Hot Seat: Arnold Schwarzenegger
2:00 a.m. June 17, 2009

The governor sat down for an interview late last week with the editorial board of The San Diego Union-Tribune. Below is an edited transcript of that conversation. For video highlights, go online to uniontrib.com/more/gov.

Do you want to say a few words to get us started?

Well, I'm going up and down the state to talk about the budget crisis and the urgency of getting the budget done on time. We're running out of cash in July and that basically will mean that government will shut down. And I have made it clear that I refuse to do any borrowing before we have done the budget. There's no miracle that is going to happen that will bring the revenues back or that makes the economy come back or changes anything. So I urge [legislators] to make the decisions right now. They're tough decisions, no two ways about it, especially for some of the folks up there that have been protecting services for a long time. And we all like to have the services. But there are tough choices that have to be made. Do we want to protect the people that deliver the services more than protecting the people that receive the services? If they're more interested in getting the services to the people then that leaves it wide open for great reform and for [ending] waste and abuse and fraud getting all of those things out of the system. So there are all kinds of great things that are available, choices and alternatives and opportunities because of the crisis. And so the question is: do they want to go there and make those kinds of changes. So the urgency's there. Do it now.

Will you veto any kind of fee increases?

Absolutely, yeah, I would.

What about a broader tax increase passed with a two-thirds majority?
I think we have made it clear that we don't want to have the taxes. We don't want to have fees. We don't want to do the borrowing overall.

Would you also oppose a federal bailout of any sort?

Well, you know, it doesn't help us. It helps us for this one year, but I mean it's very clear that we don't know yet when the bounce comes and when the revenues come back. So let's use this $5 billion that the federal government is giving us, to make up a number. Well, what do you do next year? There'll be another $5 billion hole because next year the economy's not back. So this is why I think we've got to get in there and solve the problem rather than patch it up and try to again push it off to the next governor.

Is it fair to pass on $2 billion or $3 billion of this problem to cities and counties by taking their money to plug the $24 billion gap? Isn't that just passing the problem to another level of government?

Yes, you're absolutely correct. And we have interest in sitting down with local government and finding a way of doing it so that there is the least amount of pain. We are going to work with them in every way possible. But at the same time I want to tell you that Democrats have said they're against borrowing from local government. Then we heard Republicans have said the same thing. So it seems to me that both parties are against this, so we don't want to be the ones that say we're going to fight for that. We shouldn't. If both parties are against that, then let's come up with a solution and find this extra $2 billion in solutions. So [the state finance director] has put together a list of things that will be the next layer of making cuts. And that goes to all kinds of ideas that we don't want to do. But should both of the parties decide that's where they want to go, we will have the solutions laid out in front of them. And we will tell them this is what it means. You guys make the decision because I'm not alone running this house. We all make the decisions together. So that's the way I feel about that.

If the Legislature does not solve this enormously difficult $24 billion deficit by the end of the month, what will the consequences be for the state?

If we don't get a budget in time and if they can't come to an agreement and deal with the reality which is the total $24 billion, we will run out of cash.
And when we run out of cash, that means that we will not be able to make our payments and government shuts down. So it's not like, as some say, that I want government to shut down. No, my preference is that they come and do the budget and that government can be sound and be functioning normally and we can provide the services. But if we don't have a budget and we don't have the money, then it will shut down by itself. That's not my doing. This is something that will happen, and I am telling them that I will let that happen. I will let that happen because that is their doing, then, because they know that they have to have a budget in place on time.

Experts who have looked at AB 32, the global warming measure, said there is going to be enormous economic impact to the state by forcing a change to cleaner, but much costlier, forms of energy. How you can argue that this is going to be a tremendously beneficial thing?

When you look at green technology, the job creation and the amount of money that's been spent over the last two years, this is the only thing that grew here in this state. More and more companies that are coming to us and wanting to build their battery companies here, electric cars here. And the Chinese are coming, negotiating with us. I just had a company call me from Massachusetts. They want to come out here. There is really great activity. I think that this is one of the areas that is still doing very well in California, the green technology sector.

There have been a lot of voices calling for us to to have a constitutional convention, re-write the state constitution, start everything anew, to solve all our problems? Do agree with that?

First of all, I think it's important to always step back from that and look at our state. And the first thing that hit me is that we have the most fantastic place in the world. OK, that's where we start. We have a place that even today, with all the bad news, every single person that wants to come to America, they want to come to California. They don't want to go up to Iowa or something like that. I know when I go to Austria, when I go traveling around the world, how people want to come to California. And so we should never forget that we're No. 1 in so many areas – from high tech to biotech to farming and the university system and the weather and the life style and the kind of different industries that we have and all of this stuff. It's all fantastic. We have our problems. So that's why I want to put it in perspective – that we are fantastic but within there are problems. We have the earthquakes. We have the fires. We don't have a budget system that's in place. We have the weird initiative process. I'm the first one to say, yeah, we should go in the direction of the constitutional convention and debate that. But before we do that, we have to be very careful that we don't ask for something that we then regret. So let's set up the rules.
Let's narrow it down to what we really want to look at and what needs to be reformed.

You have been asked about the cost of illegal immigrants to the state. And you have made some comments about the productivity of illegal immigrants, the contributions they make. The reaction, I think it is fair to say, was very negative around the state in many quarters. Do you care to reassess those remarks at all?

I think it is very important that we talk about the way the reality works. Because you get asked, “Isn't it the illegal immigrants that caused this budget mess and why we have a $24 billion budget crisis?â€