Joel Fox, former president of the Howard Jarvis Taxpayers Assn., predicts a big, bad multi-initiative war between unions and business interests in California next year.

The state controller has just made plain that he'll start paying California's bills with IOUs next Thursday if the legislature and governor don't agree on how to fix the $24 billion budget shortfall by then. (This is bad, but not as bad for those receiving the IOUs as it seems. The IOUs must be paid back with 5 percent interest. Your blogger is thinking of asking his bosses at the New America Foundation to pay him in IOUs. How 'bout it, Mr. Coll?).

With the state on the brink, it's not clear how this movie ends. One new narrative was offered by Republican GOP contender Tom Campbell, a former director of finance for the state, during a talk at the Los Angeles Area Chamber of Commerce.

According to Joel Fox's report in Fox & Hounds Daily, Campbell suggested a federal judge could end up with huge control over state finances.

Fox reports: "Campbell painted a dark picture of what might happen if the state runs out of cash in July. He told the Chamber audience a likely scenario is that a federal judge might intervene to demand California pay its bills.

Over at Fox & Hounds Daily, Joel Fox writes about a California legislator's proposal to dust off a forgotten constitutional revision plan from the mid-90s. The plan, produced by a commission put together by then-Gov. Pete Wilson, never went anywhere because it was introduced during the summer of an election year. But reviving it is an intriguing idea -- as a vehicle for constitutional reform both faster and less risky than a full-blown constitutional convention.

Over at Fox & Hounds Daily, Joel Fox and I are debating the wisdom of permitting legislatures to add a counter-proposal to each initiative that appears on a ballot. In this piece, Fox criticizes legislation in Oregon to do just that. And in response, I describe why I like the Oregon legislation and think counter proposals would strengthen direct democracy.

The new tax reform commission met this week in San Diego. There have been high hopes that the commission might produce a new tax blueprint for the state. But the first meeting was a bit of a struggle, with a lack of consensus on what the commission's focus should be, according to Joel Fox, who was there and provided this report at Fox & Hounds Daily.

Joel Fox, writing at Fox & Hounds Daily, suggests a way to counter the California Democratic proposal to raise taxes without the usual two-thirds vote. The proposal is part of an effort to break a partisan logjam over how to respond to the state's budget crisis. Since some of the taxes are being classified as "fees," Fox suggests that opponents could put a referendum on the ballot. Under the state constitution, bills that raise taxes can't be subject to referendum. But there's nothing against qualifying a referendum on fees.

People outside California may not know this, but our supreme court judges don't have lifetime terms. Every 12 years, they face "retention" elections -- up or down votesby thep ublic on whether they remain on the court or not. Two judges -- including Chief Justice Ronald George, the author of the 4-3 opinion in May that legalized same-sex marriage -- face retention elections in 2010. (The other judge up for retention was in the minority in the gay marriage opinion). Before 2010, the court will decide whether or not to overturn Prop 8, the ban on same-sex marriage just passed by voters. Writing at Fox & Hounds Daily, Joel Fox suggests George could face a campaign against his retention no matter how he decides on Prop 8.

Over at Fox & Hounds Daily, Joel Fox examines the election returns and points out that the City by the Bay voted down legalized prostitution and a plan to humiliate President Bush by naming a sewage plant after him.