In his second State of the State Address (available here), Governor Arnold Schwarzenegger laid out a number of political challenges that will make for “Must See Political TV” over the coming two years in Sacramento. First and foremost, he intends to call a special session tomorrow that will serve as the battleground for a number of major fights, including budget, pensions, teacher salaries, redistricting, and government reorganization. Here are a few key quotes from the speech: – ON THE BUDGET SYSTEM: In every meeting I attend in Sacramento, there’s an elephant in the room. In public, we often act like it’s not there. But, in private, you come up to me–Republican and Democrat alike–and you tell me the same thing, “Arnold, if only we could change the budget system. But the politics are just too dangerous.” The elephant in the room is a budget system that has removed our ability to make the best decisions for California. It has taken away the freedom and the responsibility of legislating. We can change that. – ON THE ROOT OF THE PROBLEM: A lot of people say, “Arnold, why don’t you just raise taxes and be done with it?” Well, as I said earlier, we don’t have a revenue problem. We have a spending problem. We could raise taxes by billions but that would only further drive up spending by billions of dollars. California would never come out ahead. Our economy would suffer, jobs would be lost and the people would be punished. Unless we go to the root of the problem and reform the system, the budget will continue to be one big fight, year after year after year. I don’t mind a fight, but if there is to be one, let it be over new, important things that move us beyond the past. – ON THE PUBLIC EMPLOYEE PENSION SYSTEM: Like the budget itself, our state pension system is another financial train on another track to disaster. California’s pension obligations have risen from $160 million in 2000 to $2.6 billion this year. Another government program out of control, threatening our state. Accordingly, we must do what business has been doing. For new employees, we must move from a defined benefit to a defined contribution system. We need a public pension system that is fair to employees and to taxpayers. – ON TEACHER PAY: We must financially reward good teachers and expel those who are not. The more we reward excellent teachers, the more our teachers will be excellent. The more we tolerate ineffective teachers, the more our teachers will be ineffective. So, in the special session, I propose that teacher pay be tied to merit, not tenure. And I propose that teacher employment be tied to performance, not to just showing up. – ON REDISTRICTING:Here is a telling statistic: 153 of California’s congressional and legislative seats were up in the last election and not one changed parties. What kind of democracy is that? I will propose that an independent panel of retired judges–not politicians–determine California’s legislative and congressional districts. They can draw fair, honest district lines that make politicians of both parties accountable to the people. The current system is rigged to benefit the interests of those in office . . . not the interests of those who put them there. And we must reform it. – ON CPR / GOVERNMENT REORGANIZATION: Tomorrow, I will send to the Little Hoover Commission our plan to reorganize this agency. And I want to say this to the many honest and hard-working people who work in corrections: thank you for your perseverance, and thank you for your hard work. We will free you from the prison of waste and mismanagement in which you have been held. California was once the national leader, a pioneer, in corrections integrity, innovation and efficiency. We can make it so once again. More reorganizations of other agencies will follow in the months ahead. I can also announce that we intend to wipe out nearly 100 unnecessary boards and commissions, abolishing over 1000 political appointments in the process. No one paid by the state should make $100,000 a year for only meeting twice a month. – ON ROADS AND HOUSES: When I first came to California, the roads fascinated me. Californians can’t get from place to place on little fairy wings. This is a car-centered state. We need roads. Like Governor Pat Brown before me, I intend to see that the government builds the roads that Californians need. We need roads and we need affordable housing. The median price of a home in California is $460,000. That is too much. A home of your own is part of the American Dream. I believe in such dreams, so I will propose legislation that eliminates regulatory and legal hurdles that delay construction and increase the costs of new housing. I want a California where people spend less time sitting on the freeway and more time in the homes that they own. I believe we can meet our transportation, our housing and our business needs and still improve the environment. SUM-UP No doubt, this speech sets the stage for a year of “Lord of the Rings” scale political fights. Of course, there are still a lot of details to follow and a lot of questions that remain unanswered. Among them: -Does taking on the budget formulas mean questioning Proposition 98, that mandates nearly half the state budget go to school finance? -When he suggests that other government agencies will be reorganized over the coming months, which are they and when will they happen? – What about the other thousands of CPR recommendations for reform? Will we see them in the budget this week or a soon-to-follow legislative package? I will, no doubt, be paying attention to these things, as I am sure will most of Sacramento. This quote sums up the year ahead best for me: “I know the special interests will oppose all the reforms I have mentioned. Any time you try to remove one dollar from the budget, there are five special interests tugging on the other end. Anytime you try to make something more efficient, there are a half-dozen special interests trying to prevent it. The result is that nothing changes in Sacramento. This place is in the grip of the special interests. The people of California demand reform. That is what the recall election was all about. That is what the ballot process is about. And that is what this special session is about. A special session will allow us to work together quickly, so that people can vote on our reforms in an election by early summer. If we here in this chamber don’t work together to reform the government, the people will rise up and reform it themselves. And I will join them. And I will fight with them.” It will be an interesting year indeed.