ARNOLD'S DREAM FOR OUR FUTURE GOVERNOR'S $222 BILLION PUBLIC-WORKS PLAN IS FUNDED MOSTLY BY BONDS, AND NO NEW TAXES.

Byline: Harrison Sheppard and Steve Geissinger Sacramento Bureau

SACRAMENTO - Gov. Arnold Schwarzenegger spelled out a sweeping vision for California's future Thursday, calling for nearly a quarter trillion dollars in spending on schools, highways and ports to brace for a wave of population growth over the next decade that threatens to overwhelm the state's crumbling infrastructure.

Taking a humble, conciliatory tone for his third State of the State address, Schwarzenegger cited the legacy of former Govs. Pat Brown and Ronald Reagan and others dating back decades who invested heavily in public-works projects that set the foundation for future economic growth.

``We must build a California eager to meet the challenges of the 21st century without reluctance or fear,'' Schwarzenegger said of his $222 billion public-works spending plan.

The governor said his Strategic Growth Plan could be rolled out without any new taxes.

The cornerstone is a $68 billion bond issue, to be funded in stages over the next decade, including $25 billion on this year's June or November ballot. It also calls for new user fees and public-private partnerships to generate revenue through toll roads and other projects.

The plan covers everything from building new schools to port infrastructure, freeways, levees, courts and prisons. In its present form, it only mentions a few specific projects, including $350 million for a high-occupancy-vehicle lane on the 405 Freeway.

Schwarzenegger was more contrite in this year's State of the State, following a year in which he aggressively - and ultimately unsuccessfully - campaigned for the government reforms that were launched in his 2005 State of the State. After losing the special election, Schwarzenegger has pledged to work more cooperatively with Democrats.

``I have absorbed my defeat and I have learned my lesson,'' Schwarzenegger said. ``And the people, who always have the last word, sent a clear message - cut the warfare, cool the rhetoric, find common ground and fix the problems together.''

Democratic leaders have already made separate proposals for smaller transportation bonds this year. They said they are willing to work with the governor, but expressed doubt that a large bond could be ready for the June ballot, which would mean legislative action by the end of this month.

Assembly Speaker Fabian Nuez, D-Los Angeles, said he doesn't believe Schwarzenegger will get everything he wants. The proposal, he said, commits state resources too far into the future.

``I have some concerns about making too deep a forecast into the future now and making that big a commitment that would basically tie our hands and our children's hands in the future to make wise decisions about how to spend their money,'' Nuez said.

``I'm not saying no outright, but it doesn't look very promising.''

Senate President Pro Tem Don Perata, D-Oakland, said he was glad to see the governor addressing the transportation issue in a way that he and Nuez have been pursuing for the past year with their own bond proposals.

``However, the governor's proposing a lot more spending than we are,'' Perata said. ``It's unclear how he plans to pay for it.''

Republican legislators had mixed reactions, agreeing the state's infrastructure needs serious investment, but questioning whether the state has the ability to pay for it.

State Sen. Tom McClintock, R-Thousand Oaks, said the state needs to be cautious when taking on new debt. He said he would agree with some new bonding debt if the projects have long-term, statewide use.

``Because the state is already at record levels of debt, with the lowest bond rating of any state in the country, it is extremely important in pursuing these projects to exercise the utmost discipline in the instruments that are used to finance them and the purpose to which these funds are put,'' McClintock said.

Assemblywoman Audra Strickland, R-Moorpark, said she would not support new bonds.

``I don't support any measure that is going to hurt California's families or the economy or jobs,'' Strickland said. ``I think they're perhaps the most expensive way to try to fund government.''

San Fernando Valley leaders cheered word that the San Diego Freeway was on the preliminary project list, enabling the $500 million project to be fully funded, and protecting $130 million in federal funds that could be forfeited if construction doesn't begin by a federal deadline.

``I'm thrilled. The money will be enough to totally complete the northbound lane in that stretch,'' said Allen M. Lawrence, a Valley business executive and member of the California Transportation Commission.

To try to ensure that the state's bond debt does not get too excessive, Schwarzenegger also plans to propose a constitutional amendment fixing a 6 percent cap on the ratio of bond debt to the state budget.

He also put forward several other proposals in his address, including:

--A $4 billion hike in public-school funding next fiscal year, which partially repays money Schwarzenegger borrowed from schools to cope with deficit woes.

--Reversing planned tuition increases in the University of California and California State University systems.

--The first-time full funding of $428 million in additional money for after-school programs under Proposition 49, the ballot measure then-private citizen Schwarzenegger helped pass in 2002.

--Proposing a $1 increase in the state's minimum wage of $6.75 an hour, to take effect in two stages over 18 months.

Political analysts said the governor struck the right tone and picked a subject matter with bipartisan appeal, even if there is disagreement about how to pay for it.

``It was the right message at the right time,'' said Barbara O'Connor of the Center for the Study of Politics and Media in Sacramento. ``It pre- empted Democrats' own agenda.''

``On a rhetorical level, everyone is on the same page. But we'll see the (governor's proposed) budget next week and the devil will be in the details,'' she said.

San Fernando Valley lawmakers said Schwarzenegger's emphasis on infrastructure and growth runs parallel with the Valley's problems, such as overcrowded schools, gridlock and air quality.

Assemblyman Dario Frommer, D-Glendale, who has been working on the prescription drug issue for the past two years, was unimpressed with the governor's call for Congress to allow foreign importation of medication. Frommer has proposed bills - vetoed by Schwarzenegger - that would allow Californians to import drugs from Canada.

``His solution is to call on Congress, but Congress isn't doing anything,'' Frommer said. ``It's almost like he's saying, 'I'm going to blame Congress.'''

Assemblyman Lloyd Levine, D-Van Nuys, supported Schwarzenegger's ``I say build it!'' theme, saying it proved the governor was willing to take on leadership needed to help California grow.

``We have needs in this state,'' he said. ``Anybody who drives in the San Fernando Valley knows that we have needs. If you're going to complain about traffic, then you have to invest in it.''

Assemblyman Paul Koretz, D-West Hollywood, said that without ensuring a steady stream of revenue, Schwarzenegger is pandering to voters who don't want to see an increase in taxes.

``This proposal is halfway to incredible but really isn't there,'' Koretz said. ``I think the cowboys call it 'all hat and no cattle.'''

State Treasurer Phil Angelides, a Democratic gubernatorial candidate who has frequently attacked Schwarzenegger, said the governor has made promises in the past - such as on school funding - that he hasn't kept.

``I am reminded of that old phrase, 'If a man fools you once ...' so I think people need to be wary,'' Angelides said. ``I measure this governor by the harm he's done to the people of California, not just the new script.''

Former Gov. Gray Davis, the man Schwarzenegger helped oust in the recall, attended the speech and said he was glad to see his successor address the state's transportation needs. But he agreed that Schwarzenegger has not done enough for prescription drugs.

``I do want to fault him for not going far enough on prescription drugs. It's great to say they're too high and Americans pay more than anyone else on the planet, but 10 other governors, Republican and Democrat, have found a way to help their citizens buy imported drugs from Canada, directly through the state Web page. We could do the exact same thing in California.''

Staff Writers Susan Abram and Lisa Mascaro contributed to this report.

Harrison Sheppard, [phone]

harrison.sheppard(at)dailynews.com

HIGHLIGHTS

Highlights of the Strategic Growth Plan

$222.6 billion in public works improvements over the next 10 years financed by new revenue including $68 billion in bonds, with $25 billion to be placed before voters in June 2006.

--Transportation/Air quality

$107 billion including:

$350 million to construct HOV lanes on the 405.

$290 million for Los Angeles inter-city rail.

$280 million to build HOV lanes on I-10.

--K-12

$48.2 billion including:

$9.4 billion for new school construction.

$12.1 billion to modernize existing facilities.

$2.4 billion for charter schools.

--Higher education

$11.7 billion including:

$400 million for tele-medicine in UC medical education programs.

$315 million for construction/renovation of UC buildings.

$234 million for construction/renovation of CSU buildings.

$492 million for construction/renovation of community college buildings.

--Flood control/Water supply

$35 billion including:

$6 billion to strengthen levees.

$1.25 billion for new storage facilities.

--Public safety

$17.4 billion including:

Most of the $17.4 billion would be used for new jails and prisons.

$600 million for other public safety projects, including facilities for the Department of Forestry and Fire Protection.

PRIORITY PROJECTS

In anticipation of Gov. Arnold Schwarzenegger's announcement of a massive bond measure to overhaul the state's infrastructure, Los Angeles County officials released a list late last month of 65 priority projects totaling $868 million. Here are highlights:

--$5 million for the Will Rogers State Beach Youth Aquatic Center.

--$5 million for the San Gabriel River Discovery Center and $22 million for San Gabriel River corridor projects.

--$17 million in Hollywood Bowl renovations and $7.5 million in John Anson Ford Theatre renovations.

--$6 million for the Acton Sports Complex, $8 million for Agua Dulce park acquisition, $15 million for the Castaic Lake Area Aquatics Complex and $18 million for the Castaic Lake Recreation Area Youth Camp/RV Campgrounds.

--$10 million for the San Gabriel Valley Intelligent Transportation System.

--$72.1 million for the Antelope Valley Recycled Water System.

--$23.5 million for the Sun Valley watershed feasibility study, power-line easement project, steam plant project and watershed Strathern Pit project.

CAPTION(S):

photo, 2 boxes

Photo:

(color) ``We must build a California eager to meet the challenges of the 21st century without reluctance or fear,'' Gov. Arnold Schwarzenegger said of his $222 billion public-works spending plan.

Rich Pedroncelli/Associated Press

Box:

(1) HIGHLIGHTS (see text)

(2) PRIORITY PROJECTS (see text)