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Schwarzenegger urges broad changes to budget, tax, pension systems

January 6, 2010 | 10:06 am

Gov. Arnold Schwarzenegger, delivering his final State of the State address to lawmakers this morning, will ask them to work with him on broad changes to the state's budget, tax and pension systems, to require that more money be spent on higher education than on prisons, and to pass initiatives he says would create new jobs.

According to his remarks prepared for delivery, Schwarzenegger will also demand that the federal government fix a system that he says gives back to California less in federal tax dollars than it spends, while other states get more.

"We can no longer ignore what is owed to us, or what we are forced to spend on federal mandates," the governor is expected to say. "We need to work with the feds so that we can fix the flawed formula that demands that states spend money they do not have."

He will also ask lawmakers to help him campaign for passage of an $11-billion bond to fix the state's water system, part of the deal they reached with Schwarzenegger in November.

--Michael Rothfeld in Sacramento

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