California's prospects in the new decade will ride on its ability to answer the two big, linked questions that the final year of its lost decade left hanging. Can it summon the energy and leadership to fix a system that, in its current shape, makes the state ungovernable? And in the year that marks the centennial of the election of Gov. Hiram Johnson, the Progressive reformer, can California rekindle the forward-looking spirit of innovation and public investment that, through much of the last century, made the state a model of shared prosperity?

On the first question there's reason for hope. The lost decade taught a growing number of Californians a hard lesson: California is in trouble not just because it has problems – foreclosures, high unemployment, budget deficits, you name it. No, they learned that California's real trouble is that its current system of government, misshapen by decades of piecemeal changes, is no longer capable of dealing with its problems.

To understand why, just think back, if you can bear the thought, to the fiscal events of 2009.

The Legislature that returned from the 2008 general election had a new face. The voters had spoken about as clearly as they ever can under our current electoral system. In the wake of the previous summer's ugly budget stalemate, they had elected Democrats to most of the competitive seats.

In a real democracy, this outcome would have gone a long way toward setting California's budget direction. When voters put a party into the majority, or give the majority party more seats, it is the operating principle of democracy that they wish for that party and its policies to prevail.

But not in California. California has a second political operating system superimposed upon the first – a constitutional web of rules requiring supermajority legislative agreement about the very subjects, spending and taxes, over which the parties and the electorate are most polarized. The driving principle of the first system is to create a majority and let it govern. The driving principle of this second system? Do nothing important without broad consensus.

And so, early last year, as the state government ran out of cash, shut down road projects and furloughed workers, the party that a majority of voters had elected was forced to try to write a budget acceptable to members of the party the voters had rejected.

The process was interminable and unlovely. And the resulting budget deal, with $41 billion worth of painful fixes, was unlovable. It combined temporary tax increases on ordinary Californians, permanent tax cuts for the largest corporations, and deep spending cuts in higher education and services to the most vulnerable people. The deal was, from the day it was born, a policy orphan, a misshapen waif neither party wanted to claim as its own.

But lawmakers had at least done their job: By mid-February, four months before the constitutional deadline, they had maneuvered through the wreckage created by the collision of two contradictory political systems to pass a budget.

The story couldn't end there. In California, it is not enough just to achieve a supermajority consensus. Because California has yet a third political system, layered atop the other two: the voter initiative.

As part of the February budget, lawmakers had swept up money set aside for early childhood and mental health programs and redirected it for higher priorities, like education and prisons. They had also agreed to "modernize" the lottery and borrow against its future revenues.

The people voters had elected to make the laws could not, however, enact these laws on their own authority. The two pots of money they needed to tap had been created by voter-approved initiatives – Proposition 10, the 1998 tobacco tax measure, and Proposition 63, the mental health measure passed in 2004 – as had the lottery itself in 1984. California is the only state where changing laws enacted by the voters requires returning to the voters. For $6 billion worth of February budget decisions to become law, voters had to give their consent.

At the May 19 special election, the voters angrily refused, turning down all the budget measures.

Here was California governance in all its glory: three political systems and two contradictory governing principles – majority rule and rule by consensus – in collision. Voters created a legislative majority, which was forced to bend to the minority, leading to a supermajority compromise, which was then overridden by a majority of voters, leaving the budget in disarray.

And here was the lesson: California doesn't work because it can't work.

The lesson has sparked a reform conversation deeper and broader than any since the Progressives ruled. In 2010 Californians will have a chance to learn about, and choose among, a wide array of reform options, ranging from the constitutional convention proposed by the Bay Area Council to the piecemeal measures being pushed toward the ballot from all points of the political spectrum. At the moment, voters may be dubious about most of these options. But at least California is in motion.

And that motion offers a small glimmer of hope on the second big question. Perhaps California is waking up to what's at stake if it continues to ignore public investment and the needs of the future.

Over the last decade, California put off hard work and chose immediate gratification over making decisions that would lead to potentially larger benefits in the future. As a political culture, California has fallen into the kind of present-mindedness that Edward C. Banfield, the late Harvard University social scientist, famously identified as a primary cause of the plight of the urban poor.

Californians complain about the state's crumbling and congested roads, but today pay only a third as much per mile driven in user fees and fuel taxes as the surfer boys who crooned a half century ago about their little deuce coupes and GTOs. They have chosen instead to finance the next round of highway improvements with general obligation bonds to be repaid by their children, somehow, out of general taxes. In 2010 Californians all drive welfare Cadillacs.

Having failed to reckon with the structural gap in the budget created by the tax cuts and spending increases of the dot-com boom, they have let the state accumulate liabilities of about $200 billion (more than twice the annual general fund budget) in budget debt, infrastructure borrowing and unfunded retirement benefits so lavishly bestowed in 1999.

And they have directed the hardest budget blows against higher education, long the symbol and substance of California's commitment to the future. Decades before California became the most populous state, it had the largest number of public college students. The commitment it made a century ago to what historian John Aubrey Douglass calls the California Idea – a higher education system balancing broad access, affordability and quality – created wealth and knowledge unequaled on the planet. It is now being dismantled before our eyes, an act of slow-motion vandalism.

Valuing present satisfactions at the expense of the future has always been the road to poverty, but never more so than in the new California. Once a state of arrival, populated heavily by migrants from other states and nations, California is becoming a more settled place, where most new Californians arrive by way of the maternity ward. It is on a path to having the first homegrown adult majority in its history, one that will thrive or fail depending on the quality of investments made today in that majority's skills and knowledge. Yet the vandalism of higher education threatens to leave that next generation less educated than the last and put California in the pinch of having too few college-educated workers to meet the needs of its economy.

This reality has not yet seeped into our political conversation, dominated by the immediate-gratification culture of talk radio and online comment sections, where people pass around brown paper sacks of ignorance and share the crack pipe of spin. But the students who are protesting the fee hikes and enrollment cuts on their campuses know it in their bones; their future and California's are one and the same.

Those students have so far misdirected their anger at their own campuses. The damage to their future is being done at the state Capitol and by a failing political system. If they – and their parents and grandparents – come to see that energy wasted on occupying the English department and berating the regents is better spent on joining and powering the budding movement for constitutional change, 2010 can mean as much to this century as 1910 and the Progressives meant to the last.