Click here to view images from the Governors visit to the chamber.

Governor Arnold Schwarzenegger met with a group of Northern California Chamber executives and local businesses leaders at the Chamber on Tuesday to make the case for the package of budget-reform measures that are the subject of a special May 19 election in California.

Acknowledging that critics have described the shortcomings of 1A, 1B, 1C, 1D, 1E and 1F, Schwarzenegger good-naturedly pointed out that “perfection never materializes” and called the propositions good, pragmatic, “middle-of-the-road” measures that are essential to stabilizing state spending in the future and getting the state through “these unprecedented times.”

Passage of the full set of measures will go a long way to restoring the confidence of the financial markets in California, said Schwarzenegger. If the measures fail to pass as a package, California stands to lose more than $20 billion in funding beginning immediately and over the next four years, which will lead to more drastic cuts to schools, infrastructure, public safety and health care – and/or for more tax increases.

“California has a great economy,” said Schwarzenegger. “We have great companies, great workers, but we are operating with a broken budget system.” It’s a system, the governor explained, that is badly flawed and in urgent need of reform.

Saying that he was elected to reform government but stymied by special interests and legislators on both sides of the aisle with agendas to fund, Schwarzenegger acknowledged that the current economic crisis created the opportunity to affect reforms that are long overdue.

“California has not had a ‘rainy day’ fund since the days of Governor Earl Warren,” Schwarzenegger said. (Warren was governor from 1943-1953.)

Prop 1A: Rainy Day Budget Stabilization & Accountability Act. Prop 1A forces the legislature to put money away in good years so it is available in bad years. The state would be required to direct 3 percent of General Fund revenues into a “rainy day” budget stabilization fund each year (increasing the rainy day fund to 12.5 percent of General Fund revenues) and preventing unsustainable funding spending of one-time spikes in revenue. Money can only be taken out of the fund when there is a budget deficit or an emergency. 1A ensures that, each year, the state budget is consistent with state revenue trends over the past 10 years, which will prevent unsustainable spending of one-time spikes in revenue, which can lead to big deficits when revenues drop.

“If Prop 1A had been in place 10 years ago, the rainy day reserve would have allowed us to avoid $9 billion in tax increases and deep cuts that were passed as part of this year’s budget,” said Schwarzenegger, adding, “If these measures are not passed – all of them – it will be disastrous.”

Prop 1B: Protect Education Funding. The measure lays out a responsible timeline for paying back the schools more than $9 billion in cuts that were required to get the state through these unprecedented economic times.

Prop 1C: Lottery Modernization Act. The state lottery has not been changed since it was first put into place by voters in 1984. Prop 1C will modernize the lottery structure by upgrading games and operations to reflect the best practices of other state lotteries – and is expected to bring in an additional $5 billion in revenues without raising taxes. Schwarzenegger acknowledged that the lottery is controversial, but added, “I would rather go for lottery money than penalize people who are in need of services.”

Prop 1D: Children’s Services Funding. The measure temporarily redirects a portion of excess funds from a voter-approved tobacco tax – some $2.5 billion – to pay for child health and social services. Prop 1D protects dollars for existing programs funded through the tobacco tax and will allow the state to avoid deeper cuts to children’s health and social services.

Prop 1E: Mental Health Funding. Prop 1E temporarily redirects a portion of surplus, unused funds from the Mental Health Services Act to fund children’s health programs that are at risk of elimination due to the budget crisis.

Prop 1F: Salary Freeze for Legislators during Budget Deficits. The measure prohibits legislators, the governor and other state politicians from getting pay raises whenever California is running a budget deficit.

Economic Stimulus. The governor also talked about the efficiencies his administration has put into place to deal with the current crisis, including work furloughs and consolidation of services such as the state’s information technology functions and energy departments. In addition, he briefly described ways the state is benefitting from economic stimulus dollars. Because of pre-planning, the state has a number of infrastructure projects that are “ready to go” – including high-speed rail and water projects – that are expected to receive some $42 billion in federal funding to rebuild California.

Schwarzenegger concluded his remarks on a high note, saying, “California will be back. America will be back. We are seeing signs that the economy is beginning to turn…We need to get people to believe again.”

Speaker of the House Nancy Pelosi welcomed the San Francisco delgation into her private reception room to discuss what she sees as priorities — health care cost containment and universal access being at the top of the list, along with transportation and investment in science and technology — for reviving the economy and creating jobs.

The Speaker graciously greeted many old friends from San Francisco, and made a point of individually welcoming each delegate. The message was similar to what the delegation has heard from the city’s lobbyists and other legislators: at a time of tough competition for every dollar, it is essential to work together and present a united front.

AT&T’s Loretta Walker thanked the Speaker and presented her with a Cable Car filled with her favorite Ghirardelli chocolates!

At a joint California Legislative luncheon, San Francisco business, labor and city leaders met with legislators from throught the state for an update on their priorities — and to deliver the message that California is united in seeking funding from the stimulus package to build and improve roads, transit, ports and other infrastructure projects that will bring jobs to California.

SF Chamber President & CEO Steve Falk added a light tone to the gathering — with loud applause from San Francisco delegates — when he said he was in DC representing “Everyone’s Favorite City!”

Board of Supervisors President David Chiu addressed the standing-room only crowd of business leaders and legislators to stress the importance of northern and southern California coming
together with a unified message.

Congresswoman Jackie Speier urged Californians to realize they are viewed in DC as a “donor” state — and encouraged those present to get together and make demands for California seeing a return on its investment in the nationala treasury.

The Chamber delegation met with city lobbyist Eve O’Toole who emphasized the importance of delivering a unified message to legislators if San Francisco is to be competitive in securing stimulus package dollars. O’Toole talked about the intense pressure on infrastructure and transportation funds. Delegates discussed the importance of finding dollars for Doyle Drive and high-speed rail.

In a session at the DC Community Court, delegates heard how Downtown DC has made the streets safer, cleaner and more attractive to residents and visitors. Delegates learned how DC operates its moving drug-free zones to discourage street-level drug trafficking.

In the evening, delegagtes enjoyed a tour of the Newseum and dinner overlooking the Capitol.
Today, Tuesday, we are headed to Capitol Hill to meet with legislators and to make the case for what San Francisco needs from the federal stimulus package. More to come…

What an exciting time this is to visit our nation’s capitol. The promise of “change” made in the 2008 election permeates the air – from economic stimulus plans to tax reform, health-care reform, climate change legislation and education reform.

We are here in DC to explore issues that the District of Columbia is grappling with and that have application to San Francisco: An effective Downtown DC Business Improvement District, long-operating community courts, education reform, homelessness and marketing Greater Washington.

But we are also meeting with congressional and administration leaders to make the case for San Francisco’s, and California’s, fair share of stimulus funding.

Log on daily to follow our progress and add your thoughts.