updated 1/5/2006 8:50:07 PM ET 2006-01-06T01:50:07

Attempting to rekindle his image as a bipartisan populist, Gov. Arnold Schwarzenegger urged cooperation among lawmakers and proposed a sweeping $222 billion public works program that would require the largest bond package in state history.

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The governor's annual State of the State speech on Thursday addressed issues basic to the lives of most Californians, including more funding for public schools, rebuilding freeways and transit systems, improving air quality and raising the minimum wage.

He asked Californians to move beyond a year filled with acrimony over the special election he had called and devoid of significant political accomplishment.

"I have absorbed my defeat. I have learned my lesson. And the people, who always have the last word, sent a clear message — cut the warfare, cool the rhetoric, find common ground and fix the problems together," Schwarzenegger said before a packed Assembly chamber. "To my fellow Californians, I say, 'Message received.'"

Pivotal appearance
The governor's speech was his third State of the State address but was widely viewed as among the most pivotal appearances of his political career. Facing re-election in November, his task was to persuade Californians to set aside any lingering bitterness over last year's election campaign and regain the bipartisan image that made him so popular his first year in office.

The vision Schwarzenegger laid out in the 30-minute speech proposed a bold program for rebuilding the state's aging freeways, bridges, schools and flood-control systems.

The governor proposed spending $222.6 billion in public works improvements over 20 years, to be paid in part by $68 billion in new general obligation bonds. The bonds would go before voters in a series of elections between 2006 and 2014.

The governor also pledged that his plan would ensure fiscal prudence for a state that grappled with multibillion-dollar budget deficits before he took office in 2003. One aspect of his "Strategic Growth Plan" would constitutionally cap debt payments, limiting them to no more than 6 percent of the state's general fund revenue.

Schwarzenegger said his plan is necessary to keep pace with California's expanding population, which is expected to hit 46 million people by 2025. The state has not embarked on such a massive series of public works projects since the 1960s.

"We cannot spend more than we have, but at the same time cannot afford costly delays in investing in critical infrastructure," he said. "The reality is that we face more than $500 billion in infrastructure needs over the next 20 years."

Demands, threats
The address contrasted sharply with his speech a year ago. At that time, he threatened a special election if lawmakers didn't meet his demands on a variety of budget and government reforms.

It was his first statewide speech since voters rejected all four of his ballot measures on Nov. 8.

Schwarzenegger tried to reposition himself in the political center, a step that could be crucial for his re-election chances as a Republican running in a state where two-thirds of voters are registered as Democrats or independents.

"I hope the members of the Legislature also heard the message that the people want us to work together," the governor said. "I have always felt that the people are my partners."

His proposed budget for the 2006-07 fiscal year is expected to include $4.3 billion more for public schools and a freeze in university fees. A predicted $5.2 billion in extra, unanticipated tax revenue next fiscal year gives the governor a welcome boost.

He also has proposed a $1-an-hour raise over two years in the state's minimum wage.

Democratic leaders welcomed Schwarzenegger's conciliatory approach, saying they were willing to work with him in the spirit of what Assembly Speaker Fabian Nunez called "principled compromise."

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