Arnold

Today the Senate Health Committee voted 7-1 not to advance AB 1x1 the massive health care reform bill championed by Speaker Fabian Nunez and Governor Arnold Schwarzenegger. That means health care reform legislation is killed for the year given the timing to make it on the ballot. Chron:

Shortly before the committee hearing, Senate President Don Perata, D-Oakland, said in a letter to Gov. Arnold Schwarzenegger that he does not support the measure because it lacks adequate funding and could worsen the state's budget problems.

The measure, which passed the state Assembly last month, needs the backing of a majority of legislators in each house before it can be sent to the governor, who supports it.

Schwarzenegger, speaking to the editorial board of the Chronicle, said he will do everything he can to keep the measure alive.

"I'm not taking 'no' for an answer," he said. "We've come a long way to get as far as we have ... this is the last mile."

The $14 billion plan was the product of more than a year of negotiations between the Republican governor and leaders of the Legislature's Democratic majority. The proposal had the backing of a diverse group of corporate, labor and consumer groups but failed to attract the necessary six votes from the 11-member health committee largely because of concerns over the long-term costs of the plan.

The amount of resources mobilized for this fight was enormous. Many groups and organizations poured many man hours and dollars into advancing this cause and then this specific piece of legislation. It is a bitter end to a noble goal: reforming our health care system. Our health care system is a disaster, yet fear of the unknown determined the outcome. We could not ensure that the expenses would not out strip revenues a crucial calculation given our state's current precarious fiscal state. It was not clear how much this bill would impact working middle class Californians. The plan was attacked from the right and the left.

The good thing is that this is not the mid-nighties all over again. When the budget situation improves we will again have a shot at reforming the system. This loss does not mean we have to wait a decade before working hard to enact sweeping change.

This is a victory for the status quo today, but we have a chance in the not too distant future to enact the reforms legislators dared against all odds to advance this past year. There were many more reasons for this to fail than to pass. That will not change the next time we take a shot at it. Hopefully we will learn some lessons from this fight and have a better chance the next time. They sure did a lot better than we did nationally in the mid-90s.

The governor has finally come around to reality. Reforming California's school system will require a huge investment in our children's future and we simply do not have the funds to do that this year. Arnold said this and more in an interview with the LAT editorial board.

But he also talked about investing more in some of the same government programs he once complained were bloated and inefficient.

The message has ceased to be that schools can do more with less.

Now, he said, properly reforming the state's education system could come with a hefty price tag.

Because of the need for funds, Schwarzenegger said, he would put off his plans for an ambitious overhaul of the state educational system until more money is available.

"We have to analyze and bring everyone in the education community together and look at all the reforms and look at if that means we need extra money to do all those things," the governor said.

"To say: 'The funding we leave off the table completely . . . because we don't have any money, but we want to do those reforms,' that is not the way it works."

He is sounding all the right notes at the moment with regards to his plans for his "Year of Education". The same cannot be said of his approach to the budget. He has already lined up the schools as a target for huge cuts.

Here is a clear sign that the speculation about Arnold's intentions in proposing a grossly unacceptable budget has some merit. He told the SacBee that he does not expect that they actually close the 48 parks he had called to close in his budget.

Gov. Arnold Schwarzenegger said Wednesday he proposed closing 48 state parks to "rattle the cage" at the Capitol, but fully expects lawmakers to come forward with alternatives -- including higher fees -- to keep parks open.

"The budget is always a proposal ... There's the reality, and the reality will rattle the cage," Schwarzenegger said during a meeting Wednesday on a wide range of issues with the Bee's editorial board.

Last week the governor released a $101 billion general fund spending plan that was balanced largely through government spending reductions. Closing 48 state parks would eliminate 136 positions and help the parks department save 8.9 percent of its budget -- or $13.3 million.

That is $13.3 million out of a $15 billion budget deficit. This was a very high profile proposal, with little fiscal gain, designed to fire up people. It worked.

Current analysis suggests that increasing fees will drive down attendance exacerbating the problem, not solving it.

The governor continues to maintain his high approval ratings according to a new LAT poll. While the voters do not approve of his approach to the budget crisis, they are blaming the legislature rather than the governor for it. They still view him as the outsider shaking things up, when he has been anything but when it comes to this budget. In general, voters have a gloomy outlook on the state.

Interestingly, there are some strong parallels to what is going on now and what happened in early 2005.

Mark Baldassare, president of the Public Policy Institute of California, notes that voters remained pleased with Schwarzenegger in the weeks after he unveiled those plans -- much as they do today, following the release of his tough budget blueprint. In 2005 it was months later, after the details sank in and opponents had organized their campaign against the governor, that Schwarzenegger's approval rating sank to 37%.

"We're following the same pattern that we did in January of 2005," Baldassare said. "When he rolled out his plans, they were surprising to a lot of people and not what they wanted, but they didn't initially take it out on him. As he started getting attacked by teachers and interest groups, his numbers fell."

The parallels are so strong that his approach to the budget is perplexing. The governor seemed to learn some lessons in 2006, but appears to have regressed again. It's bizarre and it is what is fueling the this is all a ruse to drum up support for tax increases Capitol analysis.

George Skelton spends much of his column today rejecting the comparison Arnold has been trying to make between himself and FDR, while I wholeheartedly agree with Skelton on the preposterousness of the comparison, I would like to focus on the elected officials who match up more closely with our governor. LAT:

The historical figure that Schwarzenegger should be trying to emulate is Ronald Reagan, a fiscal conservative but pragmatist.

I know, I know, but bear with Skelton.

To plug a huge deficit his first year as governor in 1967, Reagan raised taxes by a then-record $1 billion. He never had to worry about red ink again. Back then, the total budget was only $5 billion. The budget Schwarzenegger just proposed hit $141 billion, even with 10% across-the-board cuts.

We are only short about $15 billion, way less of a percentage of the total budget than what Reagan increased revenue by during his tenure. There are other Republicans that Arnold should be comparing himself to.

A more recent role model for Schwarzenegger should be his political mentor, Pete Wilson. In 1991, the new governor faced a $14-billion hole in a $43-billion general fund. (Schwarzenegger's proposed general fund is $101 billion.)

Wilson raised taxes by a staggering $7 billion -- on income, sales, cars, liquor, candy. Name it. Then he filled the rest of the gap with cuts and magicians' tools.

Schwarzenegger's draconian plan "is a wake-up call for the public," says Assembly Budget Committee Chairman John Laird (D-Santa Cruz). "This is reality. If you don't like it, what's your alternative?"

The alternative is raising taxes, because the cuts are flatly unacceptable.

Pitney says: "I don't think taxes are avoidable."

Schwarzenegger still thinks they are. Or so he says. I believe him -- believe that he's living in denial.

The governor should think hard about who he is and how he wants to be remembered. I doubt it's reflected in the budget that bears little resemblance to the statesmanlike policies of Reagan and Wilson -- let alone FDR's New Deal.

We shall see if the insider calculation that Arnold is doing this just to raise support for taxes or not is true. In general, I think Skelton has this right. Arnold rarely thinks three steps ahead, so it is hard to believe that he has planned this out as a major scheme, then again I don't really believe he wants to drown the government in a bathtub. It just doesn't make good photo-ops.

The headline on the AP story reads "Schwarzenegger is facing the kind of crisis that ruined Davis". There is a reason for that. Arnold never actually fulfilled his campaign promises, now we are right back where we started.

Arnold Schwarzenegger stormed into office during California's last budget crisis, promising to "end the crazy deficit spending" so the state would never go over the financial cliff again.

But four years later, California is back in the same spot.

The cooling economy has opened up a projected $14.5 billion deficit over the next 18 months, and the governor proposed this week to cut school spending, release 22,000 prisoners early and shut dozens of state parks.

The irony is rich: He is facing a repeat of the financial crisis that undid Democratic Gov. Gray Davis, the man Schwarzenegger ousted in a turbulent recall election.

The question is: will Arnold actually take this opportunity to make good on his campaign promises? His previous actions have only exacerbated the situation.

Far from solving California's systemic budget problems, Schwarzenegger has taken several actions that have made them worse. Just like Davis, Schwarzenegger cut taxes but not spending, which has risen 30 percent since he took office. That ensured that when tax revenue tapered off, the budget gap would reappear.

The latest crisis came on so fast that California is in danger of running out of cash this year. Schwarzenegger has ordered more borrowing — the sale of $3.3 billion in bonds — to make sure the state can pay its bills.

Arnold opened up the gubernatorial wallet and pulled out the state's credit card. I guess he duct taped it back together.

The boxes were never blown up. Reform was not accomplished. The result is deja vu. It is like 2004/05 all over again. Schwarzenegger is proposing massive budget cuts, power grabs and talking like a partisan Republican again.

His true colors are showing again. They have been hiding for a few years.

Meanwhile, they are starting to tally the real world impact of the budget cuts the governor is proposing. It is staggering. LAT:

Facing the worst fiscal crisis of his tenure, Gov. Arnold Schwarzenegger today proposed a $141-billion spending plan that would reduce health care programs for the poor, close 48 state parks or beaches, release tens of thousands of nonviolent inmates early and make substantial changes in almost every other area of the state's budget.

At the same time, he proposed expanding the state's debt load by more than $40 billion to finance more construction at public schools, colleges and other major institutions.

Schizophrenic no? Let's chop billions from classrooms so they can't buy more books or have enough teachers to teach, but let's borrow billions, driving up our future deficit issues to build new classrooms. Take from one hand and give it to the other. The construction companies get a little too.

Schwarzenegger proposed reducing education spending by $4.4 billion, $400 million of which would be trimmed from money schools had been promised this year. The reductions target special education classes, child nutrition programs, class-size reduction efforts, transportation and charter schools. Schools would receive 9% less next year than they would otherwise be entitled to under the constitutional guarantee for education funding, which the governor proposed suspending.

They are talking about cutting the minimum guaranteed money schools receive under Prop. 98. This will be vigorously opposed by the teachers. Meanwhile those in the Capitol are getting really cynical. Sounds to me like they are actually trusting Arnold to come to reality. I wouldn't take that bet.

Some in the Capitol are already dismissing the proposed deep cuts as a ruse -- an attempt to stir up so much public demand for a tax hike that the governor ultimately will be able to break his pledge not to take that route. The governor disputed any such idea, saying: "I will not go back and ask [voters] for any tax increases. They deserve better than that."

They do deserve better than this short sided plan to slash the budget. What they deserve is comprehensive reform. What they deserve is not the stop-gap measures they have gotten in previous years. What they deserve is a governor who has the political courage to invest his political capitol in getting that done.

If anyone still had any doubts about Arnold's party affiliation, yesterday's State of the State address should have erased them. Arnold is a Republican. His solution to a budget crisis is to slash spending and grab more power for himself. It is that simple.

He refuses to examine the reasons why we have found ourselves staring at a $14 million deficit. Instead, he has gone back to his failed ideas from 2005. LAT:

Returning to policies he advanced without success early in his tenure, Gov. Arnold Schwarzenegger called Tuesday for state government to permanently rein in spending and vowed not to raise taxes next year -- even as he prepared a budget that would increase insurance fees for millions of property owners.

Schwarzenegger, facing a $14-billion deficit, said in his annual State of the State address that he would propose a "difficult" budget Thursday that would hurt many groups, such as AIDS patients, the poor and the elderly. He did not mention that he would also try to raise money for firefighting efforts through a proposal, a copy of which was obtained by The Times, to collect a surcharge from renters, homeowners and business owners who buy property insurance.

Perhaps he has finally learned one lesson: don't attack firefighters in California.

But back to the issue at hand. The state has a huge budget deficit. Our governor has decided to side with the Republicans who want to drown the government in the bathtub. The result of their policies would be catastrophic for hundreds of thousands of Californians. Children would go without health insurance, elderly without assistance and schools without books. For years, California has been tightening up it's budgetary belt. There is just nothing to give anymore.

The Democrats panned the idea.

"The governor is willing to sell us short," Senate President Pro Tem Don Perata (D-Oakland) said immediately after the speech. "He is selling us on the excellence of mediocrity. Advocating automatic cuts, but failing to establish the priorities and how to fund them, is political expediency at its best and political leadership at its worst."

The governor does not appear to be charting any sort of middle of the road path on what is a very stark partisan divide on budgeting. He is simply siding with his fellow Republicans and that is not exactly the way to get things done in the legislature. Arnold already tried this concept directly with the voters and it failed miserably. The political calculation here makes about as much sense as the policy concepts.

Arnold refuses to take a comprehensive look at the problems that have created our budget deficit and now appears to be pushing what essentially amounts to Prop. 76. It is a power grab, short and simple. The voters rejected it overwhelmingly in 2005, with 62.4% voting NO. It was a bad idea to give the governor more power over the budget then and it is still a bad idea now. SacBee:

Heading into a week in which he's expected to deliver grim news about the state's fiscal health, Gov. Arnold Schwarzenegger is also preparing to propose changes to the budgeting process.

The Republican governor will offer a "budget reform" plan when he outlines his goals in his State of the State address Tuesday. Such a proposal, if successful, would likely give the executive office more authority in making cuts even after the Legislature has passed an annual spending plan.

When Arnold talks about budget reforms, he means being able to cut the budget whenever he feels like it. Meanwhile Nunez has some ideas of his own.

A spokesman for Assembly Speaker Fabian Núñez said lawmakers will have to wait to see what the governor proposes. The Democratic leader from Los Angeles has suggested changing the minimum vote for passing a budget, from the current two-thirds to a simple majority. The move would greatly diminish the role of Republicans, who are a minority in the Legislature.

"Reform is in the eye of the beholder," said Núñez's spokesman, Steve Maviglio.

Indeed. California's budgetary process is a mess with the 2/3rds requirements and the Republicans refusal to do anything other than make cuts. Hardly any other states put such limitations on their legislature. The solution is not to give the governor more power, but to untie the hands of the legislature.

See also Dave Dayen on the same subject.

This state desperately needs a big boost to our education funding. There are some greatly needed reforms and Arnold wants to make this year, the year of education. But that is going to be tough. The scope of the problems are very large and so is our current budget deficit. That said, he is still pushing forward and his blue ribbon panel has just released a proposal, complete with a $6 billion price tag. Merc:

Setting the stage for Gov. Arnold Schwarzenegger's "Year of Education," a panel he appointed has proposed a sweeping set of reforms that will help define the debate, including performance-based pay for teachers, universal preschool and full-day kindergarten.

A blueprint of the recommendations obtained by the Mercury News also calls for:

• Billions more to be spent each year to educate English-learners and other low-income students who are lagging behind more affluent peers.

• A sophisticated new data system to better track students' successes and failures.

• A school "inspection system" similar to those used in New York City and several European countries. To increase the accountability of schools, the results of the inspections would immediately be made available to the public.

A lot of time, money and resources have been poured into a series of studies to investegate the California education system and ways that it can be improved. This is just one of many. They all have a common theme: we can make things better, but it will take real money. Reforms with out money don't work and just more money won't work either.

This is assured to be a subject of Arnold's upcoming State of the State speech. He has not signed off on this report, so it is unclear if he supports all of the proposals.

One could call this a deal, or a breakthrough, but with so little time for people to figure out what is really in this thing, there is a decent amount of confusion. The Assembly has passed a health care reform bill that is supported by Arnold. It is massive and if passed would be one of the most significant changes to our health care system ever. The details are emerging, but what is clear is that the huge coalition of groups working to get reform enacted is split and that is partially due to the speed at which this proposal moved forward.

So while Andy Stern, the president of SEIU international is featured in this picture accompanying the article in the LAT, Art Pulaski and the California Labor Federation has not taken a position.

The state Assembly on Monday approved the first phase of a $14.4-billion plan to extend medical insurance to nearly all residents, giving Gov. Arnold Schwarzenegger and his Democratic allies their first victory in a risky yearlong campaign to overhaul California's healthcare system.

The measure, negotiated by Schwarzenegger and Assembly Speaker Fabian Nuñez (D-Los Angeles), would require almost everyone in California to have insurance starting in 2010. It would provide subsidies and tax credits for those who would have trouble paying their share of the premiums.

The authors estimate that it would bring medical coverage to 3.6 million Californians, including 800,000 children, who currently don't have it. But the plan cannot go into effect unless it passes the state Senate and voters approve a companion initiative that Schwarzenegger and Nuñez are planning to place on the November ballot to finance it.

See Dave more on a few significant issues with the funding. The initiative to fund the program, if they can manage to get it on the ballot faces an uncertain future without a united front behind it.

I know I am sounding really cynical now about the prospects of this plan, but I am a pretty pragmatic observer. The Senate refuses to come back to consider this before the end of the year. We don't know what they will determines once they have a chance to really thoroughly examine the proposal. It is unclear if they have gone far enough on affordability and there is a huge concern that there has not been enough headway on reforming the health care system itself. The labor community is split. The state has serious budget issues. We have no clue what the climate will look like in November 2008, if this makes it on the ballot.

There are a lot of reasons not to be excited about this development. However, there have been significant improvements made as negotiations progressed. This bill would drastically improve health care access for hundreds of thousands of Californians. The question is will it do a lot of harm to thousands more? Who benefits the most, Californians or the insurance industry? And does this have a real shot at passage?

Hopefully we will find out some more answers in the coming weeks. This too big of an issue to ram through without careful examination.

This year was supposed to be the year of health care reform. Next year was supposed to be the year of education, or so pronounced he of the grandiose titles and ambitions: Arnold Schwarzenegger. And you know what, we really need to have our state government make some headway on those issues. Unfortunately, we have a big pressing problem, the huge budget deficit. Health care negotiations have bogged down as the budget gap has risen.

Now Arnold is calling a fiscal emergency. Even prior to that came this LAT article:

Legislative leaders said Thursday that more taxes would be needed to fill a projected $14-billion budget gap next year, and the state Senate president said a healthcare overhaul -- Gov. Arnold Schwarzenegger's priority this year -- will have to wait.

Assembly Speaker Fabian Nuñez (D-Los Angeles) said lawmakers would have to consider raising a host of taxes, including those on Internet purchases and on foreign companies that do business in California.

"We've got to close those tax loopholes," Nuñez told reporters at a news conference. "We can generate billions by doing that."

Senate President Pro Tem Don Perata (D-Oakland) said some sort of tax increase would be necessary, mostly likely in a ballot measure for the public to consider. He said he doubted Republicans would provide the votes necessary for the Legislature to raise taxes.

Raising taxes in California requires a 2/3rds vote and the Republicans are simply calling for more cuts across the board. Those two desires are incompatible, thus there will be a predictable bloody battle to get the budget down.

Nunez thinks they are close enough on health care to call a vote next week. Perata is signaling that he won't go along and is pushing a water bond. Arnold wants cuts, health care and the moon. Republicans don't want anything but a smaller government.

Yes, I am pessimistic this Friday, but I think it is understandable when looking at the situation. The system is dysfunctional right now and I am not confident that they will be able to do the hard work to fix the fundamental problems.

Luxury trips paid by a nonprofit are itemized vaguely, records show. Schwarzenegger's aides say the practice is legal.

What is legal and what is right are two different to things. This does not pass the smell test. Note that by vaguely they mean Arnold's staff has been telling each other by word of mouth what was spent. Plus they have scribbled a few things down and locked them in a drawer.

I kid you not. LAT:

Gov. Arnold Schwarzenegger's office has avoided fully disclosing payments of $1.7 million in nonprofit funds for private jets, hotel suites and support staff for his trips overseas, according to state documents and interviews.

Record-keeping for many of the governor's luxury-class jaunts has been by word of mouth. Asked how the staff tracks the costs, subject to public disclosure laws, Schwarzenegger attorney Daniel Maguire said: "Orally."

I go back to the subheadline at the top. How the heck is this legal?

In late 2004, the multimillionaire governor stopped reporting the travel expenses on state disclosure forms that itemize gifts to elected officials. Instead, Schwarzenegger's top aides recorded some of the costs -- and made only general references to others -- in memos they wrote to themselves and filed away in the governor's legal affairs office.

Several of the memos did not include dollar amounts, even though regulations under the state Political Reform Act require that such figures be disclosed in a written public record within 30 days of payment. After The Times asked for those amounts -- some missing since 2004 -- the governor's office took more than two months to produce them.

Schwarzenegger has frequently called for more transparency -- what he calls the "antiseptic of sunshine" -- in state government. But nonprofit watchdogs and open-government advocates called his aides' handling of the travel costs deceptive, a way to thwart scrutiny of the lavish spending by the tax-exempt charity that foots the bill.

Say one thing and do another. That is the governor's motto. In this case it is say one thing then fly a private jet around the world and document it by having your staff chat about it and write a vague memo and file it away.

Everybody knows that big political contributions gets you face time with politicians to be able to lobby them on one issue or another. It is rare to see it so freely and specifically discussed with the LAT. For the first time, Arnold was forced to name the donors funding his lavish trips around the world. He has been funneling them through a 501c3, which provides a tax break for the donors and most of the time they do not need to be disclosed. But Arnold actually went and solicited donations at a dinner, thus they had to be made public.

The LAT talked with the donors.

Barry Cinnamon, founder and chief executive officer of Akeena Solar, said he attended the dinner and gave $5,000 for a variety of reasons, but chiefly because he wanted the opportunity to talk to Schwarzenegger about a renewable energy bill pending in Congress. Also, he said, the fundraiser was not far from his San Francisco home and involved "a nice dinner to go to with my girlfriend."

He said the protocol foundation "sounded like something worthwhile."

"Somebody's got to pay for those trips," said Cinnamon, "and I think what he does in terms of spreading the California message is absolutely terrific."

Cinnamon, whose 6-year-old company designs solar systems for homes and businesses, said he talked to Schwarzenegger for three or four minutes about backing federal legislation that would provide the first significant boost in vehicle fuel-economy rules in decades and require greater generation of renewable energy.

Schwarzenegger, he said, was enthusiastic but made no promises. Cinnamon credited the governor with providing stability to the solar industry by launching rebate programs for solar panel installation.

Big donor gives money and gets to fill politician's ear. Keep in mind that this is always promoted by Arnold as saving the taxpayers money. We may be saving money, but it is buying others influence. I would rather foot the bill than give people even more access to our governor.

And this is just ridiculous.

Under state law, Schwarzenegger, a Republican, must report the donations to the state's Fair Political Practices Commission. Schwarzenegger spokesman Aaron McLear said the governor had never personally raised money for the foundation before.

"That's an outside entity to us," McLear said. "They deal with how they want to disclose -- or not disclose -- their donors.

Uuum. Yeah. The governor's spokesman just claimed that the non-profit established to fund the governor's trip is an outside entity that they don't have control over. Right.

If Arnold wanted them to disclose, they would disclose. He doesn't. He wants to shield his contributors to the public.

Anthony York has a nice bit of analysis on health care over at Capitol Weekly in an article of the same name. I would not be surprised to see this make the jump into the big newspapers. His main point is that the bar was raised for any deal when Arnold made the decision not to try and get any Republicans support and instead to pass a bill with a simple majority and get the funding approved on the ballot.

But in the process, the governor created a new problem. Now, the Legislature is charged with devising a plan that stakeholders will not simply passively support. Schwarzenegger and Speaker Fabian Núñez must now find a way to concoct a plan that supporters are willing to spend millions of dollars on to get the funding mechanism approved on the November ballot.

That is the crux of the new health care balancing act: How far toward the governor can the speaker stretch while still ensuring that labor unions and major players in the health care industry will be willing to open their pocketbooks?

“When the governor made the decision to go to the ballot for financing, he raised the threshold of what the deal needed to be for different stakeholders,” said Anthony Wright, director of the consumer group Health Access. “There’s a difference with what they’d be willing to tolerate versus what they’re willing to campaign for.”

It is a very difficult problem and at the heart of the debate over affordability. Indeed it speaks a lot to the current internal struggles within SEIU. There are legitimate differences of opinions within all of these stakeholders as to what exactly they will support and if they will actually give money to get it passed.

No matter what there will be well-funded opposition, but will there be well-funded support for any eventual deal? That is key to its viability.

Nobody said this would be easy, no was it guaranteed that there would be a deal. To be honest there are a heck of a lot more reasons for the legislature and Arnold to fail to get a major health care reform package passed than for it to get done. Every day that slips by is reducing the chances of a deal.

There has been a lot agreed to already, but the two sides are still apart on many elements of the plan. Unfortunately politics are getting in the way right now. Chron:

Schwarzenegger and Democratic leaders also face an increasingly tight deadline for passing the bill out of the Legislature in time to gather the required number of signatures to qualify the financial package for the ballot.

The fate of the health care bill is also tied to Proposition 93 - a measure on the Feb. 5 ballot that would extend term limits for some incumbent lawmakers, including Assembly Speaker Fabian Núñez, D-Los Angeles, and Senate President Pro Tem Don Perata, D-Oakland, both key supporters of health care reform.

Some political analysts said Tuesday that growing concerns about the economy and the term-limits measure put passage of the health care measure into the long-shot category.

"You have to cut these deals when the iron is hot," said Garry South, a longtime Democratic strategist who was chief of staff to former Gov. Gray Davis. "Part of the problem is that everything is left until the last minute. That's not an environment to make significant progress on an issue like health care."

It is not surprising to see South be the naysayer here. He does not have a dog in the hunt, so he dogs everyone.

The calculations around the term limits initiative are the worst sort of politics, self-interest and power rather than good policy. But they should not be ignored. The political climate has markably worsened in the last month. The economy and thus the state's revenues have gone down and the Speaker loses political power based on the weakening polling of Prop 93.

That does not mean that talks have ended. The Speaker is still vowing there will be a vote:

Still, supporters of the overhaul insist an agreement is near. Schwarzenegger said Monday that he continues to be optimistic that a deal can be reached.

Steve Maviglio, spokesman for Núñez, said that talks will continue around the clock and that he believes a vote will be taken before Christmas.

I am still holding out hope, but am not confident that there will be a deal and I am even less confident that such an agreement would be affordable for Californians. We shall see.

Right now the revenue projections for the state are not very good. They are showing about a $10 billion deficit. That does not mean that it is time for the governor to declare a "fiscal crisis" under Prop. 58, as the Republicans are calling for. SacBee:

Top Republican lawmakers on Tuesday called on Gov. Arnold Schwarzenegger to declare a "fiscal crisis" to deal with California's looming budget problem, but administration officials said such a move would be premature.

Sen. Bob Dutton, a Republican from Rancho Cucamonga who refused to vote for the current budget because it spent too much, said the governor should use a special authority voters assigned him during the last budget crisis to tackle a budget deficit forecast to be nearly $10 billion.

Under Proposition 58 passed in 2004, the governor could declare a fiscal emergency if he determines revenue is "substantially below" what was anticipated in the budget and summon the Legislature into special session.

This smacks of the Republicans wanting to push through a bunch of cuts, rather than deal with the deficit in a strategic and long-term way. This is time for a thoughtful substantive discussion, not rash decisions. Arnold is right to resist this call. There is time and the state needs more data before it moves forward.

The administration's Department of Finance cautioned that it was too soon to make such a call.

"When we have all our data and we have our decisions in front of us, that will be when we advise the governor," Finance Chief Deputy Director Vince Brown said during Tuesday's hearing.

The state Finance Department is waiting on additional economic and revenue indicators to help draft the 2008-09 budget. Those reports are expected Dec. 10. A month later the governor will release his proposed budget for the fiscal year beginning July 1, 2008.

The state of the state in January should be the next target date, where the governor will throw a marker down on how to deal with the deficit. He cannot borrow his way out of this one. The state is struggling to pay off the huge bonds from 2004 right now.

Thanksgiving is over and the legislature is getting back to work. That does not mean that any bills are close to passage, particularly on the two biggest issues dominating the special session: water and health care. There are no votes scheduled and quite a bit of pessimism floating around at this point. AP:

California lawmakers had been scheduled to return after the Thanksgiving break to vote on sweeping health care reform and water proposals, after weeks of promises that compromises were near on both issues.

Instead, there were no signs of any deals on Monday as Gov. Arnold Schwarzenegger and legislative leaders tried to salvage something from the special legislative sessions called in September.

Senate President Pro Tem Don Perata, D-Oakland, canceled a vote on the water bond he had hoped to put before voters in February. Assembly Speaker Fabian Nunez, D-Los Angeles, postponed a vote on the health care plan he had been negotiating with Schwarzenegger.

No vote means not deals. That does not mean that everything is dead in the water, just that big breaks are not imminent.

Schwarzenegger then summoned Perata, Nunez and their Republican counterparts in the Senate and Assembly to his office for what legislative aides described as a last-ditch effort to find common ground.

"Clearly, there still remain serious negotiations on both," said Adam Mendelsohn, Schwarzenegger's communications director. "The governor just feels like coming out of the delayed vote, he felt it was important to have a discussion."

Discussions are a very good thing. We shall see what comes of it.

Peter Schrag asks today, are we back were we came in with regards to the four years Governor Schwarzengger has served in office. The answer is not much, other than landmark global warming legislation. SacBee

The Arnold era began with a huge deficit and is headed for another – maybe not of Gov. Gray Davis proportions, but immense enough. Departments have again been notified to prepare hefty cuts, the once loudly promised year of education threatens to shrivel to a whimper; the grand scheme for universal health care shows the shaky premises on which it was built.

His plan for universal care certainly, but that is not true of other plans that have been considered by the legislators. Here is the real nut of it:

Having gotten creamed in the 2005 special election in which he vowed to join the people in punishing the special interests and putting a rope around spending and the Legislature's self-serving redistricting system, he walked away from the state's fiscal and governmental dysfunction, and began his 2006 re-election year with (in his terms) an entirely new movie.

Through it all, he understood one thing better than his critics: The voters will never build a monument to a governor for raising taxes and/or cutting spending, both of which he probably needed to do to if he was to get the state's finances under control. But his whole career made clear that it's monuments he wants.

He does not care about details. He wants headlines, or as Schrag says, monuments.

And so he turned to the matters that would get them: global warming, health care, bonds for water projects, schools, highways – all of them advertised as free money that no one in the room would ever have to pay for. The fact that he wasn't born in this country liberated him from presidential ambitions and allowed him to play on a world stage and shoot for even larger targets.

What is missing here is our state's fiscal health, something all of these grand plans have a consequence on. There are plenty of other non-sexy issues he has ignored along the way, but none is bigger than the fact that the state is facing huge deficits.

What will come from the next three years? Will he leave us with a state in shambles but monuments to the great Arnold? Or will he actually put in the hard work. Will he walk away this year from the incredible work that has been done on health care? Or will he put in the hard work it takes to get a deal done and then campaign over the objections of the legislators in his own party?

Man this reads as if I could have written it. LAT:

Gov. Arnold Schwarzenegger swept into office in 2003 promising to end the state's pattern of "crazy deficit spending," cut up the government credit cards for good and force the state to finally live within its means.

So much for that.

He has never had the willpower to actually sit down and make tough decisions.

Experts say the state's spending habits are no more restrained than they were when Schwarzenegger arrived in Sacramento four years ago. The budget has grown by a staggering 40%. Costly programs have been launched.

And spending has continued to outpace tax receipts year after year -- even years when housing and tech booms led to cash windfalls.

Now the governor finds himself in a predicament similar to that of his predecessor, Democrat Gray Davis: staring at a crippling budget shortfall that threatens to overshadow all other business in the Capitol and tarnish his political legacy.

It is all too predictable. We never solved the fundamental problems that make our revenue is very cyclical. Thus when we hit hard times we run into big problems. Yesterday's LAT had this quote.

"We never fixed the problem," said Chris Thornberg, a principal with Beacon Economics. "It's been Scotch tape and glue and staples and just praying we will never have to face the reality that state government is on a path that is not sustainable."

Today's:

"There has been lots of talk and lots of gimmicks, but none of the state's underlying budget problems have been dealt with," said Ryan Ratcliff, an economist at the UCLA Anderson Forecast. "Even in the middle of a revenue boom, we kept spending more than we take in."

Arnold has been talking about making next year the year of education. Speaker Nunez seems to have nixed that idea. How about we make it the year of the budget. It sure isn't sexy, but it is damn important.