I want to express my thoughts for the coming year. I want to join with you in a common agenda to meet the needs of the State. I want to lay out an agenda for the coming year which has to be the product of Republicans and Democrats, the Senate, the Assembly, the Executive Branch of government. We have seen the year that has been quite prosperous. We look forward to another year of some uncertainty.
We have tremendous resources, great potential, and obviously many unresolved problems. I want to look a bit to the past and then chart ahead a future that I believe is doable and quite sustainable.
Looking backward for a moment, the California economy outperformed the nation in 1979 in many respects. California continues to be one of the most desirable States in the nation to live in. It's attracting people from all walks of life and these people establish residence here and they come to demand the goods and services and housing of our state. The employment in California industries increased by about 368,000 last year. And that accounted for fifteen percent of the nation's farm land.
California agriculture continues to lead the nation. 1979 was a banner year, exceeding all previous records by large margins. The total dollar value of farm produce in 1979 was 12.3 billion, and eighteen percent increase over the previous record year and we produced about ten percent of the nations' total farm production only three percent of the nation's farm land.
The aerospace industry, particularly in electronics, has several years of unfulfilled orders. The economic outlook in the nation is worsening, and while California's strength in agriculture and aerospace and electronics will be evident, we must prepare for a very uncertain future. And in any downturn in the economy, the first and greatest effects are felt by the people at the lowest rungs of our economic ladder.
In the past year we've taken several steps to encourage the creation of new jobs and to train economically disadvantaged persons so that they can find employment in these newly created job opportunities.
Last year I proposed and the Legislature adopted the California Work Site Education and Training Act combining classroom education and work site training to enhance career opportunities for persons with obsolete or inadequate job skills. Youths, people who are structurally unemployed and the economically disadvantaged.
This year I'm proposing that we spend ten million dollars in this program. Eight million next year and seven million the following year.
The Legislature has enacted a tax credit to encourage employers to hire welfare recipients. Because the bulk of the new jobs created is by small business, I'm going to propose to expand the programs of the Office of Small Business Development and the Office of Local Economic Development. More than three and a half million dollars in budget increases for these departments will add new jobs, bring other public funds into the economy and provide much needed capital to labor intensive small business.
In the area of the Century Freeway Corridor, I'm proposing a targeted economic development effort to improve employment opportunities to the disadvantaged residents of that area. One of the priorities on my administration continues to be the provision of safe, decent housing for all economic groups with our population.
Last year you passed a hundred million dollar program to stimulate construction of rental housing for low- and moderate- income persons. In the coming months the Department of Housing and Community Development will begin to purchase shares in new rental housing developments. As housing prices in California continue to escalate we will have to develop creative new approaches to making housing affordable. This year we have provided five hundred thousand dollars in the budget for a design competition to stimulate new thinking by builders and architects of affordable housing. Manufacturing housing now makes up ten percent of new housing units and provides some of the most affordable housing in California. I propose that we eliminate many of the barriers that still prevent wider use of this type of housing.
Both the California Housing Finance Agency and the Department of Veterans Affairs are proposing expansion of their loan programs which provide affordable housing.
There's probably no greater challenge to the State today than the need to reduce our dependence on foreign oil and nuclear power. I am therefore proposing an ambitious conservation program. I am proposing twenty million dollars worth of capital expenditures which will save three dollars for every dollar invested. These expenditures include the installation of solar panels on State Buildings, the co-generation of power at State Hospitals and the installation of computers to control the heating and cooling of State buildings. In addition, the California Energy Commission is allocating ten million dollars in low-interest loans to local government, hospital and public care institutions for similar energy conservation expenditures. We are already well ahead of the nation in the application of solar energy. There are more than 75,000 solar energy installations in the State, mainly for domestic water heating, pool heating and space heating and cooling. These account for over thirty percent of all solar applications in the United States, even though California's population is just about ten percent of the national total.
This year my administration will take steps to ensure that much of the hosing constructed and financed by State funds includes energy savings devices. Homes financed by the Cal-Vet program, the California Housing Finance Agency and special legislation passed last year will provide additional rental units which feature conservation devices as well as solar installations.
According to State-sponsored studies, solar space and water heating is technically feasible in 75 percent of all new single family dwellings and in 95 percent of all new multiple family dwellings.
Meeting the State's new solar goals for 1990 will result in savings of 20 percent of the oil and gas that would otherwise have to be imported and will create up to 150,000 new jobs in our State's economy. I strongly urge that you extend the 55 percent solar tax credit which expires this year. In addition, I urge that you pass Senator Roberti's Senate Bill 1205 which will pave the way for additional monies to develop alternative forms of energy.
California will soon initiate a novel demonstration of low-cost solar pond technology to generate electricity at the Salton Sea in the southern part of the State. Tis project, the first of its kind in the United States, will result in the development of 600,000 to 800,000 kilowatts of electrical capacity using a little known technology under development in Israel. This joint California-Israel solar pond project is but one of the new commercially feasible solar efforts which the State is pioneering for the energy short 1980's. Other technologies which offer great promise and which will benefit from the passage of Senate Bill 1205 include photovoltaics, solar-thermal powerplants for electricity, new solar-thermal storage systems for industrial and residential use and new applications of passive solar architecture for homes and buildings. To further speed the development of alternative forms of energy I propose the creation of an alternative energy financing authority. Assuming the necessary enabling legislation passes the U.S. Congress, this authority will enable Californians to utilize financing which is exempt from Federal tax for the development of cogeneration and small scale hydroelectric facilities. Tax exempt financing should assist in the development of an additional 1,000 megawatts of electrical capacity in our state within the next three years; and at least 6,000 megawatts of capacity within the decade.
Cogeneration and small scale hydro both provide the opportunity for new energy sources available with short lead times at high levels of efficiency. Eligibility for Federal tax exemption would ensure that these already economical energy sources are brought on line at the lowers possible cost to California ratepayers.
Finally, in the field of energy, the production of heavy crude oil in Kern County as well as the development of off-shore oil production where environmentally sound will increase California's daily production of crude oil by at least 500,000 barrels per day in the 1980's. It is imperative that we find a safe environmentally secure method of transporting this additional oil to market. Consequently, I am supporting a full-scale study of a potential for additional crude economical and environmentally sensitive methods of transporting this additional oil within California's boundaries and it should also determine the feasibility of state participation in the construction and management of any recommended pipelines.
By the late 1980's, a State tariff on the daily flow of the 500,000 barrels of crude oil per day could result in up to one million dollars per day in State revenues for the development of alternative energy in this state. In the face of rising energy costs and uncertain energy supplies, it is essential that we finance alternative, efficient modes of transportation.
I congratulate you for the passage last summer of Senate Bill 620 which, coupled with the budget I am submitting this year, represents a four-fold increase in mass transportation over two years. An increase from 46 million to 192 million. My administration will be instituting commuter rail service in the Los Angeles and San Francisco area. Funds are also included in the proposed budget to continue an approved commuter rail services in the Bay area as well as improve existing Amtrak inter-city services, initiate new services and to extend the highly successful San Diego to Los Angeles rail service to Santa Barbara. While the steps we have taken are a good beginning, we have to go further. I propose that Article XIX of the California Constitution be amended to allow highway funds to be used for the construction of transportation alternatives.
Legislation which was sponsored and signed into laws last year established the Renewable Resources Investment Fund. This heralded a new approach toward the sustainment of our natural systems. The prosperity of this state is irrevocably linked to the preservation and enhancement of our environmental assets. I strongly support the passage of the Park Lands and Renewable Resources Bond Act currently before you. Our best efforts cannot stop there. It must go to the people and we need to join in assuring its passage. Investment in our future will be vital to the economic health of generations that follow us. Some parts of the world recognize very well this principal. For example, In Iraq, oil revenues are being used to drain lands for agriculture that were poisoned by salt during the decline of the Mesopotamian civilization. In Saudi Arabia, oil revenues are invested in greenhouses, solar energy and tree planting. We will only harvest California's oil once. What will we do with the products of that harvest? The most sensible option is to use the revenues from the exploitation of non-renewable resources to ensure the long term productivity of our natural systems. I believe California should adopt the policy that revenues derived from the non-renewable resources should be invested in renewable resources. For that reason I am proposing the creation of an energy resources fund so that a portion of the additional tidelands revenue can be targeted for renewable resource projects to supplement California's self-sufficiency and direct our dependence away from non-renewable resources.
I also urge the Legislature to pass Senate Bill 200 which will ensure the future environmental quality of the Delta and the San Francisco Bay in conjunction with the Peripheral Canal. While assuring an adequate water supply for California's important agricultural and urban needs, it also contains guarantees for Delta water quality, restoration of salmon and striped bass fisheries to historic levels and provides for a conservation reclamation and ground water storage by the State Water Project. The bill also assures protection of northern California water interests. Without this bill the Delta faces continued environmental degradation and the loss of its salmon and striped bass fisheries.
A growing threat to our natural systems and the health of our entire society is the increasing use of toxic materials. There has been an explosion of over 70,000 different chemicals in use in this industrial society, without adequate pre-testing for hazards, and it's resulted in a serious pollution of our air, our water and our work places. Workers have been sterilized, ground water polluted with cancer-causing substances and highways closed because of chemical spills. We have received wide recognition for having the best toxic control programs in the country. But we have to do more. We are told by Health Education and Welfare that only one substance, asbestos, will take over a million American lives. It is time we invested in the future. For that reason I propose a total of thirty budgetary and legislative proposals which will more than double the current state effort to eliminate these hazards and substantially strengthen our hand, in dealing with corporate scofflaws who irresponsibly handled toxic materials and thereby endanger the public. These legislative and budgetary proposals would step up enforcement of our hazardous wastes, transportation safety and health occupational laws.
In addition, I propose work on new technologies to provide alternatives which can avoid the further pollution of our water and land. I also want to comment very briefly and support a substantial increase in the Department of Food and Agriculture's budget for the regulation of pesticide use. The Department's new regulations issued after months of public discussion provide a balanced and firm framework for using pesticides in a way that will maximize their productive potential while minimizing the environmental and health hazards that they cause. We must assure both plentiful and safe food on our tables through the development of safe and effective pest control methods.
The budget that I propose will implement the Department's regulations and reflects the commitment of this state to a sound and clean environment.
Turning from our natural resources to California's human assets, our people, I will within the new few weeks establish by executive order a council on wellness and physical fitness to help promote mental and physical health among Californians. The council will provide a focal point within State government for programs associated with wellness and physical fitness. It will assist schools and business and industry. In addition to that, this administration has a continuing commitment to respond to the needs of the elderly, the disabled and the economically disadvantaged. To that end, and in view of the high rates of inflation, my budget this year is supporting a full cost of living increase for AFDC and SSI recipients to help them cope with serious ravages of inflation. I will also seek funding to continue the support for independent living centers for the disabled. I will support legislation designed to make these centers an ongoing state funded program. I will continue to expand multi-purpose Senior Citizens Centers and adult day health care programs designed to provide necessary services for the elderly while maintaining them in their homes. This will help prevent premature institutionalization of the elderly.
Rising hospital costs remain a problem despite voluntary efforts in the private sector to control costs. I will continue to push for important changes to limit the rate of growth in hospital costs but I have already augmented the Department of Health Services' budget to provide staffing to immediately develop regulations which limit the rate of increase in hospital costs under Medi-Cal. I will also support initiatives and administrative changes designed to increase enrollment in pre-aid health plans. Organize health systems such as pre-paid health plans with proper incentives and proper controls can be quite effective in controlling costs.
In the area of education, we have proposed funds to expand the master plan for special education to 45 percent of the disadvantaged students in the kindergarten through the 12th grade. I am also proposing additional planning funds under the school improvement program for grades 7 through 12. This agenda is a long one. Many of the ideas have emerged from the Legislature, others from members of my administration. I see this not as the product of one person, as the ego trip of one legislator or one governor or one administrative agency.
We have a challenge to work together. The party structure is weaker. The unity of the Legislature, the cooperation with the Executive Branch, all of these things are frayed, strained and yet as we look out at our people we find half of them are not voting. Of the half who do I would suspect that another half are skeptical, are cynical or our processes. The number of democracies in this world is declining at a very alarming rate. And all of us, whatever our background, whatever our ambitions, whatever our political party, have a very sacred trust. This very fragile, difficult and often frustrating and inefficient system is the finest mechanism of democratic process that we have in the world and while we all pursue our paths in the next several months, I would just close and ask with this one thought that we at times try to subordinate our own ambition and our own individual egos to a much larger purpose. And that much larger purpose is the securing of this state, and the securing of our country. I refer to myself, but I also refer to the Senators, to the Assemblymen, to all of us. There is much ambition in the hearts of this room, but there is much trouble in the people of this land. And if we don't rise above it, what we see today will look quite good in the years to follow. We are in a crisis and while we may not have the tools at our hands to solve all of the global problems, we have a little piece of the problem that we can chip away at and restore at least a modest degree of confidence. If 1980 produces that, I think we can go back to our constituents with a wide measure of pride. Thank you very much.