It’s already looking ugly:

California lawmakers and their budget advisers estimate that the Legislature, which on Friday approved a $104 billion general fund budget that plugged a $17 billion gap 81 days into the current fiscal year, will be looking at a deficit of at least $1.6 billion nine months from now.

But that number could easily balloon to $7 billion or more…

“All these (projected deficit) numbers will be dwarfed if in fact we are heading into a serious recession because with what’s happening nationally – the credit crunch, people spending less money – projections of state revenues will go into the toilet,” said John Ellwood, a professor at the Goldman School of Public Policy at UC Berkeley.

The article makes the good point that the one-time budget solutions have now been exhausted. We’ll have “securitized” the lottery, done all kinds of accounting tricks, closed the Yacht Tax loophole, and done pretty much everything except what’s necessary – fix the structural revenue shortfall.

Some of us are talking about constitutional solutions, and it is my earnest hope that 2/3 is on the special election ballot next spring. But Democrats also need to get out in front on defining the budget crisis as a revenue problem. I had been tracking since December the tendency of the media to frame this as a spending crisis, which likely helped Republicans get away with their no new taxes demands this summer.

The public reaction against the Bush bailout should suggest the power of a populist approach, blaming deregulation and giveaways to the wealthy for our current problems. Karen Bass began using that language herself, equating the $12 billion in tax giveaways California has approved since 1993 to the Bush tax cuts earlier this summer.

Bass and John Laird also proposed a very good revenue plan emphasizing the restoration of the Reagan and Wilson-era income tax brackets and making corporations pay their fair share. Dems should have stuck to that plan more strongly, but it is a good starting point for the 2009 fight.

Democrats will also benefit from new leadership. Karen Bass is a good progressive and as we saw helped craft a very good revenue solution, and did the right thing in resisting Republican demands as long as she could. Had she come to power earlier in the year she might have had more time to craft a better strategy than what Núñez left her, which wasn’t much. It will be especially good to be rid of Don Perata, who lacked proactive leadership on the budget, instead reacting to events and eventually cutting a bad deal with Republicans and Arnold without meaningful input from Speaker Bass. Darrell Steinberg will likely provide stronger, more progressive leadership as well.

I have a lot of hope for both Bass and Steinberg in their first real opportunity to craft a better budget. But if they are to succeed they need to start defining the terms of debate now – frame this as a revenue crisis. That helps explain how the Republicans are responsible for these ongoing delays as they exploit the 2/3 rule for their narrow ideological agenda. And it can help build public support for the smart, fair, progressive revenue solutions that must be at the core of the 2009 budget.

As the economy continues to sink into what may well be another Depression, it is absolutely vital that California’s public services are up to the task of helping us survive it. The stakes for the 2009 budget cycle could not be higher.

Disclosure: I work for the Courage Campaign. Take the poll – it closes at noon today!

This year’s budget crisis produced more than frustration, agony, and suffering for Californians. It has also produced a growing consensus that our basic governmental processes are broken. The 2/3 rule is the most commonly criticized aspect of California’s broken government, but there are other factors that get cited, from ballot box budgeting to term limits to redistricting. Even good progressive leaders like Karen Bass are having difficulty given these structural problems. Eliminating the 2/3 rule alone would go a long way in helping fix this state, as would electing enough Democrats to give us a 2/3 majority. But as Californians look at Sacramento, there’s growing agreement that a broad range of fixes are necessary to get our state moving again.

Today the San Francisco Chronicle echoes these arguments in an editorial, calling for a series of reforms from eliminating the 2/3 rule to biennial budgeting to Prop 13. But because there are so many reforms that are needed, and because it’s difficult to get them through the Legislature and the ballot box one by one, some groups have concluded the only way to push through a bigger reform package is to call a constitutional convention.

The Bay Area Council has already made such a call, suggesting a convention that is limited to only structural governance issues and prevented from proposing changes to individual rights clauses or anything related to social issues. Their call is starting to get traction around the state. The BAC is made up of the heads of Bay Area corporations like Chevron and Yahoo! and have the resources to put this issue before legislators and voters. The question facing not just the Courage Campaign, but progressives in general, is do we agree with them that a convention is the best way to provide the reforms we need?

That’s why the Courage Campaign is asking you to vote  in our convention poll. Do you think we should advocate for a Constitutional Convention to fix our state’s numerous problems?

The arguments for a convention are compelling. Voters choose the delegates, and must approve whatever amendments the convention proposes. A convention elected by and accountable to voters would have broad public support and its recommendations might be taken more seriously – and have a greater chance of passage – than individual reforms sometimes seen as partisan in nature, like Prop 93 or Prop 11. A convention also allows for numerous reforms to be proposed and adopted at once, instead of in a slow one by one process. And of course a convention may succeed at producing needed reforms where all other attempts to fix the state’s process in recent years have failed.

There are good counterarguments to this. If Democrats achieved 2/3 majorities in both houses they could push through some of these reforms without needing to go through the lengthy process of holding a convention. It may not be possible to limit the authority of a convention to just process issues – we don’t want to open pandora’s box or give social conservatives an opportunity to limit basic rights. And surely there are other objections (put them in the comments if you’ve got ’em!).

So that’s why we’re asking you to take the poll. Let us know what you think. And certainly add your thoughts in the comments. If a convention does happen it will need broad support from the progressive community, and it’s a discussion we need to have now, especially if the well-funded BAC is serious about calling one.

More details, including an explanation of how a convention would work, over the flip.

The details of how a convention would work:

Article 18 of the California Constitution explains the convention process. First, the legislature must vote with a 2/3 majority to put a proposition on the ballot to call a convention, and a majority of voters must approve that proposition. If the convention call is approved by voters, within 6 months there will be a convention. Delegates to the convention will be chosen by the voters based on districts. The convention does not have the authority to actually change the Constitution itself – only the voters can actually ratify Constitutional changes. What the convention does is debate and refine proposals, and agree on what will be submitted to voters.

For example: If the Legislature puts a convention proposition to voters in March 2009 and it is approved by the voters, the convention must begin no later than September. Between March and September Californians would vote to send delegates to the convention. The convention would likely take several weeks to thoroughly deliberate proposals, and present a document to voters by the end of 2009. At an election in 2010 – perhaps the June 2010 primary – voters would be asked to approve the proposed changes.

To add to that: the voters can bypass the legislature and put a convention call on the ballot themselves by gathering enough signatures.

And below is the email we sent out last Thursday to our members:

Dear Robert,

California is in crisis.

And, no matter what happens with the state budget this week in Sacramento, the reason for this crisis is clear — California’s government is broken.

Gov. Arnold Schwarzenegger may veto the state budget. And the legislature may override his veto. But our state will still be structurally ungovernable.

On Tuesday, we highlighted the destructive gridlock caused by the 2/3rds voting requirement to pass a budget. But that is just one part of a larger government failure to address the problems that face Californians. Runaway ballot initiatives, annual budget stalemates, and arcane rules are some of the structural problems that plague Sacramento. As unemployment and foreclosure levels soar, a broken government is an impediment to economic recovery.

America has been here before. During the 1780s, our newly independent nation faced a crippling economic crisis and a government that was unable to effectively respond. To remedy the crisis, James Madison, George Washington and other public servants met in Philadelphia in the summer of 1787 to reshape the federal government to resolve the crisis and provide for stable government that also protects our freedoms and rights. We celebrate their achievement by calling them Founding Fathers.

We believe California is at a similar crossroads. The economy and the political stalemate will only get worse unless we fix Sacramento. To fix Sacramento, we need the kind of structural change that can only come from a revised California Constitution.

The Courage Campaign is therefore considering asking the state legislature to convene a Constitutional Convention for California, which would open up a formal process to enact significant structural changes in our government — just as our Founding Fathers did in 1787.

We think it is imperative that such an important decision only be made with the support of our members and our allies in the progressive movement.

We are not the only California community considering calling for a Constitutional Convention. The “Bay Area Council” — which includes representatives from Google, Yahoo, Chevron and Wells Fargo — has already gone on record in support of the idea in a San Francisco Chronicle op-ed, strongly advocating that “drastic times call for drastic measures.”

There is momentum behind this idea, but unless progressives begin to engage this discussion, our agenda for California’s future will be marginalized.

In our view, if a Constitutional Convention is called, it should be narrowly focused, with the power to propose to voters reforms of the budget process, legislative process, ballot initiatives, and other aspects related to the way California’s government operates. We would insist that the convention have no authority to discuss changes to parts of the Constitution that protect individual freedoms and rights, or anything related to social issues. The convention delegates would be elected by California voters, and any proposed changes would have to be ratified by voters.

A Constitutional Convention could create change that would transform California and our country. To make that change as progressive as possible, public participation and approval — at every step down this pivotal path — is fundamentally important.

That’s why we’re putting our decision in your hands. We want you to tell us whether calling for a Constitutional Convention is a good idea for the Courage Campaign and for the progressive movement in California.

Do you believe we should call for a California Constitutional Convention to fix our state’s government? Please read our brief explanation of how the process would work and then take our simple “Yes” or “No” poll today. One person, one vote. DEADLINE: Monday at 12 p.m. PT:

http://www.couragecampaign.org…

We are calling on you, the people of California, to lead, because that is the only way progressive change will happen. We can give the legislature and the Governor an opportunity to act, but they will only do so if we build a grassroots movement for change — from the bottom-up.

That’s what happened in 1787 and that’s what we can make happen now.

Thank you for doing everything in your power to help us make 2008 — and 2009 — a new and historic era for progressive politics in California.

As the discussion over the horrific bailout plan unfolds – you know, the one that gives Henry Paulson the powers of a Caesar – it is becoming clear that the biggest risk to our nation’s future is the usual political formulations that have crippled the Democratic Party these last eight years, and turned Nancy Pelosi’s speakership into one of the most ineffective of the modern era.

Specifically, the problem is the ongoing ability of the Blue Dogs – and one Charles Schumer, Senator from New York – to frustrate anything that is not pro-corporate and ultimately pro-Bush. They have succeeded in neutering the Democratic Congress that was elected in 2006, and if they aren’t stopped this week, they may succeed in crippling an Obama Administration before it can even get started.

Schumer is emerging as Paulson’s key water carrier in the Congress. On Fox News Sunday Schumer gave cover to conservative arguments about not attaching strings to the bailout:

Schumer…said that legislators would not imperil the proposal by adding too many extras. “We will not Christmas-tree this bill,” he said Sunday on Fox. “The times are too urgent.”

A stimulus package, he added, “doesn’t necessarily have to be part of the bailout.”

“Christmas tree” is conservative framing designed to equate any efforts at accountability,  reregulation and economic recovery as a kind of pork. Schumer shows his true colors in repeating this framing.

This is partly an attack on Speaker Nancy Pelosi. Pelosi has long been pushing a “second stimulus” package that would include infrastructure projects, aid to state budgets for Medicare (especially important for us in California), and other common-sense policies. Pelosi has started to suggest that the bailout should be linked to something like a second stimulus, if not the second stimulus itself:

She says the bailout should include provisions to help families facing foreclosure to stay in their homes, as well as create jobs, extend unemployment benefits and prevent CEOs of failed companies to leave with multimillion-dollar “golden parachutes.”

Schumer is here signaling his intention to prevent any of that from being attached to the bailout. But as the “second stimulus” and its affiliated concepts have not been able to break through the Republican working majority in the House (that is GOP + Blue Dogs), attaching it to a bailout seems the best chance of putting it into action.

Schumer is also undercutting Barack Obama, who today listed six conditions that must be met for him to support any bailout, conditions that are not unlike those Pelosi has been pushing.

It’s not hyperbole to say this is a crossroads moment for America, California, the Democratic Party, and for Nancy Pelosi’s speakership. It’s time for her to show the leadership she has not yet been willing to show in this Congress, and flatly refuse to support any bill that does not include meaningful stimulus and reforms. Sen. Bernie Sanders has a great list of ideas that should be the baseline.

And it’s time for we Californians to pressure our elected officials to support Pelosi and Obama, and to categorically reject the failed policies of Schumer, the Blue Dogs, and the Bush Administration. Now is the time to call your representatives and our senators – especially the unreliable Dianne Feinstein – and insist that they support Pelosi, Obama and Sanders and ensure that any bailout helps Main Street, not Wall Street, and punishes failure, instead of rewarding incompetence.

I will be on KRXA 540 AM at 8 this morning to discuss this and other California politics topics.

George Skelton holds Arnold responsible for the worsening political climate in Sacramento in his column in today’s LA Times:

Overrides of any bills are humiliating and extremely rare — the last one was 29 years ago when Jerry Brown was governor — and generally are regarded as symptoms of gubernatorial weakness.

Schwarzenegger has vowed to retaliate by vetoing “hundreds of bills” passed by the Legislature in the closing days of its session, measures close to many lawmakers’ hearts.

At that point, the Capitol would be heading into nuclear winter.

But rather than write the easy column – blaming everyone for the crisis and calling for some moderate solution – Skelton digs deeper and takes Arnold to task for his posturing and particularly his tendency to increase his demands once the Legislature has given him what he wants:

And what’s this all about? Besides the governor trying to escape any blame for a bad budget and position himself standing up to an unpopular Legislature?

The state already has a rainy day fund. The Legislature agreed to increase it significantly and to transfer into the pot unexpected “April surprise” revenue exceeding 5%. The dispute is over when and how the money can be extracted from the fund. At least, that was the dispute.

Democrats agreed Wednesday to Schwarzenegger’s demand that the fund be tapped only when the state is collecting insufficient money to pay for current services, according to one source familiar with the negotiations. But then Schwarzenegger — seemingly itching for a fight — asked for more.

It’s clear to me what’s happening here. Arnold took one look at the Field Poll that showed 15% approval for the Legislature and decided now was the time to play hardball. Knowing that legislators would not be interested in prolonging budget fight that causes Californians suffering so close to an election, he is pushing hard, shock doctrine style, for his right-wing reforms.

The Legislature has its share of blame for this crisis – Republicans who used the 2/3 rule to hold the state hostage are the prime culprits here – but Skelton is right to refocus our attention on the role Arnold has played in helping break California’s government at a time when strong, decisive government action is needed to save us from the economic abyss.

Of course, the problems with our government are structural. Perhaps it’s time for more fundamental forms of change – changes to the way our state’s government operates. We can’t keep doing this any longer.

Arnold approve	38%
Arnold disapprove	52
Leg approve	15
Leg disapprove	73
Support Recall	29
Oppose Recall	63

Californians hate their politicians these days, but they hate the Legislature more strongly than they do the governor. Today’s Field Poll showed Arnold has record high disapproval ratings but still fares much better than the Legislature, as the table at right suggests.

The poll also shows little appetite for the prison guards’ proposed total recall. Whereas at this stage in the process in 2003 46% of voters backed a Davis recall, only 29% do today. Even Democrats oppose a recall, 40-52.

What this means is that the Legislature and the Legislature alone is on the hook for this budget. And as the budget is getting panned by virtually every stakeholder in the state, it’s likely that the Legislature’s standing is only going to be damaged further by this budget, to the point where one has to wonder from a purely political standpoint whether the Dems were better off prolonging the fight.

This budget, then, represents a BIG political gamble on the part of the Legislature – that the public will hate them less for this deal than they would a further budget delay. A spring 2009 special election on the budget is almost certain, and it may include SEIU’s effort to repeal much of this current deal alongside fundamental budget reforms from eliminating the 2/3 rule to the GOP’s long-sought spending cap, perhaps even a constitutional convention.

For Democrats to prevail in those struggles they need public support, and ultimately, some level of trust that if the Legislature is given new powers or an easier time of making a budget they will use those powers wisely. This budget deal may make that more difficult.

Dems can still win the 2009 budget war – but to do so they’re going to have to be smarter than they were this year. Perata in particular seemed to have no plan or strategy at all, and wound up cutting and running just as he did with the Denham recall. With new Senate leadership we can hope and we will expect better. The state’s future hangs in the balance.

UPDATE by Dave: It’s worth noting that this budget will require the voters to weigh in just to get it enacted.  The provisions on the rainy-day fund and the borrowing against future lottery revenue (which is dumb, dumb, dumb) need voter sign-off.  So we could see a special election as early as January.  I don’t know if there would be time to piggy-back 2/3 or the SEIU proposal or anything else to that election.

According to the LA Times Don Perata is ready to wave the white flag and give in to Republican anti-tax demands:

Senate Leader Don Perata (D-Oakland) told his caucus in the e-mail, sent Thursday night, that he informed the governor “we urgently need a budget — let’s see if I can work on a deal with the Reps [Republicans] that is no tax, no borrowing. He agreed.”

Perata wrote that he anticipates working with Republicans through the weekend, trying to pull together a final deal.

“We then bring in Assembly leaders to show them what we’re sending them,” Perata wrote. “And then we go to the floor the moment we have mocked-up language ready. . . . We’ll do our best to hold the line on borrowing.”

How lawmakers can close a $15.2-billion gap without taxes and borrowing is unclear.

Evan Halper and Patrick McGreevy are understating that last part. It is not possible to close the gap without taxes and borrowing. There’s no way around that fundamental fact, unless Perata thinks the solution to California’s budget crisis is to bankrupt every city in the state by taking their funds. That in turn will lead to massive layoffs, worsening an already bleak economic picture in the state.

This is why Democrats lose – Republicans know that if they hold the state hostage long enough Democratic leaders will give in. Speaker Karen Bass has been a strong leader and making the right moves in resisting Republican demands. But Perata is set to undercut her with this sellout, which as the email suggests, is going to be presented to the Assembly leaders as a fait accompli.

Democrats are poised to win several seats in both the Senate and the Assembly as a result of Republican obstructionism on the budget. As Brian noted earlier today the public supports the Dems and opposes the Reps on the budget and on taxes. For Perata to toss all that out the window because he suddenly has cold feet would undercut Democratic candidates across the state and continue to leave Californians vulnerable.

Of course, that’s par for the course with Perata, who has a long record of backstabbing Democratic activists. His latest move to give Republicans what they want on the budget is a sorry parting gift to the state and to his caucus. And it would ensure that we will see exactly the same tactics from the Republicans next summer.

If this report is accurate, then Perata needs to resign immediately – or his caucus needs to remove him from power and give Darrell Steinberg the power to work on the budget instead. Californians and Democrats have suffered from what passes for “leadership” from Perata for long enough. It’s time we got real Democrats who understand the stakes and are willing to use their advantage with and support from the people of this state and break Republican hostage tactics for good.