SAN FRANCISCO — While acknowledging the continuing severity of California’s budget crisis, Gov. Arnold Schwarzenegger highlighted new spending proposals during his final state of the state address yesterday.

The Republican governor, who will be termed out of office at year’s end, led off the speech with a $500 million job-training proposal and a $200 million plan to revive state tax credits for home buyers.

“The first priority for the coming year is the economy and jobs, jobs, jobs,” Schwarzenegger said.

The governor went on to address the state’s severe budget problems, including a $6.6 billion general fund deficit in the current fiscal year, which ends June 30, as well as a $13.3 billion gap projected for fiscal 2011. That’s despite a series of actions over the past year to close $60 billion in budget gaps.

Schwarzenegger withheld details until Friday, when he formally makes his budget proposal, but he said the picture won’t be pretty.

“As bitter as the words are in my mouth, we face additional cuts,” he said.

That served as a springboard for the governor to discuss a series of long-term reform proposals he said he would push for in his final year.

Many of the proposals he has tried before, without success, including state employee pension reform and budgetary spending limits.

One proposal was brand new: a constitutional amendment to prohibit the state from spending more on its prison system than its university system.

“What does it say about a state that focuses more on prison uniforms than caps and gowns?” Schwarzenegger said. “It simply is not healthy.”

Today the state government spends about 11% of its budget on prisons and 7.5% on higher education, the governor said.

It would take a two-thirds vote by lawmakers in both houses to put such a measure before voters.

The plan would be sure to draw fire from the well-financed prison guards’ union — which can be expected to dig in its heels over the governor’s proposal to allow private prisons, not to mention the very idea of reducing prison spending.

Schwarzenegger also said he will continue to push for reform of California’s tax system, referencing the blue-ribbon panel that issued a report last year proposing a shift away from income taxes on high earners toward a consumption based tax akin to European value-added taxes.

The existing system exacerbates the state budget problems, the governor said, adding that in 2009, state tax revenues declined eight times more than the state economy contracted.

“The budget crisis is our Katrina — we knew it was coming; we’ve known it for years,” Schwarzenegger said. “And yet Sacramento would not reinforce the economic levees.”

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