Schwarzenegger

The Armageddon Tease

Joe Mathews — Wed, 20 May 2009 14:35:00 -0400

To complete the orgy of self-promotion in this space: At the Daily Beast, I attempt to explain Schwarzenegger's failure as a campaigner.

The May 19 Massacre

Joe Mathews — Wed, 20 May 2009 03:33:00 -0400

Your blogger would have called it for "No" at 8:01 p.m., but he was out reporting. It's a special election wipeout. Propositions 1A through 1E -- backed by Governor Schwarzenegger, Democratic legislative leaders and most of the state's elite -- all lost badly. Only 1B appears to be receiving as much as 40 percent support in early returns. The rest are in the mid to upper 30s. (UPDATE MONDAY MORNING: all 5 measures are now well under 40 percent).

What's next? Chaos. Fighting. And a discussion of how exactly a bankrupt state declares bankruptcy.

Governor: Two Revised Budget Proposals Coming Thursday

Joe Mathews — Mon, 11 May 2009 16:22:00 -0400

Gov. Schwarzenegger said this morning that he's going to release two revised budget proposals on Thursday so that voters understand the consequences of their vote in next Tuesday's special election.

Traditionally, governors release a "May revise" -- a revised version of their January budget -- but Schwarzenegger's announcement, made after a meeting with local officials at a senior center in Culver City, was a bit of a surprise. (Some of his own aides hadn't known this was coming). The governor had previously said he would release a May revise after the election, on May 28. Your blogger was there, along with a surprisingly small number of TV and radio reporters.

Schwarzenegger didn't offer a long explanation, but apparently, he wants to give voters a "Door #1" or "Door #2" approach. One revised proposal would show what Schwarzenegger contends the budget will look like if the special election measures, Props 1A thru 1E, pass next Tuesday. The other would show what he contends the budget will look like if the measures fail. The governor said he wanted to make sure that voters have "a clear understanding" of what their vote will mean.

Schwarzenegger also expressed some frustration that voters seem to be prepared to vote "no" to send a message of frustration about their elected leaders. The trouble, the governor said, is that voters will be the ones hurt most if the measures pass. He raised specifically the possibility of borrowing local government moneys. That prospect drew a pointed rebuke from a city councilman from the east Los Angeles county suburb of Whittier (Richard Nixon's hometown), who said that municipalities shouldn't to make "sub-prime" loans to the state, which he called not a credit-worthy entity.

Update Monday afternoon: a friend of the blog points out correctly that with Prop 1C almost certainly going down to defeat, there may not be that much difference between Door #1 and Door #2. In terms of upfront budget savings, Prop 1C accounts for $5 billion of the approximately $6 billion. in terms of long-term budget help, Prop 1A, however, is a big deal, producing an estimated $16 billion in taxes (albeit two years from now) by extending new temporary taxes from two years to four years.

The Governor vs. the Flash Report

Joe Mathews — Wed, 08 Apr 2009 19:44:00 -0400

Wanna know what's driving Republican politics in California? It's not the Republican governor, or the Republican minority in the legislature. It's the Flash Report, the blog and web site run by Jon Fleischman, an Orange County political operative (and friendly acquaintance of your blogger) who is also an official of the California Republican Party. Flash Report posts often drive news coverage and radio talkers around the state.

If you doubt the Flash Report's power, check out the memo -- at the bottom of this item -- that is being distributed by Gov. Schwarzenegger's team and the campaign committee that supports the measures on the May 19 special election ballot. The memo, titled "Flash Report Myth-Fact," offers a direct refutation of multiple Flash Report posts criticizing the most important measure, Prop 1A, which would establish a new state spending limit and beef up the rainy day fund. The memo also provides a useful back-and-forth (sort of centrist vs. conservative back and forth) on the advantages and disadvantages of Prop 1A.

A related note: Northern Californians who have never met Jon (as one who disagrees with him on many issues, I must say that he's always terrific to talk with) will have an opportunity on April 21 in San Jose. New America and Joint Venture: Silicon Valley Network are hosting an event on the special election measures, and both Fleischman and your blogger are scheduled to be a part of a panel discussing the measures.

"Flash Facts About Proposition 1A

There have been a lot of columns on the Flash Report over the past month regarding Proposition 1A filled with less-than-truthful accusations and assumptions. Everyone is entitled to their own opinion about the propositions, but the debate should be an honest and open one - one in which correct data and information is provided. This document seeks to correct the record and provide accurate information about this measure.

Myth #1
President of The Howard Jarvis Taxpayers Association Jon Coupal: "While they admit that they have no control over their spending impulses the solution they offer would actually allow continued increases in spending without any connection to the taxpayer's ability to provide revenue. Proposition 1A ties spending to income, income which can be increased under the measure through new taxes. The State Constitution already requires a balanced budget, so the only effect would be a reiterate the same requirement, one that is already being ignored with impunity." (John Coupal, Howard Jarvis Taxpayers Association And Michael Reagan, "As A Spending Limit, Prop. 1A Does Not Cut It," Flash Report, 3/30/09)

Fact:
California taxpayers are protected against taxes by the 2/3 vote requirement. Prop 1A does nothing to change this protection. In fact, Prop 1A should reduce the pressure for tax increases over time by forcing the state to save money into the rainy day fund during the boom years to ensure that reserves are available during economic downturns.

Myth #2
Insurance Commissioner Steve Poizner: Prop 1A does nothing to change the fiscally irresponsible approach that is the cause of our chronic budget deficits. Instead, it will cost Californians jobs and hurt small businesses at a time when the state's unemployment rate is already at a staggering 10.5%. (Jon Fleischman, "Poizner Calls on California Republican Party to Oppose Proposition 1A, Flash Report, 3/24/09)

Fact:
Prop 1A puts into place all of the following fiscal reforms:

Prevents overspending revenues in the good years on ongoing programs by mandating that revenues above the 10-year trend line be redirected to first build up the rainy day fund (budget reserve) and then to fund ONLY one-time expenses such as tax rebates, paying down debt or funding an infrastructure project;
Increases the rainy day fund from 5% of the General Fund to 12.5 % of the General Fund;
Mandates an annual 3% transfer to the rainy day fund PLUS transfer of revenues above the 10-year trend line;
Can only be modified by a vote of the people;
Constitutionally limits the ability of the Governor to suspend/reduce the rainy day fund transfer;
Limits the ability of the Governor to withdraw money from the rainy day budget stabilization fund to emergency uses, such as a fire or flood; and
Creates new authority for the Governor to reduce spending during the fiscal year without legislative approval.

Myth #3
Ben Zycher, Fellow With The Pacific Research Institute: "The language allows the governor to suspend or reduce transfers into the BSF for any fiscal year upon issuance of an executive order, and there is no limit on that power; given the spending pressures that exert themselves upon any California governor, it is likely that such executive orders will become the norm rather than the exception." (Ben Zycher, "FR Interview With Economist Ben Zycher Who Says The Measure Does Not Deliver On A Promise Of A Real Spending Limit," Flash Report, 3/6/09)

President of The Howard Jarvis Taxpayers Association Jon Coupal: "But Proposition 1A fails in its promise to provide a real spending limit for California. How can it, when the Governor can suspend transfers into the budget stabilization fund simply by issuing an executive order? How can this be characterized as imposing 'spending discipline' if the spending limit will automatically be adjusted upward for new taxes?" (Jon Coupal, "Governor, You're Not In Hollywood Anymore," Flash Report, 3/16/09)

Fact:
Prop 1A is a constitutional amendment that does not include a suspension provision. There is absolutely no way for the Legislature or the Governor to unilaterally suspend it. In fact, it would take another vote of the people to change it - the Legislature and the Governor could not act alone to alter it.

It is also drastically different from Proposition 58, which provided a lot of loopholes for the Governor and Legislature to avoid its requirements - namely it made transfers to the rainy day fund optional, not mandatory. Prop 1A does not contain this kind of provision and makes the conditions for transfers into and out of the rainy day fund mandatory so that they are not subject to political pressures.

In regards to the spending limit increasing upward for new taxes, the trend line based on revenues will increase only if the Legislature enacts a permanent tax increase and then only after it is in place for ten years. The Proposition 1A revenue limit doesn't make it any easier or more likely to raise revenues, compared with today. Indeed, if spending is already at the revenue cap, a tax increase would be difficult to justify since the proceeds of the new taxes would be deposited in the reserve.

Myth #4
Lewis K. Uhler, President, National Tax Limitation Committee: "Furthermore, the Prop. 1A spending cap will not, in itself, limit general fund spending. All that this cap does - if spending ever actually bumps up against this 10-year average revenue trend line - is to require that the excess, or so-called ‘unanticipated' revenues be placed in a ‘rainy day fund' - the Budget Stabilization Fund (BSF) and spent according to the rules of the BSF." (Lewis K. Uhler, "Vote No On 1A The "Spending Cap" Measure (Prop. 1A) Is Not Effective Medicine For Taxpayers," Flash Report, 4/3/09)

Fact:
The rules in Prop 1A governing transfers to and withdrawals from the rainy day budget stabilization fund are crystal clear and ensure that boom-year revenues (plus the annual 3% mandatory transfer) are saved into the rainy day fund. These transfers can only be suspended in the event that revenues are below last year's expenditures grown for inflation and population. Likewise, withdrawals from the rainy day budget stabilization fund are only allowed under similar circumstances. Current law allows suspensions and withdrawals from the rainy day budget stabilization fund for any reason.

Myth #5
Ben Zycher, Fellow With The Pacific Research Institute: "Proposition 1A allows the (assumed) revenues from any tax increase to be included in the revenue projection for the current fiscal year, thus increasing allowable spending. But it proscribes any consideration of the adverse economic effects of---and thus the reduction of the tax base caused by---the tax increase in future fiscal years over the ten-year projection horizon. This means that a tax increase yields more allowable spending immediately without any recognition of the future adverse revenue effects, so that future transfers out of the BSF become more likely. Because Proposition 1A treats tax increases in this unrealistic way, it biases the future revenue projection upward, and with it allowable spending under the terms of the proposition." (Jon Fleischman, "FR Interview With Economist Ben Zycher Who Says The Measure Does Not Deliver On A Promise Of A Real Spending Limit," Flash Report, 3/6/09)

Fact:
In regards to the spending limit increasing upward for new taxes, the trend line based on revenues will increase only if the Legislature enacts a permanent tax increase and then only after it is in place for ten years. But the Proposition 1A revenue limit doesn't make it any easier or more likely to raise revenues, compared with today. Indeed, if spending is already at the revenue cap, a tax increase would be difficult to justify since the proceeds of the new taxes would be deposited in the reserve.

The bottom line for whether taxes would be increased has been, is, and will be getting a two-thirds legislative vote. Remember: since Proposition 13 passed in 1978, the Legislature has never raised taxes to increase programs and services - only to address deficits or emergencies. Since 1978, tax increases to finance new programs have only come about by a vote of the people.

Furthermore, only permanent tax increases are included in the trendline, so temporary tax increases would not apply.

Myth #6
Grover Norquist, President, Americans for Tax Reform: "Prop 1A does not even come close to providing an effective spending cap. Even worse, the so called "rainy day fund" that 1A creates is nothing more than a slush fund for the spending interests that have put a great state on the road to bankruptcy." (Grover Norquist, "Plenty To Dislike In 1A - Americans For Tax Reform Says Vote No On May Ballot Propositions," Flash Report, 4/6/09)

Fact:
This is political rhetoric, not a factual analysis of what Prop 1A would actually do. Prop 1A creates a mandatory annual 3% transfer to the rainy day fund and forces the state to save boom year budget revenues. The measure calls for part of these savings to retire an existing education obligation, to retire existing budgetary debt and to build up the rainy day fund for use to help the state through bad budget years. In the event that the rainy day fund fills to its 12.5% target, Prop 1A still only allows the use of additional budget savings on specific items such as further building the rainy day fund, paying for infrastructure projects, providing one-time tax relief, or paying off unfunded health care liabilities for state employees.

Note that had Prop 1A been in place over the past decade, the rainy day fund would have been full three times. In addition $33 billion would have been available to fund one-time expenses. Instead we had no rainy day fund and that $33 billion was spent in large part to fund ongoing programs that now cannot be sustained without a tax increase.

Myth #7
Ray Haynes: "Proposition 1A contains no limits on spending for education, infrastructure and bonds, which means that legislature can take this money any time it wants, with little or no restriction, to increase state spending. Second, once the limit on the Budget Stabilization Fund (the BSF) hits 12.5%, the state can spend its excess revenue on anything. Understand that the 12.5% BSF requirement is fixed, it is 12.5% of the budget for that year, amounts deposited in the past do not accumulate. The money deposited from last year counts towards this year's limit. That means in really good years, where revenue is pouring in, as it did in 1999-2001 and 2005-2007, the BSF will fill quickly, and the transfers will be done. Assuming that the Legislature doesn't spend it on the approved items (which it will), once it is full, the BSF is no restraint on spending." (Ray Haynes, "May Ballot Props - A Really Bad Deal," Flash Report, 3/25/09)

Fact:
Prop 1A contains a very clear limit on spending: revenues above the 10-year trend line are used for one-time expenses, to pay down existing budgetary debt and to build up the rainy day fund.

Prop 1A is clear about what happens to excess revenues (above the 10-year trend line) when the rainy day fund is full (12.5% of the current year General Fund). These additional revenues could be used to further build the rainy day fund, pay for infrastructure projects, provide one-time tax relief, or pay off unfunded health care liabilities for state employees.

Prop 1A also specifically allows excess revenues (beyond the 10-year trend line) to be used to further build the rainy day fund beyond the 12.5% target.

Myth #8
President Of The Howard Jarvis Taxpayers Association Jon Coupal: "As a result of Steinberg's selection of Hancock as the author of the argument against, the word "taxes" will not appear anywhere in the official arguments for or against Proposition 1A." (John Coupal, Howard Jarvis Taxpayers Association, "Proposition 1A: Keeping Taxpayers In The Dark," Flash Report, 3/2/09)

Fact:
This argument is a red herring. Voters will see both a description of Prop 1A and its fiscal impact when they go to the polls. The title and summary of the measure that appears in the official voter information guide specifically states: "higher tax revenues of roughly $16 billion from 2010-11 through 2012-2013 to help balance the state budget."

Myth #9
Ray Haynes: "This cap is based on historical spending patterns (over the last ten years, the fastest growth in spending in the history of the state), and has a number of exceptions and allowable spending categories. Analyzing its true effect is difficult because it is based on spending patterns, unknown factors, and legislative action by a legislature that has proven itself to lack all self control. No one can point to a number and say ‘Spending will not exceed that amount.'" (Ray Haynes, "May Ballot Props - A Really Bad Deal," Flash Report, 3/25/09)

Fact:
Because Prop 1A creates an historical 10-year trend line for spending, the measure very clearly defines a limit based on a regression analysis that includes good years and bad years during the past decade. DOF estimates the 10-year trend to be about $100 billion for FY08-09 and to drop a couple of billion dollars in FY09-10. Had the measure been in place the last ten years, this trend line would have forced savings into the rainy day fund during several years - money that would have been available to help us through the current crisis.

This measure is predicated on the fact that we will have years in which revenues are above the cap, called "good years" and years in which they are below, or "bad years".

Prop 1A puts into effect essentially two different formulas. The first applies to the good years to cap spending based on a 10-year revenue trend line designed to smooth out expenditures. The state's fiscal problems have not grown as a result of the down years, but rather the good years when the Legislature makes ongoing funding commitments that we cannot afford to sustain. Prop 1A limits the Legislature's ability to spend it all in these years and forces them to save for the down years.

It is in these down years - that is, when current year estimated revenues are lower than prior year expenditures - when the second formula created by Prop 1A comes into place. Under Prop 1A, the state cannot spend more in a down year than it spent in the prior year plus an adjustment for population and inflation. Right now, the trend line would increase at about a 5.2 percent rate, but population and inflation are at a combined 4 percent growth rate.

This means that irrespective of the actual balance in the reserve fund and irrespective of the ten-year revenue trend line, the state could only draw down the rainy day reserve to allow for current year spending that does not exceed the prior year's expenditures plus an adjustment for population and inflation. Under this second formula, it would be limited by the population and inflation growth rates, even if we had the funding in reserve to spend all the way up to the higher revenue trend line.

Had Prop 1A been in place over the past decade, the rainy day fund would have been full three times. In addition $33 billion would have been available to fund one-time expenses. Instead, we had no rainy day fund and that $33 billion was spent in large part to fund ongoing programs that now cannot be sustained without a tax increase. We would have gone into the 2008-09 budget year with less than half the deficit and $9 billion in reserve to cover the gap.

Myth #10
Lewis K. Uhler, President, National Tax Limitation Committee: "The threshold difficulty is that neither the California Department of Finance, nor any other potential source of these numbers, is willing to provide out-year revenue projections with which to work. And the design of the Prop. 1A cap, relying upon a running 10-year average of actual general fund revenues, cannot be used to test the efficacy of the cap without such out-year revenue projections (whereas, a conventional state spending cap, which is predicated on the previous year's actual spending, adjusted for changes in inflation and population, generates a hard number and a known restraint over the business cycle)." (Lewis K. Uhler, "Vote No On 1A The ‘Spending Cap' Measure (Prop. 1A) Is Not Effective Medicine For Taxpayers," Flash Report, 4/3/09)

Fact:
The Department of Finance has provided an estimate of how Proposition 1A would have impacted the last ten years of budget history and how that plays out in the current year (FY08-09). They found that if Proposition 1A had been in effect, spending would have been held to about $92 billion for FY 08-09 and $9 billion would have been available in the rainy day fund. Instead, the state faced a situation earlier this year where expenditures were estimated to be more than $104 billion with nothing in reserve to cover the massive budget deficit due to the decline in revenues."

'These Are Not Serious People'

Joe Mathews — Thu, 12 Mar 2009 21:16:00 -0400

That's how California Gov. Arnold Schwarzenegger today characterized opponents of the six measures that were part of last month's budget deal and go before voters in the May 19 special election.

Schwarzenegger made plain in a speech at the Commonwealth Club that, despite sagging approval ratings, he intends to campaign strongly for the package of six measures.

He also revealed a tough political strategy: go negative against opponents of the package and particularly the spending limit and rainy day fund measure, Prop 1A. In the speech, Schwarzenegger depicted those opponents as out of the mainstream, "the far left" (who want to spend) and "the far right." He was not kind. Consider this excerpt:

In a blast at members of his own party, he said: "Those who say that we could balance the budget through spending cuts alone are guilty of political cynicism at its worst. These are not serious people."

That's right, the governor of California effectively declared that much of the Republican establishment, a majority of GOP legislators and the two of the three GOP candidates for governor in 2010 (Steve Poizner and Meg Whitman) "are not serious people." That's a bit much, but their opposition to taxes in this circumstance is certainly unserious. It appears that the third GOP candidate, former Congressman and Schwarzenegger finance director Tom Campbell, has the governor's endorsement. If he wants it.

As for the Democrats, he called them hippies and said they don't know math. "Those who say we could balance the budget through tax increases alone reveal their total economic ignorance and lack of math skills. Their grasp of economics must come from living on a hippie commune."

And there was this classic piece of Arnold rhetoric, as an explanation for why a rainy day fund is needed: "Many of you probably have a pet. At my house, we have dogs, and I'm the one in charge of feeding them every morning. If I put outa whole week's worth of food, they would eat it all and not have anything to eat for the rest of the week. Dog food, tax revenues -- it's the same thing. Perhaps that's not a good example. Some smart-aleck reporter will say that I compared the legislature to my Labradors. But I love my Labradors."

No, governor, this smart-aleck blogger wouldn't say that. He'd say that you said you love your Labs, and left your feelings about the legislature to the imagination.

Arnold Hearts Constitutional Convention

Joe Mathews — Thu, 26 Feb 2009 14:38:00 -0500

He explains why to George Skelton. The governor is interested in looking at changes to the requirement of a two-thirds vote of the legislature to pass a budget. But he also wants to transform the executive branch, which wasn't on the agenda of many folks attending this week's summit in Sacramento on the idea. Schwarzenegger wants to get rid of the independently elected constitutional officers -- the lieutenant governor, the attorney general, the controller, the treasurer -- who sometimes make it hard for him to administer the government.

As a policy matter, Schwarzenegger has a point. There'd be more accountability if the governor could appoint the people in those roles. As a political matter, Schwarzenegger may have hurt the convention effort by saying that. Opponents of the idea will deride the convention as a power grab by a governor whose approval rating is at 33 percent in a new poll.

Donations to 2008 California Initiative Campaigns Topped $227 Million

Joe Mathews — Thu, 05 Feb 2009 15:51:00 -0500

That's not a record. The number topped $300 million during 2005, the year of Gov. Schwarzenegger's ill-fated special election, and in the 2006 cycle. But it's not chump change--more than the payroll of the New York Yankees, and a little less than the budget at smaller University of California campuses.

It's What Governors Say, Not What They Do

Joe Mathews — Mon, 19 Jan 2009 16:42:00 -0500

Gov. Schwarzenegger largely punted in describing the state of the state. So others have picked up the slack. The Sacramento Bee's Dan Weintraub explains how we're doing. There's a little good news, and some bad.

Even more interesting is this extraordinary piece by New America's Micah Weinberg. He puts Schwarzenegger's speech in context, comparing it to the rhetoric of other governors. This is part of an extensively analysis Weinberg did of the words governors across the country use. The results are startling: it's what you say, not what you do.

I conducted an analysis of the rhetoric of 97 governors that compared the language in their speeches to that of national party platforms. It showed that approval ratings were higher, chances of re-election greater and margins of victory larger if governors used partisan language that appealed to the political majority in their states. On the other hand, the actual fiscal policy changes they presided over had no discernable effect on their political fortunes.

So if you're a governor in a Republican state, it is not necessary to actually cut taxes in order to be successful, but you'd better talk about cutting taxes as frequently as you can. And in a Democratic state, you need not succeed in expanding state programs, but you had better say that you're planning on doing so.

This reminded me of a passage from Lou Cannon's book, Governor Reagan:

Through tax increases and sundyr compromises, Ronald Reagan retained his high standing with mainstream conservatives, some of whom began boosting him as the next president even before he learned the ropes as governor. Conservatives were not blind to Reagan's pragmatism. They liked what he said, even when it required ignoring what he did, because Reagan had a perspective that William F. Buckley described as "essentially undoubting."

This begs the question: Would Schwarzenegger have been more effective if he had shut up about post-partisanship and instead simply practiced it silently, while keeping up conservative, red-meat rhetoric in public? The answer might be yes.

California Puts New Rules On Ballot Committees Controlled by Pols

Joe Mathews — Fri, 16 Jan 2009 13:25:00 -0500

In California's blockbuster democracy, it's now commonplace for politicians to establish their own political committee to raise money for and spend money on ballot measures (as opposed to the committees they use for their own election campaigns). This tactic, most aggressively advanced by Gov. Schwarzenegger, makes sense in an era when most issues of significance end up on the ballot.

But some believe that ballot measure committees, which may accept a contribution of any limit, are a way around the legal limits on how much one can give a politician. And several politicians have used the ballot measure funds for political spending that had nothing to do with an initiative or referendum.

On Thursday, the state's Fair Political Practices Commission made a stab at limiting the power of ballot measure committees that are controlled by politicians. Such committees will no have to show that they are devoted to a particular ballot measure. What does this mean? Even more such committees, as politicians open multiple accounts to comply with the regulation. So who's the winner in this scenario? Election lawyers.

Only One Way Out Of California Mess: The People

Joe Mathews — Fri, 09 Jan 2009 03:12:00 -0500

It has become obvious that Gov. Schwarzenegger and legislative leaders of both parties simply won't be able to reach a compromise that comes anywhere close to closing California's rapidly growing budget deficit, now estimated at some $40 billion over two years. The state government is running low on cash. Within weeks, it may have to start paying people in IOUs.

Democrats simply won't agree to enough cuts. Republicans won't agree to tax increases, and they can block that because of the state's requirement for a two-thirds vote. The Democrats' convoluted (if politically smart) attempt to do an end run around two thirds and raise taxes by majority vote isn't going anywhere; even if it's revived and signed into law, it's all but certain to get struck down in the courts or overturned by referendum. The governor you ask? Schwarzenegger has little credibility with lawmakers of either party. When it comes to big deals, he simply can't close.

For anyone who still held out hope that our state's leaders could fashion a way out of this mess by themselves, the legislature's very own analyst offered an answer today: no way. The legislature's failure to act over the last two months has added $12 billion to the problem, according to a report from the legislative analyst's office and comments by its chief Mac Taylor. So what to do? The voters, via the ballot measure, are the only ones who can resolve the crisis.

That's my reading of the LAO report, at least. The LAO explicitly suggests that the legislature and governor seize on the idea of a special election (talked about for June or later) and move it up to April. What would be on the ballot? Well, first there would be two ballot measures that were sent to the people as part of last year's budget agreement --the $5 billion in lottery borrowing and the establishment of a stronger rainy day fund for the state. To that, the LAO would add measures, suggested by Schwarzenegger, that would ask voters to redirect money previously set aside by ballot initiatives (Prop 10 for early childhood, Prop 63 for mental health) to the state's general fund.

The LAO and Taylor don't stop with just these four measures. The legislative analyst actually proposes new measures to add to the ballot. What are they?

1. Two new measures that would also grab money apportioned by initiative to help with the current state budget crisis. One of the measures targeted would be Prop 49, the after-school initiative sponsored by Schwarzenegger himself in 2002

2. A measure that would permit the state to issue gas tax bonds -- that is to securitize future gas tax revenues -- and use the money to accelerate the building of current transportation projects.

3. A measure that would ask voters to approve massive short-term borrowing in order to put such borrowing on a stronger legal footing if it is challenged in court. The LAO suggests one method might be to seek more "economic recovery bonds" -- that is general fund bonds to cover the deficits -- like the $15 billion in bonding authority in Prop 57, which was approved by voters in the last major budget crisis, in early 2004.

4. A package of tax increases would be placed before voters as ballot measures. These are tax proposals that Republicans won't support. The LAO, bowing to political reality, says the legislature should let the people decide. Given the number of tax proposals on the table, it's possible this could produce a half-dozen different measures.

All told, the legislative analyst -- yes, these folks work for the legislature, which is supposed to handle the budget -- are arguing that the only way out of the fiscal mess is an April election in which voters would cast ballots on, by my count, between 9 and 15 complicated and important measures. (The LAO report is titled, "Overview of the Governor's Budget." It would have been more honestly titled: "You Know That Question About Whether the State Is Governable? It Isn't. Even Those of Us Who Work in the Legislature Know This"). Clearly, California has reached a point where it is no longer a true republic. Ballot measures are the coin of the realm. We are truly a blockbuster democracy.

And if the voters don't approve most of these budget measures in the special election the LAO wants?

Well, then, there may be no way out.