Lt. Gov. McCarthy, Mr. Speaker pro Tempore, Mr. President pro Tempore, Constitutional Officers, Members of the Legislature, thank you and Happy New Year ...
I include in my greeting and new year's wish our friend, the distinguished Speaker of the Assembly. He's not with us today because of the death of his beloved mother, Mrs. Minnie Collins Boyd. Willie, you have our deepest sympathies. We know you made your mother proud.
The Speaker will return to a new Legislature facing an old challenge—to turn this state around.
California needs our leadership as never before ... because California is in crisis. We have lost 800,000 jobs. At least one in ten Californians is out of work.
As a result, state government lacks the revenues and cannot pay ... can not pay ... for all the increased services we are asked to provide.
Economists say America's recession is ending.
But we know better. We know that Californians are still losing their jobs, or live in fear of losing their jobs. The end of recession will come not just when we start to create more jobs than we lose. The recession will end only when people can once again feel secure and confident about the future.
There's no time to waste. There's no time for politics as usual. There's no time for partisan fingerpointing, and no time for self-pity.
You and I have little time to make a difference for California. Let's get the job done. But let's begin by showing the world all that is right and good about California ...
What kind of people are we?
We're the kind of people who, in the midst of a terrible recession at home, risk our lives to restore hope in a forsaken land called Somalia.
We're the people who made the first movies, the first home computers, designed the Space Shuttle and gave America the tools for victory in the Cold War.
We face hard times now, but we can change that. We can make our own future. California has courage equal to any challenge. We have the daring, we have the vision and we have the talent to change our luck.
Last spring, we saw one of America's great cities in flames, the casualty of violence and bitterness, of grief and economic devastation that linger with us yet ...
We saw merchants, many of them newcomers struggling to make it in America, stoutly defend their stores and their families.
We saw the very worst bring out the very best.
We saw Angelenos with guts enough to wade through violent crowds, risking their very lives to save total strangers.
We saw the Rev. Bennie Newton, an African-American minister throw his body over a severely beaten Latino man and cry out: Kill him and you'll have to kill me too.
California has other kinds of heroes, those whose courage or vision is on display not in a single dramatic moment, but every day of their working lives. Michael Stennis saw the riots threaten not his life, but his life's work.
For 35 years, the Stennis family's chain of restaurants has been a landmark of South-Central L.A. But on one tragic night in April, seven of their stores were vandalized and looted. Two others were burned to the ground.
But Michael Stennis isn't giving up. He could rebuild anywhere. But he's doing it right in South-Central L.A. And he's continuing to rebuild his community with scholarships for neighborhood kids.
The Rev. Newton had the courage to put himself on the line. Michael Stennis had the courage to work for a community comeback.
If we are to lead, you and I must follow their example. It's time to put ourselves on the line for California. It's time for us to set the stage for the great California Comeback ...
We can no longer afford to be a collection of disparate, rival interest groups. We must all be Californians first.
We must work together to keep a solemn promise, an especially American obligation.
I first learned it from my father, Jim Wilson. He believes there is an unspoken bond between the generations. It's the promise parents make to their children to leave them a world of greater opportunity.
You and I have increased the number of children receiving early mental health counseling five-fold. We've doubled the number of four-year-olds in pre-school. We've helped thousands of low-income, uninsured pregnant women and their newborns receive prenatal and well-baby care. And our Healthy Start program will help 60,000 kids this year to overcome inadequate nutrition, and a host of mental and physical problems.
But, my fellow Californians, we're the first generation in American history in danger of breaking that special promise to our children.
We'll never be able to continue to do right by them, to keep our word, to save our schools or protect the public, if we do not restore California as the best place in America to live and work.
Today I want to speak exclusively of jobs; because along with the personal cost of being out of work comes a public cost. People who are out of work can't pay taxes. And as a result—and yes, I repeat—state government cannot pay for the increased services we're asked to provide.
In the weeks ahead, I'll be travelling up and down our state to detail my vision of how California can better educate our children and make our streets safer. But today I want to speak only of jobs.
After all, it takes three jobs just to pay the cost of sending one undergraduate to the University of California.
It takes 22 jobs to support one elementary school classroom.
It takes five jobs to keep one additional dangerous criminal in prison.
And it takes almost a quarter-of-a-million jobs just to meet this year's growth—just the growth mind you—in Medi-Cal recipients.
All public programs begin not in this Chamber, but in the sweat and toil of working men and women. Jobs make all else possible. That's why we must rebuild California ... job ... by job...by job.
To do that, California must start easing the burden on job-creators. You can't have employees without employers. You can't love jobs and hate job-creators.
All through the presidential campaign, we heard that America needs jobs, jobs, and more jobs. But California will never get our share if we greet job-creators with taxes, taxes and more taxes.
After all, California is in sharp competition with other states and other nations that tax a lot less than we do. That's why I insisted we hold the line against taxes last year. It meant tough, painful choices, but the alternative was to lose even more jobs.
We must hold the line again. But if we are to create new jobs, we'll have to do more than reject higher taxes. If we are to create jobs, we'll have to cut taxes ...
A temporary half-cent sales tax is set to expire on June 30th. Some say government can't afford to let that happen. I say we can't afford to let more Californians be thrown out of work. Higher California taxes simply mean fewer California jobs.
So I asked this new Legislature to create new jobs — to put Californians back to work by enacting tax incentives and other changes to create jobs.
First, California is the great incubator of ideas. After all, Hewlett-Packard was once just Bill Hewlett and Dave Packard working out of a garage. So I ask you to invest in the jobs of the future by enhancing the tax credit for the research and development of new technologies. And I ask you to make it permanent.
Small business led us out of the last recession by creating three-quarters of all job growth. Small business will lead us out of this recession too. So second, I ask you to pass a small business investment tax credit to encourage more people to invest in these small, but powerful, engines of job growth.
Third, for small employers to grow large, they need time to become profitable. Too many don't survive their heavy start-up costs long enough to provide the jobs they should. To keep them in business through those tough, early times, we should keep the bargain we made two years ago and reinstitute the net operating loss carry-forward.
We can do even more.
I ask you to expand the loan guarantee program for small business men and women. Our goal should be to provide up to $300 million in credit for these job-creating entrepreneurs.
And I ask you to work with me to restructure our state's competitive technology program. We must compete for federal defense conversion funds. These are resources California needs as we move from building weapons for global military competition to building products for global economic competition.
We must consider doing even more to create jobs. After all, we lead a nation-state possessing the eighth largest economy in the world. California has a larger gross domestic product and about one-fifth more people than Canada. California abounds in economic expertise. I think it's time for California to benefit from the wisdom of a Council of Economic Policy Advisers.
I'll soon name the full membership of this Council. But today, I'm proud to announce that former Secretary of the Treasury and former Secretary of State George Schultz has agreed to serve as our chairman.
One of the things we must do is encourage the growth of manufacturing jobs in California. Even in a high-tech information age, manufacturing will continue to be critical to our economic health. An earnings tax credit or sales tax exemption for the purchase of manufacturing equipment would spur investment in jobs for California.
This is one of the first questions I want to put before this new Council: Whether and how California can offer this incentive in so challenging a time, a time of both budget gap and painfully high unemployment.
Ninety-eight percent of California employers have 100 or fewer employees. We all know that California businesses are fleeing to other states that offer a lesser cost of doing business. But all too many of these small business employers don't have the option to leave. Instead, when they finally decide they just can't make a go of it in California, they simply—sadly—close their doors. They go out of business, putting proud men and women on the street and adding a dimension of individual human suffering to the public cost of unemployment.
We moved closer last year but failed to reform a corrupt, costly and terribly unfair system of workers' compensation. People like Mike Stennis will tell you that he can survive the L.A. riots ... but that California's fraud-ridden system of workers' compensation may do him in, along with the workers who depend on him. Let's reform this corrupt system. Let's get the job done.
On New Year's Day, Gayle and I were invited by friends to join a family gathering. Their son-in-law, Fred Silva, is a superb craftsman who owns a business that puts down wood flooring.
After three years as a small employer, Fred has decided to call it quits. Though he's never had a claim filed against him, his workers' compensation costs have become unaffordable. He'll still take jobs he can do by himself. But he just can't afford to be an employer any longer. He just can't make it.
Fred's wife Donna told me: "It's just not fair to our employees," putting into words the pain on her husband's face.
She's right. It makes no sense that workers' comp—a system intended to protect injured workers and their families—is today hurting many more workers than it helps. It's stealing from them. It's stealing their jobs—jobs we all need both to put food on this table and to take pride and dignity from doing something that has value each day.
It's just not fair.
Last year, the Council on California Competitiveness accused state and local governments of becoming "job—killing machine." John Vasoncellos, you and your ADEPT report reached the same conclusions. Those of you on both sides of the aisle seem to agree on the urgent need for a cure. What remains is for us to take action to get the job done.
We all agree that government must stop being an adversary to job-creators and start being a partner.
We all agree that regulations stifle growth. And yet we have a maze of rules and regulations that only high-priced lawyers can navigate.
California must not be a passive victim of recession.
When Los Angeles was ravaged by riots, we created a revitalization zone ... a place where rules and regulations take a back seat to jobs and opportunity. But today we need a revitalization plan not just for South-Central, but for all of L.A.
And not just for L.A., but for all of California ... for the small business owner In the San Fernando Valley, the farmer in the Central Valley and the inventor in the Silicon Valley.
Our economy is drowning in a sea of red-tape. That's why I've ordered every agency in state government to streamline policies and regulations, to create jobs and to get the job done.
When my Administration hears of a major California employer who is considering leaving our state, we unleash a strike force, modeled after what is known in the aerospace industry as a "Red Team."
These teams, drawn from leaders in the public and private sector, cut through the usual bureaucratic procedures, fix problems, and save jobs. In short, they do what's needed to let California and California companies compete and win jobs. They get the job done ... if they can't, I want them to call me or call Julie Wright, our new Secretary of Trade and Commerce.
But saving the jobs of the present isn't enough. We must look ahead to the industries and the jobs of the future, from biotechnology to the many offspring of defense conversion.
We must take advantage of fiber-optics, a new technology that can link classroom, office, library, and home; one that can free our highways of congestion and bring more jobs to California.
I asked the Public Utilities Commission to develop and implement new policies. And I asked them to report to us by September 1 on how California can take full advantage of this new technology, so we may take action this year.
Let me share with you another example of California's enormous potential as a world leader in technology.
Environmental technology is already a $25-billion-a-year business in our state. Cleaning up environmental degradation throughout Europe and Asia is a gigantic effort worth hundreds of billions of dollars more and tens of thousands of more jobs.
That's why I have directed CAL-EPA and the Trade and Commerce Agency to work as a partner with California business, to assist in marketing our environmental technology around the world—and bring more jobs to California.
In fact, we must compete even more aggressively for California's share of world markets of all kinds. We have to build on the success of our foreign trade offices, which now will function under the aegis of the newly created California Trade and Commerce Agency.
Well over one million Californians already owe their jobs to world trade. California export trade is booming, providing a silver lining to the gray clouds of recession. We've just begun to fight for California's market share. I respectfully but strongly urge President-elect Clinton to follow his instincts and let us benefit from the North American Free Trade Agreement. If ratified by Congress, it promises vast new markets and new jobs on both sides of the border.
Few challenges to our future are as great as those posed by our relentless population growth.
If we are to bequeath to our children a robust economy and a healthy environment, we must strategically shape our growth. I will shortly release a plan, two years in the making, that will do just that.
And I invite the leaders of the Legislature and all who have drafted bills on growth management to sit down with me, to compare our plans, and then to take action.
We must shape our future, not suffer it.
One way our generation is failing to keep its promise to the next relates to shelter and has two profound impacts. The first is to deny the prospect of affordable housing to our children—many will not live in homes as good as those they grew up in. The second is to deny construction workers jobs in building homes. I refuse to accept either.
To assist both first-time homebuyers throughout California and the residential construction industry, I have asked the California Housing Finance Agency to initiate and insure home loans up to ninety-seven percent of the purchase price. Present FHA mortgage limits fail to reflect the reality of California's much higher home prices. This effectively denies too many young California families the chance for home ownership.
I've also asked this agency to address the critical need for housing construction financing, to become a housing partner.
Government could stand to be more of a partner in almost every area. It's time to remember that government is meant to serve the people, not the other way around.
To make government more responsive to the people, I will issue an executive order establishing a Task Force on Quality Government.
We've got to streamline government, eliminate bureaucratic delay, and begin treating the taxpayer like a customer, to focus on results, not process. It's our job to make government fit the people—not make people fit the government.
I've talked this afternoon about how we can get the job done in California. There are many Californians who are impatient for change. They've already tried to get the job done by undertaking the arduous task of bringing initiatives to the ballot. To be blunt, these folks are more than skeptical. Based on years of evidence, they just don't believe we are capable of enacting even the most obviously needed reforms.
Well, friends, there's a way to prove the skeptics wrong: We can enact the reforms the people need and deserve.
I'll put California employers and California workers up against anybody.
California CAN have a magnificent future—provided you and I in this Chamber work together to undo and cure all the costs, delays burdens, regulations, taxes and lawsuits ... that kills jobs in California.
To make these desperately needed changes, we must work together. Two years ago in my first State of the State message, I said to you in the Legislature that if we do the people's business and make state government work—we'll find there's ample credit to share.
I can't do it without you. And you can't do it without me. But together we can get the job done.
Let's not require the people to resort to the initiative to do what they elected us to do.
If together we make those changes, California will have the magnificent future it deserves.
It will be America's premiere export state.
It will be the cutting edge in high-tech innovation.
It will produce today's jobs for us ... and tomorrow's jobs for our children ... enough jobs to replace austerity with prosperity ... prosperity that will pay for the kind of education, public safety and children's services we all want.
It will allow us to keep that special promise to bequeath to our children a California of ever-greater opportunity.
That's our task—to make that change.
Together, let's begin today to keep our promise. Let's get the job done. Let the great California Comeback begin today. Right here in this Chamber.