Governor Arnold Schwarzenegger acknowledged the state’s fiscal problems are far from over, but was optimistic for its future during his final State of the State address delivered this morning in Sacramento.

“If I had to summarize in one word our focus for the coming year, it would be the word ‘priorities,'” Schwarzenegger said. “We have to get them straight and we have to keep them straight. The first priority for the coming year is the economy and jobs.

“The people and businesses of California are an engine of self-betterment and progress.

As long as government keeps the engine oiled with prudent policies — and more importantly — does not pour sand in its gears, this state will persevere and prosper.”

He went on to make four proposals: a $500 million jobs package that could train 140,000 workers and create 100,000 jobs; a measure to streamline permits for construction projects with a completed environmental report; first-time homebuyer tax credits up to $10,000 for new and existing homes and exempting the purchase of green tech manufacturing equipment from sales tax.

Senator George Runner said that the Governor’s talk was more visionary than solution-based.

“This was his vision for bringing things back in order in the state of California,” Runner said. “It is a very ambitious plan, including issues and priorities we need to be concerned with.”

“He mentioned tax credits for green jobs, well, that’s nice, but the fact is that California has one of the highest unemployment rates in the nation, we need all jobs,” Runner said.

The unemployment rate in California is just above 12 percent.

“We need to roll back some of the burdens that are put on California businesses to allow them the freedom to do their hiring and allow them to grow,” he said.

He added that pension reform was touched on, but is a problem that needs to be dealt with so the next generation isn’t saddled with a bill they can’t pay.

“I’m glad the governor talked about jobs as a top priority,” said Senator Tony Strickland. “It should be the #1, #2 and #3 priority for every legislator. We have the highest unemployment rate since the Great Depression, but if we do the same thing that we’ve done in the last few years, we’re going to get more of the same. There’s a reason that the legislature has a 12 percent approval rate.”

Referring to the budget process as “our Katrina,” Schwarzenegger noted that tax revenues were down more than 20 percent and that they aren’t expected to return to normal levels until 2014.

Schwarzenegger also said that legislators and taxpayers should expect additional cuts to be made before the budget crisis is resolved. He predicted that at the current rate, the state will run out of money for state pensions and that the federal government is imposing an unfair burden on California, expecting it to shoulder the burden of illegal alien control and care without help from Washington.

Assemblyman Cameron Smyth was optimistic about the governor’s proposals, but warned against cutting too deep.

“Despite the generally dismal forecast of the upcoming year in today’s address, Governor Schwarzenegger did offer some intriguing ideas that I believe are necessary for the well-being of our state,” Smyth said. “I agree with him that putting California jobs first must be a top priority, and that government should promote reinvestment, not impede progress.  We must embrace reform, demand accountability, and operate transparently as we do the work of the people.

“Once again this year, we will have to make difficult budget decisions in order to close a budget deficit that is projected at over $20 billion.  However, before we even begin the discussion about cutting services to those who need them most, we need to look at other areas where we can save money,” he concluded.

Runner said the telling day will be Friday, when the Governor releases his budget.

“That’s when he’ll have to answer the question of how we balance a budget that’s $20 billion dollars off,” he said.

Higher education was pitted against prisons, which Runner said is a common State of the State tactic.

“The way to get our prison issues under control is to get the federal government out of it. We spend $17 thousand per inmate because the feds have taken over our prison health care. We need to get them out of it.”

“I agree with the Governor that we also need to demand our fair share from Washington.  While other states are receiving as much as two dollars for every dollar they send to the federal government, California receives about seventy-eight cents,” Smyth added. “At the same time, these federal dollars cannot be a substitute for fiscal responsibility.  The Legislature must act swiftly to bring spending in line with revenue without raising taxes.  As we saw last year, even the largest tax increase in California history was barely able to make a dent in the deficit that has resulted from runaway spending.”