One of the most important challenges facing us is the adoption of a balanced state budget. According to the independent and bi-partisan Legislative Analyst, the state faces a budget deficit of $8 billion.

The Governor's budget relies heavily on cuts to education, health care and social services, and transportation.

In education, the Governor proposes to suspend the education funding guarantee contained in Proposition 98, breaking a promise he made last year to fully fund education. An additional $2 billion will be cut from the education budget over the next 18 months if the Governor's proposals are enacted. That is on top of the $2 billion that was taken from education last year. Together, this would equal a $4 billion cut from education in two years.

The Sacramento City Unified School District (SCUSD) estimates that the Governor's cuts will reduce by $11 million the amount of funds that they otherwise would have received. This could mean the loss of many critical programs that have contributed to the improved success of students in Sacramento.

In the area of health and social services, the Governor proposes to eliminate the modest $37 cost of living increase for poor seniors and persons with disabilities currently living on $812 per month. He proposes as well to make it tougher for seniors and the disabled to live in their own homes by cutting the pay of home care givers from $9.50 per hour to the minimum wage. Fewer quality caregivers will work at that low wage, forcing more seniors and disabled persons into more expensive nursing homes.

Before making these cuts, it seems to me that we should do everything we can to increase the federal dollars flowing to the state and to reduce tax loopholes. Unfortunately, the Governor's budget does little if anything in either area.

Californians get back only 79 cents on every federal tax dollar that they pay. Californians pay $50 billion more in federal taxes than we get back to the state in federal dollars. If we got back only 10% of that $50 billion in federal tax dollars, this would amount to $5 billion which would solve over one-half of our state budget problem. The Governor campaigned on being a federal tax dollar "Collectinator." Now is the time, with the new federal Administration and federal Congress under the control of the same party as the Governor, for the Governor to begin "collectinating."

Another area of concern is closing tax loopholes. For example, we should close the tax loophole that will re-open later this year for luxury yacht purchasers, and we should close the loophole that allows large corporations to move money offshore to avoid paying what would otherwise be owed to the state.

Now, I would like to spend my few minutes with you on a topic that is really close to my heart – expanding access to preschool.

The preschool years are no longer just about socialization, but are a time for linguistic growth, conceptual understanding, and social competence.

A child's preparation for school and for life begins early on, starting with a healthy pregnancy and continuing with nurturing, stimulating experiences through infancy, the toddler years and beyond.

The environment in which children grow up significantly determines the pace of their learning during their early years. Kids learn more in settings that encourage cognitive, socio-emotional, and physical development.

High-quality preschool experiences reduce performance gaps in first grade. These early performance gaps continue to be observed in later grades.

Children who attend preschool programs engage in more complex activities with other kids, show significant cognitive gains, perform better academically, and are more likely to make normal progress through the primary grades.

Children who attend quality preschool programs perform better on standardized tests, complete high school and continue their education beyond high school graduation, earn more, and are less likely to go on welfare.

The preschool years are a crucial time for developing the "emergency literacy skills" necessary to become a reader, such as understanding the structure and sounds of words, and the meanings of words and concept.

Fewer than half of California's preschool-aged children are enrolled in preschool, well below the national rate of 64%. And there are often long waiting lists for preschool. A recent study found that 67% of Sacramento's publicly-funded preschool programs had long waiting lists.

Preschool benefits working families – and we need to do a better job making sure these kids have access to preschool. Low-income children are least likely to be enrolled in preschool. Two-thirds of all women with preschool-aged children work outside the home.

Studies show that every dollar invested in quality preschool program saves taxpayers $17 from reduced crime, reduced welfare caseloads, and other savings. (Source: High/Scope Perry Study)

Children who participate in quality programs are less likely to become involved in crime: a 15 year study recently published in the Journal of the American Medical Association found that 3-4 year old children left out of a quality program are 70% more likely to be arrested for a violent crime before they turn 18.

Underqualified staff and high staff turnover compromise the quality of many existing preschool programs. Preschool teachers are among the most important people in our kids' lives, but the median annual earnings are only $17,000.

Other states are making great strides in expanding early childhood education:

Georgia offers free full-day prekindergarten to all 4-year-olds in the state through a lottery-funded program administered by an Office of School Readiness.

Florida voters approved a ballot initiative in 2002 to establish prekindergarten for all 4-year-olds. Full program implementation begins this year.

Oklahoma includes all 4-year-olds and serves 60% of those in the state.

Ohio implements preschool for nearly all 3 and 4-year-olds using the Head Start program as a model.

We will see a preschool revolution in California over the next several years.

Next week I will introduce a bill, sponsored by Superintendent of Public Instruction Jack O'Connell, to create professional learning and training opportunities for all preschool teachers.

Rob Reiner, the Chair of California's First Five Commission, is embarking on an ambitious plan to raise taxes to fund universal preschool. He plans to qualify an universal preschool initiative for the November 2006 ballot.

Assemblymember Wilma Chan and I are working on a companion bill in the Legislature to put the structures in place to support such an expansion.

Here in Sacramento, I have been meeting with local leaders to discuss what we can do in Sacramento to expand preschool. I've spoken with Mayor Heather Fargo, Supervisor Roger Dickenson, and school board members about pooling our local resources.

It's a very exciting time, it's a very exciting moment, and when the time is right I hope you will all join me in pushing to make universal preschool a reality here in California.