Grass-roots capitalism.

As a fourth generation Californian, I know there is something special about this state. With 31 million people, it is the biggest manufacturing and trading center in the world's biggest economy.

But California's economy does not exist in a vacuum. We have to turn California's economy around by breaking the cycle of violence, by making our communities safe for business, and by investing in our children. And now we have to rebuild Southern California after the destruction of the Jan. 17 Northridge earthquake.

From Day 1, my top priority as governor will be to restore prosperity in California, to invest for the future and to make this the most vibrant economic environment in the world.

The main motor of this growth is what I call grass-roots capitalism.

Grass-roots capitalism is entrepreneurial activity that drives the economy from the bottom up, not from the top down.

It is entrepreneurial activity that is met by responsive and innovative government -- not laissez-faire government. It is entrepreneurial activity that touches all of our people -- not just the favored few. And it is propelled by companies big and small, old and new.

Grass-roots capitalism involves us all -- government, the private sector, each and every citizen -- into a partnership to create prosperity, jobs and growth.

So, my economic plan has three top priorities. First, we must fight for jobs. Second, we must fight for taxpayers. Third, we must fight for business and entrepreneurs.

THREE PRIORITIES

Fighting for jobs means taking immediate action to help businesses get started and create jobs. It means tax incentives to spur economic activity. It means breaking the regulatory choke-hold strangling our economy. It means training workers for the high-tech, high skill jobs of the future. And it means sending a message that government wants to be an active and responsive ally in job creation -- not a stiff and sluggish obstacle standing in the way.

Fighting for taxpayers means giving real value to citizens for their tax dollars. It means cutting waste and making government more productive. It means a job-creating economic plan that pays for itself without raising taxes. And it means sending a clear message: California government means business. Fighting for business and entrepreneurs means taking immediate steps to put government in touch with the needs of business. It means innovative loan programs to small job-creating businesses. It means promoting strategic business clusters -- the building blocks of our new economy.

FIGHTING FOR JOBS

Fighting for jobs means teaming up with business to boost job creation and business activity.

As a first signal that California means business, we will offer a Start-Up Business Tax Moratorium. Here's what it would do: New businesses created in California would be given a one-year pass on state business income taxes or corporate franchise taxes.

Next: For businesses that create new, lasting, well-paid jobs in California, I want to offer a real new jobs tax credit. If businesses create new, full-time jobs, they would be given a credit of up to 25 percent of the first year's wages. The credit would be paid out over three years and would not exceed $10,000 per new job.

Here's what it would mean for an individual business: If you create a new job paying $28,000 a year, you would be eligible for a tax credit of up to $7,000. It's that simple.

Fighting for jobs also means that we, once and for all, must break the regulatory strangle hold on economic activity in our state.

On average, a California business must obtain 37 permits before it even opens its doors. That's just not acceptable.

First, we must initiate a complete inventory and examination of federal, state and local government regulations. With this information on a computer database, we will finally be able to determine which regulations can be eliminated or streamlined.

Next, California must adopt a lead agency approach to regulatory oversight, limiting the multi-agency, multi-level approach that results in multi-delays. Under this system, one agency at the state level would have responsibility for guiding state permits from start to finish.

To give business a further helping hand, I would appoint a regulatory ombudsman in the Governor's Office to help businesses through the permitting process. The regulatory ombudsman would expedite permits for businesses that plan to create new jobs in California. In exchange for creating lasting jobs, businesses would be placed on a fast track and given written guarantees on end dates for completing the regulatory process. If a permit decision is not made on time, permit and regulatory fees would be waived.

Slashing red tape makes California more competitive and helps create jobs. So will investing in quality infrastructure. That's why we need a $1 billion "rebuild California" fund to leverage state dollars to build the infrastructure of the 21st Century. Through bond sales, this rebuild California fund would provide inexpensive capital to local governments for essential infrastructure projects.

Fighting for jobs also means we have to prepare California's workers to perform high-skill, high-wage jobs now and in the future.

Today, state government spends over $3 billion on 23 separate job training and vocational programs. While some are effective, it is apparent that some of these programs are duplicative and disjointed. Just as bad, many of our programs are training workers for jobs that will not exist in the 21st Century job market. We need to consolidate those programs that work and throw out those that don't. FIGHTING FOR TAXPAYERS

The second part of my economic plan is to fight for California taxpayers. To move California's economy forward, state government can and must give Californians more value for their tax dollars.

Clearly, the best way to fight for taxpayers is to cut waste, streamline government and improve productivity. Californians aren't getting what they pay for when it comes to state services.

A few years ago, Texas found itself in a budget crisis much like our own -- $4 billion out of balance. The state launched what is called the Texas Performance Review to examine each and every government activity and tax dollar spent. They went looking for waste and found it, saving the state over $5 billion. As governor, I would launch a California Performance Review to go through state government office by office, regulation by regulation, line by line. I would also be a fervent advocate of a uniform California Sunset Law to make it easier to put unneeded programs out of business. The law would require agencies and programs be evaluated every five years. Programs that fail to perform, or are unable to justify their existence, would be eliminated or consolidated. FIGHTING FOR BUSINESS

The third prong of my economic plan is to fight for business and entrepreneurs. In the Treasurer's Office, I take great pride in the Cal-Vest investment program, through which I have committed nearly $700 million to help small businesses and home buyers.

If someone who creates jobs and generates tax revenues in California has a problem, he or she should have access to the administration. That's good business and sound, responsive government.

Not only will I meet with business people as a regular part of my executive routine, but every month I will schedule a One-on-One with Business Day to meet face-to-face with companies, to address their concerns and seek solutions to their problems. And we will publish a report to share ideas with other entrepreneurs. This has to become a state with a reputation for being business friendly.

Fighting for business also means fighting for entrepreneurs.

Every day I hear from businessmen and women who are struggling unsuccessfully to find investment capital. Their options are shrinking. One good indicator, the volume of outstanding loans at California banks, has fallen by nearly 20 percent since the end of 1990. That has severely harmed business start-ups and expansion. That is why I want to create the Golden State Growth Fund to promote grass-roots capitalism by leveraging existing state funds in order to expand access to capital.

The Golden State Growth Fund would be a one-stop finance center for businesses, banks and economic development officials in search of capital. Small businesses, venture firms and cutting-edge environmental companies would be eligible for loan guarantees, venture capital and project financing.

FAVORING CALIFORNIA FIRMS

A minimum commitment of state resources -- leveraging private sector funds -- would help considerably in the fight for business. But state resources can also be used directly to generate economic activity. That is why I want "California First" preferences in taxpayer-fund, public works or purchasing contracts. The other day, at a construction site, I met with workers who wanted to know why we keep giving taxpayer-financed jobs away to out-of-state companies. And why can't we hire more California workers to do California jobs.

California tax dollars must be put to work for California taxpayers. And here's how: State agencies awarding public works or purchasing contracts greater than $100,000 would be required to award a 5 percent bid advantage to California-owned firms.

If California firms are within 5 percent of the lowest bid, they would be eligible for the contract at the price of the lowest bid. Since contract prices would be set at the price of the lowest bid, California First preferences would not cost the state any additional money. Some 26 other states already have such programs.

Finally, fighting for business means giving real economic decision-making power to the private sector and allowing businesses to do the real work of job creation and profit making. That's why I want state government to promote grass-roots capitalism through the creation of regional manufacturing clusters to solve problems and increase competitiveness.

From Northern Italy to Denmark to the Lehigh Valley of Pennsylvania, economic clusters have helped expand entrepreneurial activity, increasing wages, profitability and employment. But too many California businesses are unaware of their benefits. That's why I want to offer real incentives to companies that form problem-solving, job-creating clusters.

As the millenium approaches, we Californians have two options: We can stumble down the present path, devoid of policy and purpose. Or we can fight back with a strategic plan that creates jobs and invests in our future.