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By Timur Abimanyu, SH.

MH

MIRED IN CRISIS, STATES KICK OFF LAGISLATIVE YEAR

SACRAMENTO, Calif. – Governors in California, New York and Kentucky spelled


out ambitious plans to create jobs and deal with a crippling financial crisis Wednesday
at a time when states around the country are opening their legislative sessions under an
ominous cloud of economic uncertainty.

Gov. Arnold Schwarzenegger in California and Gov. David Paterson in New York
delivered state of the state addresses that tried to strike upbeat notes for the future
while acknowledging that they are in the midst of deep fiscal problems. In Kentucky,
Gov. Steve Beshear said he would "refuse to use this recession as an excuse not to
move forward."Legislative sessions got under way in other states, with lawmakers
arriving at capitols in a more subdued mood than usual on account of the economy. In
Nebraska, there was a call for a shortened session to save money.

The pain is being felt in most states as lawmakers begin sessions this month. The
Center on Budget and Policy Priorities says state budget shortfalls are likely to reach a
staggering $180 billion for the coming fiscal year— a crunch that means new tolls to
fund road projects, more prisoners being released early to trim corrections budgets,
and possibly the end of welfare programs in some states.In his final State of the State
speech, Schwarzenegger sought to look beyond his often-rocky tenure and tell
lawmakers they must act boldly to reform the state's tax and budgeting systems so
future leaders do not find themselves in similar dire circumstances. He noted sweeping
changes to the tax system recommended by a bipartisan commission last year.

He also outlined plans to train 140,000 workers and create 100,000 jobs in a state with
an unemployment rate of more than 12 percent — but acknowledged the need for
more cuts in the face of a $20 billion budget deficit.In warning that the months ahead
will not be easy, Schwarzenegger conceded that some areas of state government had
been cut too far, pointing to K-12 and higher education. He said he would seek to
protect education funding, calling it an embarrassment for California that the state
spends far more on its prison system than on its universities. Prisons account for
roughly 11 percent of general fund spending, compared to 7.5 percent for higher
education.

"First, as bitter as the words are in my mouth, we face additional cuts. We know what
that means. We know the pain it entails," he told lawmakers packed into the Assembly
chamber as his wife, first lady Maria Shriver, looked on. "What can we say at this
point except the truth? That we have no choice."In New York, Paterson addressed
budget deficits in his speech by proposing the merging of state agencies and public
tracking of agency performance. He asked Lt. Gov. Richard Ravitch to take the lead
on a four-year recovery plan, proposed a constitutional spending cap and promised to
use his executive authority to veto or delay spending to keep the government solvent.

In a speech critical to improving his standing in the polls, the Democrat called for
curbing the state's overspending and for creating jobs, in part by renewing New York's
once-mighty manufacturing sector. Among his proposals is the acquisition and
renewal of abandoned factories for sale back to the private sector.Paterson also
focused considerably on ethics reform. He said he would introduce ethics legislation to
limit the influence of special interests and wants a new independent agency to enforce
ethics laws. He proposed term limits for elected officials as well as requiring them to
disclose their outside business ties.

"Outside influences and inside decay have bred cynicism and scorn in the people we
represent," the governor said, adding that he expected pushback against his proposals.
"Prosperity hides all manner of sin, but no longer."Kentucky's Gov. Beshear said that
his top priority remained job creation and retention. His state has lost more than
113,000 jobs since the recession began two years ago, and has a jobless rate of 10.6
percent.

"In these troubled times, Kentuckians need hope and they need help," he said.

In Nebraska, lawmakers began their legislative session mired in financial troubles, two
months after they slashed $334 million from the two-year budget. Fewer bills than
normal were expected to be introduced, and Gov. Dave Heineman even suggested it
might be appropriate for lawmakers to cut the current session short to help save
money.The majority of state senators who responded to an annual, pre-session survey
from The Associated Press said that more budget cuts may be in order during the
session to help prepare for the next, two-year budget cycle that begins in mid-2011.

In Missouri, lawmakers convened their session also besieged by budget woes and
perceptions of corruption. They pledged to clean up their image and keep government
running without raising taxes. The challenges facing lawmakers contributed to a
downbeat mood as the House and Senate each gaveled into session around noon.

Schwarzenegger's pledge to avoid cuts in education drew praise from some


lawmakers.

Democratic state Sen. Christine Kehoe said she appreciated the governor's upbeat
message and supported the idea of keeping education and higher education whole. But
she worried about Schwarzenegger's ability to follow through on his promise, saying
his administration has been "short on results."California's tax revenue is not expected
to rebound for another three or four years. Even when it does, the boom-and-bust cycle
will continue without sweeping reform, Schwarzenegger said."If I had hesitated to
attempt something because it was too hard, I'd still be yodeling in Austria," he said.