Singer: Even though Governor Schwarzenegger's slate of propositions met with resounding defeat in November, they point to the real budgetary problem in the state, which is a combination of mandatory spending and caps on taxation. And as a result of those two facts of California government, it's very difficult to balance the budget. Can it only be done on the revenue side or the spending side, or will you need to address those two issues together in tandem?

Westly: Again, people get stuck in this town. When I came to Sacramento, people said, "Whoa, which side are you on? Are you on the side that wants huge tax increases that will run our few remaining businesses out of the state? Or are you on the side that wants to make massive cuts in education and healthcare?" And I said, "Wait a minute. There's a smarter way to deal with this." And again, it's not just something I've talked about, it's something I've done.

There's a lot of money already on the books that we're not collecting, even after the two programs I've done, which, again, has already brought in $3.5 billion. There's an additional $6.5 billion on the books today in taxes we're not collecting. So the smart thing to do is to start there, collect as much of that as possible, and then take a look at how much of a gap you have remaining.

Singer: The tough question is does Proposition 13 have to be changed? Do property taxes have to increase, as the former advisor to Governor Schwarzegger Warren Buffet suggested?

Westly: The short answer is I don't support changing Prop. 13. But more importantly, there's a simple political reality: Prop. 13 is not going to be changed any time soon, and the fact is our schools need help sooner.

Again, that's why I'm acting now, not hoping for something that might happen in the future to save us, but to come up with concrete solutions. We're looking at some follow ups to our successful voluntary compliance initiative and other programs to see if we can bring in additional money to help get more money into schools, healthcare and the areas where we need it. And I think we'll be successful bringing in additional money this year toward exactly that end.

Singer: Talking about education, a lot of people on the right side of the spectrum say, "Yes, let's increase funding for schools, definitely. But let's also increase accountability, especially for the teachers." And even some Democrats would argue that the teacher's unions play too large of a role in the party. Do you think that's the case? Or do you think that there are other ways of improving the state's education system without attacking teachers?

Westly: I think teachers are the heroes in public education, not the villains, as the Governor has tried to paint them.

I went to public schools K-12 in my life, almost all of which in California. I think teachers are the best things in the education system.

So I want to see Prop. 98 fully funded. I've pledged to do that. I'm the one candidate running for Governor who's talked about and actually shown you can bring a substantial piece of that money in by getting creative and being innovative.

Singer: Now speaking of healthcare, you have noted on your website, and I'm sure speeches as well, there are quite a few Californians living without healthcare. What steps can the state take - especially with the federal government making cuts to Medicaid - what steps can the state of California take to ensure that more Californians have healthcare?

Westly: First, you're absolutely right - it's a state tragedy that we have close to six million Californians without healthcare. And by the way, it's not cost-effective to have this many people exposed, clogging up the emergency room systems. It's wrong from a philosophical point of view and it's a poor investment for the state.

What I've articulated is that as Governor, the first thing that I would do would be to sign the Healthy Families legislation, known, too, as the Escutia-Chan bill. That's a first step, which provides basic healthcare for children. And again, not only is this a smart thing to do, it's clearly a cost-effective thing to make sure you provide health benefits for children.

Second, over the long haul, I'd like to see what was Prop. 72, also known as SB. 1, which was the employer mandated provision of healthcare for companies with a minimum of 50 or 100 people. I think that's the smart next step to making sure we do a better job of providing healthcare for most Californians.

Singer: Let's keep going through some more issues. The price of gasoline in California is among the highest in the continental United States, and the state has faced serious problems with its energy markets in the past. Notwithstanding a ban on Enron-like behaviors, which have caused a number of the problems in the past, what steps can be taken to alleviate the energy issues facing the state?

Westly: First, California does have some of the highest gas prices in the country, but part of that is because we have the highest environmental standards, and I think that's something many Californians are proud of.

As you know, California has long been an environmental leader. We passed the first catalytic converter legislation in the 70s. Within a decade, not only most of the rest of the country but the rest of the world had followed suit. So that's something I'm proud of.

Over the long term, though, we need to provide more power in this state so we can keeps costs at a reasonable level. And as you may know, I've spent a lot of my life working in the alternative energy field, starting in the Carter administration where I worked in the office of conservation and solar.

I think California's strong suit is to continue to lead the world in alternative energy, bring more alternative power online so that we can have more energy independence and more control over our power costs.

Singer: The issue of immigration is a very divisive issue, it's a tough issue. In the special congressional election down in Orange County a few weeks ago, the founder of the Minuteman Project pulled a surprising 25 percent of the vote, which is a large share even for Orange County. Given that so many Californians, both inside Orange County and around the state, are concerned with the flow of immigration into the state, how would you handle this issue as Governor?

[Cross talk about time remaining]

Westly: First, California needs to do a better job of securing its borders. We cannot have unabated hundreds of thousands of people crossing the borders every year. Most people understand that. But it's equally clear that the state's economy would not survive without the ample access to immigrant labor, primarily from Mexico.

What I want to do is turn down the partisan rancor at both ends of the spectrum, the sorts of unfortunate things that we heard in the Orange County congressional election, and particularly - and perhaps most inflammatory of all - was the Governor's call to support vigilantes at the border. That's not the right answer.

We need to be looking for common sense solutions like the McCain-Kennedy approach that allows immigrants to come across the border in a guest worker program, to get jobs in California, and to help drive this economy forward, and also to provide a reasonable path towards amnesty for many of the immigrants that are already living in California.

The other thing that's important to note is I've promised that within six months of becoming Governor, I would go to Mexico, meet with President Vicente Fox's successor, because the Governor of California and the President of Mexico need to have a close working relationship. I think that's been missing from the current equation, and that's something I would fix immediately.

Just as an aside, by the way, I just did some TV ads - you might not know about this - opposing the Governor's special initiatives. And I was the first candidate for Governor to do TV ads statewide in Spanish myself, and as I joked, I did them in Spanish, my wife did ads in Chinese, and between the two of us, we've got the state covered.

Singer: Final question - What would you like to say specifically to members of the liberal blogosphere to get them more involved in this race?

Westly: Two things. First, I think I represent something different. I'm not a career politician. I'm someone who's been politically passionate all of my life, but I'm someone who has a unique background in the high tech sector in Ebay, where I think we created one of the most democratic and empowering companies ever on the internet.

Second, I've been a classroom educator, and no one running for Governor in recent history has that background.

Third, I've been an effective Controller. Perhaps what I'm proudest about is when everyone else said it was impossible, I found ways to bring $3.5 billion into government to provide funding for things like education and healthcare that I'm passionate about. When people say I want to support the most progressive person in the California gubernatorial race, forget all the things the candidates will tell you. I would say I think being the one guy who's brought $3.5 billion into government for things we all believe in, like education and healthcare, by de facto makes me the progressive candidate.

So it's a different background, it's a commitment to Democratic core principles and it's the ability to put my words into action.

Singer: Terrific. Well thanks so much for your time and good luck with your campaign.

Westly: I hope we can talk an awful lot more, and as someone who's made my life in high tech on the internet, let me just say what you're doing is the future, I get it, and we're going to be giving you a lot of time, because a lot more people are reading what you're doing than an awful lot of papers in this state.