EDITORIAL THE WAY FORWARD SCHWARZENEGGER CHARTS THE COURSE FOR CALIFORNIA'S RECOVERY.

AS Gov. Arnold Schwarzenegger reached the podium in the state Assembly chamber, on his way to deliver his first State of the State address, it was clear Californians got what they voted for in last year's recall election:

A leader.

The governor is confident about the future of California as ``an empire of aspirations,'' while realistic about its problems. The key, according to Schwarzenegger, is growth or, as he put it, ``Jobs, jobs, jobs - the more jobs, the better.''

The good news is that growth is on the horizon, with almost every national economic indicator pointing toward recovery. The bad news is that while the nation's prospects look good, California's lag behind.

That's because over the years California has created an over-regulated, overtaxed and overly expensive business climate that's driven corporations and their jobs outside the state. For that reason, Schwarzenegger insists on fixing California's badly broken workers' compensation system and refuses to increase taxes.

``We do not have a tax crisis,'' Schwarzenegger said. ``We do not have a budget crisis. We have a spending crisis.''

That's an assessment the state's Democratic leaders don't seem to understand, but Schwarzenegger has drawn the line: They must be part of the solution, or he will go after them as part of the problem. After five years of spending California to near-bankruptcy and making it a junk bond state, they lack the credibility to ask taxpayers for more money. And unless they step forward with concrete proposals of their own, the public has little reason to take their potshots at the governor seriously.

Besides, Schwarzenegger has offered them a tremendous opportunity to work with him. As he concluded his speech, he stressed the need to end the partisanship that has strangled state government. Schwarzenegger seems to genuinely seek bipartisan cooperation, and Democrats would be fools to turn him down.

Because if bipartisanship is Schwarzenegger's carrot, his appeal to the people is his stick.

If legislators won't work with him, he can always go over their heads by seeking a public referendum. He promised to do as much if the Legislature fails to pass meaningful workers' comp reform by March 1, and, along with Democratic Controller Steve Westly, he has launched a campaign to bolster public support for his fiscal-recovery plan.

That's the heart of Schwarzenegger's State of the State - an invitation backed up by a threat. The governor seems willing to compromise on politics, but not on California's well-being.

That's what leaders do, and, at long last, this state has one.