even within their party. Moreover, if Democrats don't embrace Schwarzenegger's initiatives, which come straight from their playbook, he will be able to blame them for intransigence.

Nuez, the Assembly speaker, said Democratic leaders discussed how cooperating with Schwarzenegger would help him and concluded that it isn't an issue. "As long as the governor is advocating Democratic initiatives, we'd be hard-pressed to refuse him," he said. "If that helps his reelection, so be it."

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