GOVERNOR'S STATE OF THE STATE ADDRESS `WE MUST ACT NOW' SCHWARZENEGGER STRESSES ENVIRONMENT, INFRASTRUCTURE.

Byline: KATE FOLMAR and HARRISON SHEPPARD MediaNews Sacramento Bureau

SACRAMENTO -- Pushing an aggressive agenda for his second term, Gov. Arnold Schwarzenegger on Tuesday called for a first-in-the-nation standard to reduce greenhouse-gas emissions from motor vehicles and proposed even more borrowing to build new classrooms, prisons and dams.

In his annual State of the State address, delivered to a joint session of the Legislature, the Republican governor called for legislators to value action over partisan politics.

And he said he hopes to continue notching successes like those of 2006 -- even while offering something for almost everyone to desire and despise.

``For too long, California has just stared at this mountain of the future,'' said Schwarzenegger, a native of Alpine Austria.

``We couldn't climb it because our current problems blocked the path. We couldn't climb it because it was politically too steep. Working together, we can scale that mountain.''

At the same time he offered up proposals that are likely to ignite partisan debate.

He continued to buck the GOP establishment with his efforts to combat global warming and his desire to insure all Californians by placing new burdens on employers and insurers.

He tweaked Democrats with a proposal to spend $4 billion on construction of two new reservoirs north of Sacramento and east of Fresno. Those can go nowhere without support from skeptical majority Democrats.

Continuing last year's $42 billion borrowing binge, Schwarzenegger said he'll seek authorization for an additional $43 billion in bonds in 2008 and 2010 -- much of it for prisons, courts and dams, which lawmakers excised from last year's plan. The remaining $23 billion would be devoted to California's public schools and universities.

This is what Schwarzenegger meant by calling for a ``post-partisan'' era, said Republican political consultant Dan Schnur.

``There are two ways to be post-partisan,'' he said. ``One is to get nobody mad and get nothing done. The other way is to get people on both sides angry at one point or another and have them supporting you at another point.''

Wearing black Vans sneakers with his navy business suit as he recovers from a badly fractured femur caused by a skiing accident, Schwarzenegger lacked some of his usual verve during the 20-minute speech.

But he outlined plans to act with gusto in an executive order that requires a 10 percent reduction in the carbon content of all passenger vehicle fuels sold in California by 2020.

Details must still be worked out, but administration officials said the standard would apply to all gasoline refiners, and could be met if they increased the amount of ethanol in gasoline from the current 6 percent to 10 percent.

Fuel goals praised

Other measures also would work, they said, including producing more hydrogen for fuel-cell vehicles and natural gas for natural-gas vehicles. The administration said a carbon-trading system also will be part of the regulations, adding that the goal is to keep the rule flexible so the oil industry can find the most cost-effective solution.

``Our cars have been running on dirty fuel for too long,'' Schwarzenegger said. ``California has the muscle to bring about such change. I say use it.''

Environmentalists praised the move. They said they hoped it will spread to other states and Congress, as many prior California environmental rules have. And they said they hoped it will spur investment in clean fuels technology.

Assemblyman Michael Feuer, D-West Hollywood, who has proposed a bill to require that half the cars sold in California run on clean alternative fuels by 2012, praised the governor's plan and said it was compatible with his own bill. He said he is looking forward to bipartisan work on the issue.

``I'm very pleased to hear the governor's take on the transformation of our fuel supply,'' Feuer said.

Joe Sparano, president of the Western States Petroleum Association, said the plan was based on ``laudable goals,'' and that he liked its flexibility, although many questions remain.

California consumes 16 billion gallons of gasoline a year, and 1 billion gallons of ethanol already. Because California doesn't grow corn, nearly all of its ethanol is imported from the Midwest, Sparano noted.

The key to keeping gas prices low under the new rule will be for California entrepreneurs to devise new, cheaper and more-energy-efficient ways of making so-called ``cellulosic'' ethanol from switchgrass or other plants, he said.

But Republican lawmakers are skeptical of the governor's plan, feeling it will harm the state's economy.

``Unique fuels for California traditionally cost Californians more money,'' said Sen. George Runner, R-Lancaster, the Republican caucus chairman. ``And that doesn't make a lot of sense to us.''

Dams, delta fixes

The announcement came on the same day that new federal data showed 2006 was the warmest year on record in the United States. Since modern temperature records were first kept starting in the late 1800s, the 10 hottest years have all occurred since 1990.

On the water front, Schwarzenegger proposed $6 billion in bonds. Of that, $4 billion would fund construction of two new dams -- Sites Reservoir in Colusa County, and Temperance Flat on the upper San Joaquin River in the foothills east of Fresno -- long sought by Republicans and rural leaders.

An additional $1 billion would fund delta improvements, $500 million would pay for groundwater storage and the rest would fund conservation and miscellaneous issues.

The dams proposal immediately ran into opposition from environmentalists and some prominent Democrats, who called it a giveaway to farmers, who use 80 percent of the state's water yet provide only about 8 percent of the state's economy. They asserted that as much water can be provided through more conservation, like low-flush toilets.

``I'm adamantly against using taxpayer money to fund and subsidize private investors who store water and then sell it to us at 10 times its value when we really need it,'' said Assembly Speaker Fabian Nunez, D-Los Angeles. ``I'm drawing the line there.''

Lester Snow, director of the state Department of Water Resources, however, argued that because of global warming patterns already under way, new dams are needed to catch and store water from Sierra snows that are melting earlier and faster.

Classrooms and cells

In his speech, the governor made another pitch for his $12 billion health care plan, unveiled Monday. Majority Democrats were most enthusiastic about that and continued infrastructure development.

Schwarzenegger's proposed building boom includes $10.9 billion for new prison and jail facilities. The state is under pressure from the courts to relieve overcrowding in a prison system designed for 100,000 inmates but currently housing about 172,000. The prison spending would need legislative but not voter approval because it would mostly avoid tapping the state's general fund.

It also calls for adding an additional 15,000 more classrooms and renovating 40,000 more.

The governor proposes to borrow $11.6 billion for public schools and $11.5 billion for universities by 2010. His administration also plans to create a Web site at which Californians can oversee how bond money is spent.

Today, the governor will present a $100-billion-plus state budget and reveal how he intends to patch an estimated $5.5 billion deficit.

Los Angeles-area lawmakers said they hope they can follow the governor's vision for ``post-partisan'' politics, even if they don't agree with every aspect of his vision.

``I think it can happen, if everybody really remembers why we ran for office and keeps our constituents first and foremost in mind,'' said Sen. Alex Padilla, D-Van Nuys. ``It's not always easy. Sometimes you do let the party line get in the way or sometimes even our personal egos get in the way. But our calling here in public service is to rise above and try to deal with that for the people of California.''

Assemblyman Cameron Smyth, R-Santa Clarita, agreed.

``I think he certainly set an aggressive agenda -- but I think that's exciting,'' Smyth said.

``I think that's what the people want, that's what we're here to do. Now it's up to the Legislature to work out the nuts and bolts and how we're going to accomplish some of these things.''

-- Staff Writers Paul Rogers, Mike Zapler and Edwin Garcia contributed to this report.

kfolmar(at)mercuurynews.com

[phone]

California's top priorities

ENVIRONMENT: Establish a new low-carbon fuel standard to reduce emissions and impact global warming. Proposed spending $6 billion for water storage and restoration.

PRISONS: Calling overcrowding a ``danger and a disgrace,'' the governor proposed $9.5 billion for new prisons.

EDUCATION: Proposed building 15,000 classrooms and renovating 40,000 more. Called for making education information more accessible to the public. Proposed investing more in career tech education.

HEALTH CARE: Called for universal health care and a ``shared responsibility'' by employers, insurers, doctors and the public.

DEFICIT: Announced that the state budget will ``dramatically reduce'' the deficit.

POLITICAL REFORM: Renewed his call for an independent commission to draw political boundaries.

BONDS: Proposed an additional $43.3 billion in bonds and other borrowing.

CAPTION(S):

photo, box

Photo:

(color) Gov. Arnold Schwarzenegger delivers his State of the State address at the Capitol in Sacramento on Tuesday. He called for a reduction in greenhouse-gas emissions from cars and proposed even more borrowing to build new classrooms, prisons and dams.

Steve Yeater/Associated Press

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California's top priorities (see text)