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Arnold's second State Of The State Address to the California State Legislature.

Schwarzenegger called for spending cuts, changes in education regulations, a cap on university fee increases, reform of state purchasing, consolidation of duplicative government departments and commissions, renegotiation of state energy contracts and a solution to the state's unemployment insurance woes. He said that he was steadfast in his opposition to taxes and that spending cuts were the key to fixing the state's budget crisis. "The fact of the matter is that we do not have a tax crisis; we do not have a budget crisis; we have a spending crisis," he said. "We cannot tax our way out of this...

The address is set for 5 p.m. today in the Assembly chamber. While Schwarzenegger discusses general issues today, he will leave many of the difficult details of how he intends to close a $14-billion deficit for Friday, when he is scheduled to release his 2004-05 budget. Schwarzenegger's office consulted hundreds of people in preparing the speech and worked through multiple drafts, according to people who took part. In the address, the governor will reiterate his call for more bipartisanship in Sacramento's political culture. But the heart of the speech will be the importance of boosting the economy — a goal...

The governor's choices are limited. Because of voter-backed initiatives, constitutional mandates and contractual obligations, as much as three-fourths of the state's $100-billion budget can't be touched, Ross said. Within the narrow slice of the pie over which he has discretion, Schwarzenegger is expected to call on lawmakers to cut spending on state programs such as Medi-Cal and Healthy Families, along with prisons, colleges and universities. "Virtually every aspect of state government is going to be asked to shoulder part of the savings and sacrifice to get our fiscal house in order," Palmer said. ... Some Democrats applauded the reversal, interpreting...