Gov. Arnold Schwarzenegger signed Assembly Bill 1835 Tuesday, raising the minimum wage in the state to $8 an hour by 2008 which will be the highest in the nation.

“Raising the minimum wage is something I have wanted to do for a long time and I am happy that this year, we have the right bill and the powerhouse economy we need to get this done,” the Gov. said in a statement. “Since I came into office, we have added nearly 600,000 new jobs, unemployment is less than 5 percent, and the state’s revenues are up by almost $20 billion. The California economy is a raging, roaring success and now is the time to make sure that everyone is getting to share in this prosperity.”

The bill, presented by Assemblywoman Sally Lieber (D-Mountain View), bumps up the minimum wage by $1.25 an hour and will be phased in with an increase of 75 cents on January 1, 2007 and another increase of 50 cents on January 1, 2008. The last time the minimum wage was raised was more than 4 years ago.

Two years ago, the Gov. vetoed a bill that would have hiked the minimum wage by $1, saying it was “not the time to create barriers to our economic recovery or reverse the momentum we have generated.”

A year later he said he would have been willing to sign a $1 minimum wage increase but was forced to axe the measure because it contained indexing that didn’t “account for changes in the economy which could have deleterious effects on the economic health of the state.”