Gov. Arnold Schwarzenegger this morning presented lawmakers with an ambitious agenda for his final year in office, calling for broad changes to the state's budget, pension and tax systems, a constitutional requirement to spend more on higher education than prisons and a greater share of federal funding for California.

Schwarzenegger, who has criticized lawmakers for inaction in his annual address in years past, praised them this time for working together to close tens of billions of dollars in budget deficits, for reaching a deal to fix the state's water system and, as recently as Tuesday night, passing legislation to change the state's educational system that he said he'd sign.

"Together, as a team -- as fractious, tentative and uncertain as it might have been -- together we got California through the front end of the worst financial crisis since the Great Depression," Schwarzenegger said in his final State of the State speech, speaking in the Assembly chamber.

Schwarzenegger's initiatives are certain to be difficult given that he and lawmakers face another $20-billion deficit -- similar to the one that took months to close last year -- and that they already have cut drastically many state programs.

The governor told them today that he would refuse to again cut education, which has lost billions in the last two years. At the same time, Schwarzenegger suggested a constitutional amendment -- the third ballot measure he would be supporting in a single year -- to reverse the ratio under which California now spends 11% of its budget on prisons and 7.5% on higher education.

"If you have two states and one spends more on education and the other one on incarcerating, in which state's economy would you invest?" he asked.

That goal, which the governor said could be accomplished by privatizing state prisons, is likely to meet with opposition from the state prison guards union and the federal courts that have taken over prison medical care.

Schwarzenegger asked lawmakers to reconsider a proposal he backed to revamp the state's tax structure, which he said had "disappeared somewhere under this dome." He said the state employee pension costs had increased 2,000% in a decade and needed to be controlled. He said the state budget system should be aligned with actual expenses.

And the governor unveiled a job creation program that would allocate $500 million for employee training, inoculate big construction projects from lawsuits over environmental regulations, extend a $10,000 tax credit for first-time home buyers, and exempt green technology companies from sales taxes on some purchases.

Schwarzenegger asked lawmakers to help him push the federal government to fix an "unfair" system in which California received 78 cents back from each dollar it paid in federal taxes, while Texas received 94 cents, Pennysylvania got $1.07 and Alaska got $1.84. Meanwhile, as a border state, he said, the state incurs extra costs relating to immigration, along with other federal mandates. Now, he said, the new federal healthcare bill would "pile billions more onto California."

"While, as you know, I enthusiastically support healthcare reform, it is not reform to push more costs onto states that are struggling while other states get sweetheart deals," the governor said.