Capitol Alert

Days after Assembly Republican leader Mike Villines took a voluntary 5 percent pay cut to "stand in the trenches" with GOP aides whose pay hikes were rescinded, the Clovis Republican decided to step down from his GOP post.

Villines said that when he took the voluntary cut, he hadn't yet decided to give up his leadership position, which will trigger an automatic salary reduction when it becomes effective June 1.

Put simply, Villines' voluntary cut is $6,682 and his mandatory cut is $17,431 to move from leadership to rank-and-file.

What now?

Villines plans to fold the first cut into the second.

His pay will drop substantially, nonetheless.

From $133,639 to $116,208.

Thirteen percent.

Assemblyman Sam Blakeslee was elected Thursday as Assembly Republican leader, effective June 1.

"Our team is looking forward to working with everyone in the Legislature to find responsible solutions that balance California's budget and returns prosperity to our communties," the San Luis Obispo Republican said in a written statement.

Blakeslee vowed to fight for high-performing schools, safe streets, a healthy business climate, and for reform and streamlining of state government.

Blakeslee will replace Assemblyman Mike Villines, R-Clovis, who held a news conference earlier Thursday morning to announce that he will step down at the end of this month.

Villines, attacked by conservatives for supporting tax increases in budget negotiations, said resigning will resolve lingering questions within Republican ranks statewide.

"The truth is, there will always be this lingering fear, 'Well, would Mike do taxes again?' I won't, but I think it's important for a new start and a new fresh face."

"I think I can offer a lot of advice and wisdom to the team, but I've run my course," he added.

Villines, who will be termed out of the Assembly next year, said he expects to continue a career in public service and has not ruled out a run for statewide office.

Villines, who replaced George Plescia as Assembly Republican leader in November 2006, said he was not pushed out by members of his 29-member Republican caucus, which lost three seats in the 2008 election.

Married and the father of three children, Villines said his family has taken a "tremendous hit" from his Assembly work, which included months of long, tense budget negotiations that ended with marathon sessions in February.

"This has more to do with my wife and kids than it has to do with anything else," Villines said of resigning his post.

Assembly Republican leader Mike Villines is making an official announcement this morning "about his future and the direction of the Assembly Republican Caucus."

At least that's how the news release announcing his announcement puts it.

Villines, of course, is expected to resign his leadership post, and Assemblyman Sam Blakeslee's name has been floated as his successor.

The Assembly Republican Caucus is meeting right after Villines' announcement. Caucus rules require 15 of the Assembly's 29 Republicans to approve a leader.

If elected, Blakeslee's reign could be short: The San Luis Obispo lawmaker is termed out next year.

Villines has caught the wrath of anti-tax conservatives ever since negotiating a budget deal in February with Gov. Arnold Schwarzenegger and legislative Democrats.

Speaking of the state budget, the Legislative Analyst's Office is releasing a report today called "California's Cash Flow Crisis: May 2009 Update."

Given the state of the economy, it wouldn't be wise to expect good news from a report with the word "crisis" in the title.

GOVERNOR: Gov. Arnold Schwarzenegger has set another press conference this morning to discuss Wildfire Awareness Week. This one is at the Cal Fire West Riverside Fire Station in Riverside.

HIGH-SPEED RAIL: The California High-Speed Rail Authority board meets at 10 a.m. in Sacramento City Hall, council chambers, 915 I St.

YOUTH PRISONS: The Books Not Bars campaign holds a news conference and rally in Capitol Park at 11 a.m. to support Assembly Bill 999 by Democratic Assemblywoman Nancy Skinner of Berkeley. The bill would require the state Division of Juvenile Justice to consider participation in education, drug treatment and other programs in setting release dates for juvenile offenders.

Compiled by Micaela Massimino

Call it a political promise kept...

Assembly Republican leader Mike Villines is a little slimmer this week -- in the wallet.

Villines vowed to cut his own pay by 5 percent to "stand in the trenches" with 44 Republican aides whose pay increases were rescinded, along with those of 80 Democratic aides, after controversy was sparked last month by public disclosure of them.

The state controller's office received a fax from Villines on April 28, six days after his vow, and the GOP leader's pay cut became effective May 1, said Hallye Jordan, spokeswoman for Controller John Chiang.

The cut amounts to $6,682 per year, or $557 per month.

The Clovis Republican will have to survive on the remainder, $126,975 annually ...

Plus about $35,000 in per diem.

Still pending is the California Citizens' Compensation Commission's consideration of a 10 percent pay cut for all legislators and statewide elected officials.

One fear of GOP lawmakers surrounding the May 19 special election is that should the ballot measures fail, Democrats and Gov. Arnold Schwarzenegger could go around them and simply swap certain taxes for fees and raise revenues without their votes.

Democrats tried to do just that in December, but Schwarzenegger promised to veto the package. The governor did not say, however, that he wouldn't be willing to potentially sign such a deal.

Traditionally, new taxes have required a two-thirds vote of the Legislature. (Anti-tax groups, it should be noted, plan to sue should lawmakers raise taxes through a majority vote.)

Fast forward to this weekend, when Assembly GOP leader Mike Villines voiced publicly (at least to my knowledge) that simmering fear for the first time.

"I know it's counterintuitive, but by coming to the table and negotiating, we saved the two-thirds protection," Villines said as the California Republican Party opposed the measures. "Mark my word, I believe that if these initiatives don't go through, you will see a majority-vote budget, you will see it signed and you will see the defense of taxpayers in this state disappear."

Assembly Republican Leader Mike Villines made his case for Proposition 1A in a letter sent Friday to members of the California Republican Party executive committee ahead of its weekend endorsement meeting.

Villines reminds Republicans that he "came up through the conservative ranks of our party." His argument is essentially that Republicans shouldn't let the perfect be the enemy of the good. While Proposition 1A has its flaws, he writes that the reality is that "liberals" control the Legislature and that "we have to fight to make important gains where gains can be made."

But as Flash Report editor and CRP vice chairman Jon Fleischman notes, a vote against Proposition 1A is "a virtual certainty."

Villines' letter follows after the jump:

In the Legislature's rosiest of budgetary scenarios, voters would approve all the measures on the May 19 ballot and the total funds netted (through transferring from mental health and early childhood programs and borrowing from the lottery) would be about $6 billion.

Even then the nonpartisan legislative budget analyst says the state will face an $8 billion shortfall.

If the ballot measures fail, the deficit hole would grow to $14 billion.

Rightfully so, folks around the Capitol are already peering around the corner to the next budget fight, likely this summer. Given that it's legislative spring break this week, let's do the same.

The Republican legislative leadership has said there will be no more tax hikes.

"We made it clear that any further budget action we may need to take in the coming months must be done solely through savings to government programs," GOP leader Mike Villines said after the latest deficit emerged.

There's been some scuttlebutt about the building about potentially returning to the Democrats' December plan to hike taxes with a majority vote.

The Democrats' plan called for swapping certain taxes for fees, while raising other taxes that then went to the state's general fund. Tax hikes typically require two-thirds support - and thus GOP votes.

A March 9 opinion from the Legislature's lawyer, issued to the tax overhaul commission created by Gov. Arnold Schwarzenegger, gives the legal green light to majority-vote approach.

"We think that a tax bill is not subject to the two-thirds vote requirement if the cumulative effect of the 'changes in state taxes,'...when considered in their entirety would be neutral or would produce a net decrease in state tax revenues," Diane Boyer-Vine, the legislative counsel, wrote.

Capitol Alert has posted the full opinion here.

Meanwhile, the GOP senators who broke ranks to vote for the tax hikes in February are doing pretty well for themselves these days.

More committee shuffling by the Senate two weeks ago landed Sen. Roy Ashburn, R-Bakersfield, as the vice-chairman of the Joint Legislative Audit Committee.

And ex-GOP leader Dave Cogdill landed the vice-chairmanship of the Senate Banking, Finance and Insurance Committee, a move requested by Cogdill, approved by GOP leader Dennis Hollingsworth and executed by the Rules Committee controlled by Senate President Pro Tem Darrell Steinberg.

(Read about the previous internal Senate shuffling.)

HEALTH FORUM: Gov. Arnold Schwarzenegger will be in Los Angeles today for a health forum co-hosted by the White House. It is the fifth and final such forum held across the country.

Schwarzenegger will be joined by Washington Gov. Chris Gregoire and Melody Barnes, the domestic policy council director for the White House.

Photo: Senate President Pro Tem Darrell Steinberg, D-Sacramento, goes over the plan for voting on the budget plan with GOP leader Dennis Hollingsworth, R-Murrieta, before the Senate voted on the budget on Feb. 19, 2009. Credit: Brian Baer/Sacramento Bee.

After last fall's elections, the Democratic leaders in the California Senate and Assembly were a mere five votes shy -- in both houses combined -- of a complete two-thirds governing supermajority.

They've never come that close since.

Vacancies -- created through members taking other offices and running for open congressional seats -- are likely to frustrate Democrats and empower Republicans for at least the rest of the year.

"It does create complications," said Senate President Pro Tem Darrell Steinberg, D-Sacramento. "You want to have a full house."

The two-thirds majority is a magical combination in California because that is the level of support needed to pass a budget or raise taxes in the Legislature.

Exhibit A, of course, was the February budget debacle, in which Steinberg locked state senators in the Capitol as the taxes-and-cuts package deadlocked one vote shy of passage.

At the time, the Democrats needed three GOP votes to pass the budget, but only had the support of two Republicans. There was one Democratic vacancy, created by ex-Sen. Mark Ridley-Thomas, D-Los Angeles, resigning his post to join the Los Angeles County Board of Supervisors.

"We would have been out of here Saturday night instead of the following Thursday without all of the drama if we had had a full house, in all likelihood," Steinberg said.

The final GOP vote, Sen. Abel Maldonado, wrestled major concessions from majority Democrats, including placing a constitutional amendment on the 2010 ballot to overhaul state elections.
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To this day, Ridley-Thomas' seat remains unfilled. Democratic Assemblyman Curren Price of Inglewood finished first in the primary last week and is expected to take his place in the upper house after a May 19 runoff.

Of course, that will create a vacancy in the Assembly, which will likely last until early October by virtue of the state's election-scheduling laws.

"Every vote we pick up, it is exponential for the Republicans," said Assembly GOP leader Mike Villines. "It gives us a lot of ability to move the debate and navigate to issues that we care about."

In the Assembly, Democrats control 51 seats in the 80-member house, three shy of a two-thirds majority. That number will rise to four once Price departs for the Senate.

Then there are those open seats in Congress.

The legislative leaders who labored for weeks trying to find a way to patch the $40 billion budget gap closed last month were quick to react today to LAO projections of a new $8 billion hole.

Senate leader Darrell Steinberg even extended a special invitation to GOP gubernatorial hopefuls Steve Poizner and Meg Whitman, who have been critical of the February budget deal.

Assembly Speaker Karen Bass, D-Los Angeles

"Given the nation's continuing economic problems since we passed the budget, it is not surprising to see the state's revenue projections continue to fall. We must keep a careful watch on revenues during these volatile times, and all of us, Democrats and Republicans alike, must be prepared to continue to make tough decisions should the May Budget Revision also show significant declines in revenue. We also have to keep in our minds the potential that if the ballot measures fail on May 19th, the budget problem grows by another $6 billion."

Assembly Republican Leader Mike Villines, R-Clovis

"Republicans take very seriously the warning issued today by California's Legislative Analyst that our economy continues to deteriorate and revenues continue to decline. We understood when we passed the budget in February that our state's fiscal crisis was not over, and that the Legislature may be called upon to make further spending reductions in the months ahead.

"We agree with the Analyst that further tax increases should not be on the table. When we passed the budget in February, we made it clear that any further budget action we may need to take in the coming months must be done solely through savings to government programs.

"The Analyst's report echoes what Republicans have been saying all along -- that economic recovery and job creation must continue to be an important priority for the Legislature in the coming months. We will continue working to try and pass economic recovery measures that will create more jobs for those out of work and inspire more economy activity in our state."

Senate President Pro Tem Darrell Steinberg, D-Sacramento

"We will solve the challenge outlined this morning by the Legislative Analyst with the same intensity that we solved the $42 billion problem in February."

"It should come as no surprise that the Nation's economic downturn continues to severely impact California's budget - retail sales continue to decline and unemployment continues to rise and American families lost $5.1 TRILLION in the last 3 months of 2008."

"Like thousands of businesses and millions of families, state government has less money to spend."

"But moms and dads will continue to get their kids off to school. Sick people will need an emergency room. There will be fires to put out. Criminals to prosecute. And elderly people to care for."

"Fortunately, the action we took in February makes what we face more manageable."

"For months those who have lobbied us have told us what not to cut, what not to tax, what not to do."

"That time is past. We have entered the post-press release period of our budget crisis."

"I am extending an invitation to both Meg Whitman and Steve Poizner to meet with us. They've both said that as Governor they could close our budget gap without raising taxes. Well now, that's what we need to do and we need their list of cuts and savings."

"We invite any and all people and stakeholders who are skeptical of the magnitude of the challenges we face to step forward with their ideas."

"Senate Budget Subcommittees are already meeting to craft additional changes to the budget. In addition, the Senate Budget Committee will convene in the coming weeks to hear from the Legislative Analyst on this report and what steps we can take to fix this problem."

"We will solve the problem."

Senate Republican Leader Dennis Hollingsworth, R-Murrieta

"The fact that the LAO is projecting a $6 Billion deficit for the 2009-2010 Budget is not a surprise. I said early on this budget was not going to fully solve the problem. We had anticipated the budget shortfall would be around $10 billion, and it still could reach that number."

"Now we need to focus on re-evaluating some of the solutions previously discussed that include helping the private sector create jobs and stimulate the economy. We also need to use any federal stimulus money California receives efficiently and effectively and look at streamlining government by reducing spending. We can't go back to the taxpayer's again to ask them to fix the problem, especially after hitting them with a $1,000 price tag just three weeks ago."

"Clearly, more work is needed and I look forward to working with my colleagues in the Assembly and Senate to achieve that task."

Assembly Republican leader Mike Villines and ousted Senate GOP chief Dave Cogdill have published an op-ed in the Fresno Bee on why they supported -- and negotiated -- this budget.

To be sure, the budget the Legislature passed was very difficult to negotiate and includes some items we strongly disagree with, particularly taxes. If Republicans were the majority party and could control the budget, there would be no talk about raising taxes, period. Republicans would be working to lessen the tax burden on hard-working Californians. But Republicans don't control the budget process; Democrats do.

So we had a choice. We could continue to say no and refuse to negotiate, facing the real prospect of enough lawmakers agreeing to pass a budget without Republican input. That budget would have surely included massive tax increases and overspending, with no reform.

Or we could negotiate a budget compromise with Democrats on a budget that saves California from the brink of insolvency, gets hard-working taxpayers their long overdue tax refunds, helps to get our economy growing again and includes long-term fixes to our budget problems. We chose the latter course.

This close of the piece sounds like is came straight from the keyboard of the governor's speechwriters: "There is no doubt that this budget is a true compromise. No one got everything they wanted and everyone will have to sacrifice to get us back on track. In the end, Democrats and Republicans came together to do what's right and finally get California on the road to recovery."

The first GOP leadership challenge resulting from the budget negotiations came and went Saturday night as Assemblyman Chuck DeVore, R-Irvine, moved unsuccessfully to unseat Assembly GOP leader Mike Villines.

In a closed-door Republican caucus before the marathon floor session, DeVore made a motion to remove Villines as GOP leader (known as "vacating the chair" in Capitol-speak). None of the other 28 Republican Assembly members seconded the motion.

"The discussion was a credit to the caucus. Nobody raised their voice, everything was logical, people made their case and I lost," said DeVore, who is plotting a 2010 run for U.S. Senate.

DeVore's motion was not seconded despite the fact that 25 of his all of his Assembly GOP colleagues have endorsed him* in his bid to unseat Sen. Barbara Boxer, including Villines himself.

*UPDATE: DeVore wrote in to say that every Republican Assembly member has endorsed his U.S. Senate campaign.

The leadership challenge came a day after a supposedly private e-mail from DeVore to Villines was publicized on the John and Ken radio show in Los Angeles.

In the e-mail, DeVore wrote that "for the caucus, for the party and for the upcoming elections, if this is the final (budget) deal and you believe it to be good...then I think you need to resign or be replaced the day of the vote," according to the radio show.

DeVore confirmed the authenticity of the e-mail, though he denied that he leaked it to the conservative radio shock jocks. Only a day earlier, John and Ken had blasted DeVore on air for not challenging Villines' leadership more directly.

How then would a private e-mail between the two become public?

DeVore said he had forwarded the e-mail to "some of my members, colleagues" -- at their request -- "because it contained kind of a logical rundown of why I thought what we were about to do was in error."

"Clearly, I should not have sent that to anyone else other than Mike Villines, because obviously the last paragraph was kind of a bombshell," he said, suggesting someone else forwarded the e-mail to the radio hosts.

In the end, instead of Villines resigning, DeVore did.

Happy Valentine's Day.

Yes, it's Saturday, and yes, you're getting an AM Alert. That's because the Legislature is set to vote today on a huge package -- a 17-month budget fix that includes $15.8 billion in cuts, $14.3 billion in tax increases, and $10.9 billion in borrowing.

Both houses of the Legislature have floor sessions set for 5 p.m.

What happens next is still in the air.

Due to the two-thirds vote requirement in the Legislature, three GOP votes will be needed in both the Assembly and the Senate if every Democrat supports the budget package.

"I expect all the Democrats to vote for the budget. Absolutely. No exception," Senate President Pro Tem Darrell Steinberg declared earlier this week.

That means you, Lou Correa.

Conventional wisdom around the Capitol is that the bigger battle will be in the Senate, where Capitol Alert outlined the GOP landscape on Friday.

One other thing to watch during session is who goes up first.

As in, if Correa does support the budget, will he vote before his GOP colleagues? Likewise, would any Senate Republican cast an "aye" before Correa? And would Assembly Republicans cast votes for taxes before Senate passage is assured?

All good questions; no clear answers.

What is clear is that Senate Republicans are divided.

On Friday morning, the Senate Republican Caucus sent out a press release with a collection of quotes from editorials, a business leader -- and even one union head -- essentially characterizing the deal as a necessary evil.

Sabrina Demayo Lockhart, a spokeswoman for Senate Republican leader Dave Cogdill, said the release "should have gone out under the leader's e-mail, not the caucus e-mail."

Hours later, a second release came, titled, "More Budget Comments."

It contained quotes from GOP senators blasting both taxes and the current budget deal.

"We just wanted to clarify what other members of the caucus had stated publicly," Lockhart said.

NOTE: In Wednesday's AM Alert, we reported that 12 lawmakers had fundraisers scheduled. Well, the number should have been only 11. Assemblyman Jerry Hill had canceled his until after a budget solution is reached.

Photo: Senate President Pro Tem Darrrell Steinberg, D-Sacramento, rubs his eyes during a call to a lawmaker concerning the state budget at his Capitol office in Sacramento, Friday, Feb. 13, 2009. Credit: AP Photo/ Rich Pedroncelli

Legislative leaders and Gov. Arnold Schwarzenegger did not release details of the tentative budget pact they've struck, though that didn't stop details from leaking out.

The 30,000-foot view: $15.8 billion in cuts, $14.3 billion in tax increases, $10.9 billion in borrowing. And if California gets $10 billion in federal stimulus money, cuts drop by $1.2 billion, borrowing by $5.5 billion and tax increases by $1.8 billion.

Delving deeper, the plan: Gives K-12 education $5 billion less than it was otherwise entitled to.

Eliminates two paid holidays for state workers, with the final number of furlough days per month through June 2010 still subject to negotiation.

Cuts UC and CSU by 10 percent.

Eliminates cost-of-living increases for recipients of CAL-Works and SSI-SSP.

Cuts the corrections department's medical budget by 10 percent.

Eliminates funding for local public transit agencies.

On the tax side, the plan increases sales tax by 1 cent on the dollar, vehicle license fees from current 0.65 percent of vehicle value to 1.15 percent, and gasoline taxes by 12 cents a gallon with proceeds to pay off transportation bonds. Income taxpayers would pay a 2.5 percent surcharge on tax liability - 5 percent if federal stimulus comes in under $10 billion. Reduces tax credit for dependents from $309 to $99.

Taxes would be increased for two years, and an additional one to three years if the spending restriction measure is approved on the ballot.

Other new "revenues" include taking from voter-approved taxes for mental health and early childhood programs.

The whole thing would have to go before voters in a whopping five-measure package: borrowing from the lottery, changing Proposition 98, approving the spending cap, and taking funds from Proposition 10 (tobacco tax for early childhood programs) and Proposition 63 (tax on millionaires for mental-health programs).

That, of course, is if the whole thing passes the Legislature in a vote now scheduled for Friday.

"I'm not guaranteeing any votes," Senate GOP leader Dave Cogdill said Wednesday.

"I felt it was as good as I could get and I was willing to release my members," he said. "It's up to them (his members) to make that decision."

So far GOP Sens. Dennis Hollingsworth, Sam Aanestad, and Abel Maldonado have all publicly said 'no deal.'

Then there's the case of moderate Democratic Sen. Lou Correa.

"I just don't think it gets out if he doesn't go up on it," Cogdill said

Steve Wiegand's January profile of new Assembly members walking a political tightrope is worth a re-read. (On the Democrats-only budget passed in December, none of the four freshman Dems to win in previously GOP-held seats voted. They all abstained. Schwarzenegger eventually vetoed the proposal.)

"A deal is never a deal around here," Republican Sen. Bob Huff warned Wednesday, "until it's in writing, and you're voting on it."

Which could be as early as tomorrow...

Details of what's under discussion in the budget talks are slowing trickling out.

To be clear, no deal has been struck and negotiations are continuing (and shifting). But Jim Sanders teased out at least some of the taxes on the table for today's Bee:

• Increasing the state's sales tax by 1 cent on the dollar.
• Increasing gasoline taxes by 12 cents per gallon.
• Raising the state's vehicle license fee from 0.65 percent of a vehicle's value to 1.15 percent, with 1 percent going to the general fund and local law enforcement getting 0.15 percent.
• Increasing the personal income tax across the board, either by assessing a surcharge on tax liability or increasing the tax rate.

The sales, income and VLF components would be in effect for either two years or five years, depending on whether a companion spending cap measure passes.

Sanders reports that if the cap were approved, the tax hikes would last five years. If the cap fails, the taxes would last for only two years. It was not clear Tuesday whether the gas tax hike would be tied to the spending cap measure.

Despite promises for a vote this week, the state Senate announced over the Legislature's speaker system Tuesday that floor sessions for the rest of the week are now "check-in" -- Capitol-speak for not actually meeting.

That could change at the discretion of the leadership. (Get a midday update from Senate leader Darrell Steinberg, who will be the guest at the Sacramento Press Club.)

Where's the action today? The fundraising circuit, of course.

Twelve lawmakers -- exactly one in ten -- are scheduled to fan out across Sacramento today, hat in hand, asking for money from many of the very special interests with skin in the budget game.

"They must be getting ready to vote," said Ted Costa, president of People's Advocate, a political watchdog group, only half-jokingly. More seriously, he said, "It seems to me that they should get this budget thing taken care before they're out there raising money."

Events run from 8 a.m. to 8 p.m.

Those collecting checks today: Elaine Alquist, Charles Calderon, Ron Calderon, Wes Chesbro, Connie Conway, Chuck DeVore, Noreen Evans, Tom Harman, Ted Lieu, Bill Monning, Mary Salas, and Jose Solorio.

OTHER EVENTS: Assembly GOP leader Mike Villines is scheduled to speak to the Contra Costa County Republican Party in the evening, where he'll receive the group's "legislator of the year award."

STUDY: A new report from The Pew Center on the States calls California a "budget laggard."

2010 WATCH: Former Rep. Tom Campbell, who is exploring a run for governor, will be at the Commonwealth Club in Lafayette today. The title of his talk: "Budgeting the Bailout for California and the Country."

Attorney General Jerry Brown will attend a Sacramento luncheon hosted by the California Newspaper Publishers Association, where he'll take questions from Jim Newton, editorial page editor of the Los Angeles Times.

Also today, Insurance Commissioner Steve Poizner will announce a $15 million settlement with a California health insurance company that rescinded coverage of 2,300 customers. The company will have to offer coverage to those customers, reimburse their out-of-pocket costs and pay a $1 million fine.

BIRTHDAY: Assemblyman Joel Anderson, R-Alpine, turns 49 today.

Photo: That's Sen. Darrell Steinberg entering the governor's office for a meeting Tuesday night with a bottle of wine he told the Associated Press was a "peace offering." Credit: Rich Pedroncelli/Associated Press.

And so the furloughs begin.

In case you're confused about all the back-and-forth on the furloughs for constitutional offices, here's the deal:

Employees in the offices of California's statewide electeds are working today.

But Gov. Arnold Schwarzenegger insists he still has the power to furlough them. Both sides are citing the same ruling from a Sacramento Superior Court judge on Thursday.

Long story short: More court battles are likely to follow

Wondering how to spend your furlough day?

Well, the Association of California State Supervisors wants you to head to lawmakers' district offices. "It is vital that your legislators hear from you on this issue, and visiting them in their home offices is one of the most effective ways to approach them," the group wrote to its members earlier this week.

Or you could go skiing.

Squaw Valley USA is offering $30 lift tickets to all furloughed state workers on the first and third Fridays of the month. Just bring your state identification card or a 2009 pay stub as well as a regular ID.

Of course, you can always drink your pay cut woes away. The Rubicon Brewing Company is offering 10 percent off your bill to furloughed statees.

BIRTHDAY: Assemblyman Pedro Nava, D-Santa Barbara, turns 61 today. He's hoping voters give him the gift of becoming attorney general in 2010, after recently filing paperwork to make a run at becoming the state's top cop.

BUDGET UPDATE: The news Thursday was that Senate leader Darrell Steinberg said a vote was upcoming next week. No deal yet, as the negotiations continue behind closed doors.

That secretive process is being pretty well criticized here, here, here, here and here.

Asked if there would be any time for public input before any sort of deal is rammed through the Legislature, Steinberg expounded:

"Certainly, the public has the absolute right to review what we do eventually put forward. And our members certainly do as well. We're going to afford the public, our members that full opportunity," he said. "On the other hand, this is an emergency. We're going to balance those two concerns."

Finally, in Thursday's AM Alert about the Capitol's "wear red day" we reported that Assemblywoman Lori Saldaña, the chair of the Women's Caucus and a sponsor of the heart disease awareness day, would skip town for a La Jolla golf fundraiser.

Turns out, Saldaña skipped her own fundraiser and didn't plan to fly back to her district until this morning.

Photo: Signs advise customers that the DMV will be closed Friday as part of state furloughs ordered by Gov. Arnold Schwarzenegger as a cost savings measure. Photo taken Thursday, Feb. 5, 2009. Credit: Brian Baer/Sacramento Bee

Tensions in the California political world are running high.

Assemblyman Kevin Jeffries, R-Lake Elsinore, accused the California Labor Federation of uninviting him to a budget briefing this week that was marked "legislators only."

Apparently, it was for "Democrats only."

"When I was first elected, I attended a briefing hosted by the labor federation, and I was the only Republican in the room," Jeffries said in a statement. "I told them then that I didn't expect we would always agree, but that I hoped we could keep the lines of communication open. Apparently they don't share that desire."

Steve Smith, communications director for the labor federation, responded thusly: "The bottom line, in terms of Assemblymember Jeffries, is this is an individual who has a 13 percent lifetime record on labor issues."

Or, more precisely, labor didn't want no GOP fox in labor's hen house.

"In a meeting like (Monday's), in which we were basically talking about core labor values and how to protect core workers' rights in this budget process, we know who has been supportive of those issues and who hasn't," Smith said.

And that's only the start.

On Tuesday, Sen. Abel Maldonado, R-Santa Maria, blasted Democratic state Controller John Chiang for requesting $2 million in new furniture in the last seven months.

"I don't like the fact that hard working people in my district are getting IOUs and he's buying millions of dollars worth of furniture," Maldonado said in an interview. (For the record, taxpayers due refunds from the state and others missing payments aren't getting IOUs just yet. They're simply not receiving anything at all.)

Maldonado even posted the furniture purchase orders online here and here.

Chiang's office struck back, calling Maldonado's accusation "pathetic."

"Had he done any homework, the senator should have realized that the expansion project, including furniture,...began before Controller Chiang took office," his office said.

Further, Chiang's office argued, the controller "demanded that staff cut down the costs, and by changing financing, materials, design, and construction, reduced the overall expense of the project by more than 50 percent" - a $4 million savings.

Part of the frustration - for just about everyone - is the lack of information coming out of the Big Five budget negotiations.

That process leaves 116 lawmakers on the outside looking in.

"What I don't appreciate is the Big Five is meeting and we're going zero information out of it," said Maldonado. "My constituents are asking me daily -- 'what is happening' -- and my response is we're waiting on the Big Five."

Kevin Yamamura delves into the history and politics behind the secret negotiations in today's Bee. The money quote:

"Whether it's education or labor or any of the other groups, when we get wind of something that has significant jeopardy for us, we fight against it," said Kevin Gordon, a lobbyist for hundreds of California school districts. "It's a system set up to defeat the latest idea that's been hatched, which makes it that much harder to get a solution."

And so, the negotiations continue. In private, as best as the leadership can keep them.

Photo: Sen. Abel Maldonado, R-Santa Maria, votes no during the floor debate on a Democratic budget plan on Thursday Dec. 18, 2008. Credit: Brian Baer/Sacramento Bee

In an effort to ramp up pressure on Republican lawmakers who might agree to a compromise budget deal, a top GOP official has submitted a resolution for the party's convention later this month to formally censure any Republican who votes for new or higher taxes.

"If the Republican party loses the ability to say that we're the party against higher taxes than we've been dealt a grievous blow," said Jon Fleischman, the author of the resolution and a Southern California vice chairman in the California Republican Party.

Fleischman, who publishes the conservative FlashReport Web site, said the resolution is meant as a "stick" to dissuade GOP legislators from agreeing to any budget plan with higher taxes crafted with majority Democrats and Gov. Arnold Schwarzenegger.

"I think it is fair to say that if you are a Republican and, between now and the February convention, you vote for tax increases, you are likely to be censured by your party and cast out among the unwanted," he said.

The resolution goes one step further than a censure. It calls for changes in party bylaws to allow the Republican Party "to campaign and contribute funds against these pro-tax Republican legislators in primaries, and in general elections."

The state GOP faithful are set to gather for their semi-annual convention in Sacramento on Feb. 20.

"I think there's enough anger out there that something like this could pass," said Patrick Dorinson, former communications director for California Republican Party.

Legislative leaders and Schwarzenegger have been negotiating behind closed doors -- in what's termed Big Five meetings -- to address the state's roughly $40 billion budget hole through July 2010.

What happens when "the only game in town" -- as Democrats have taken to calling their budget plan -- ends?

That's the question facing the Legislature and Gov. Arnold Schwarzenegger as California faces the doom-and-gloom prospect of issuing IOUs in less than four weeks.

In their news conference Tuesday, Senate President Pro Tem Darrell Steinberg and Assembly Speaker Karen Bass were visibly frustrated with the state of collapsed negotiations.

"We all know how this movie goes," Steinberg said. "The governor will be out again in some community in California attacking the Legislature and elected representatives for failing to act. It's frankly a tired, old movie."

In the end, the Democrats couldn't -- or wouldn't -- meet Schwarzenegger's demands (more cuts, additional public-private partnerships and easing of environmental regulations for at least 10 projects) for him to sign the budget.

"The Legislature has been more than willing to meet the Governor halfway on his proposals, but we cannot in good conscience back an 'anything goes' approach to California's environment and a privatization scheme that would make George W. Bush blush," the Democratic leaders write in an op-ed in today's Bee.

For now, lawmakers and the governor must start over, with Schwarzenegger hoping to use his January budget proposal -- the full language of which will be submitted to the Legislature by week's end -- as the blueprint.

Democrats, however, remain skeptical of any budget plan that requires GOP support.

As Steinberg said Tuesday that Democrats would "be happy to hear" Schwarzenegger could rally Republican support, Bass then blurted out, "That'd be great."

Of course, the Democrats' plan -- even beyond Schwarzenegger's veto -- faces challenges of its own.

The Howard Jarvis Taxpayers Association and GOP lawmakers filed a lawsuit against the plan Tuesday. And Allen Zaremberg, president of the California Chamber of Commerce, denounced the plan as an "unconstitutional" effort "to subvert Proposition 13."

In non-budget news, Assemblyman Curren Price shakes the money tree today for his run against Assemblyman Mike Davis for the state Senate seat recently vacated by Mark Ridley-Thomas.

The price to attend Price's event at Chops tonight: $1,300.

Photo: Assembly Speaker Karen Bass and Senate President Pro Tem Darrell Steinberg on Tuesday. Credit: Brian Baer/Sacramento Bee

Here's a guide to all the news you missed during your (and our) holiday break.

Yes, California still has a budget problem.

Gov. Arnold Schwarzenegger and the Democratic leadership negotiated during the holiday weeks over whether Schwarzenegger would sign their majority-vote package of $18 billion in cuts and taxes.

First they were "very close" in the words of Senate leader Darrell Steinberg. Then they were "far away" in the words of Schwarzenegger spokesman Aaron McLear.

Bee cartoonist Rex Babin sketched the battling sides (see right).

Schwarzenegger headed off to Idaho for a Christmas break, though he kept in touch with legislative leaders via videoconferencing.

Then, on New Year's Eve, Schwarzenegger administration officials unveiled the 2009-10 budget proposal to close the roughly $40 billion deficit.

It was the sixth Schwarzenegger budget proposal of 2008.

The new elements include reducing the dependent care exemption on state income tax returns from the current $309 per dependent to $103; carrying over some of the deficit into the 2010-11 fiscal year; borrowing funds from voter-created programs for the mentally ill and pre-kindergarten children, and borrowing $4.7 billion from the private sector.

Read The Bee's outline of the plan. Or read the governor's document for yourself.

The budget proposes to change state worker health care, reduce the length of the school year, save a billion in prison and parolee costs, and blow up some of those old boxes, among other things.

Schwarzenegger himself wasn't at his own budget unveiling. Legislative leaders seemed unimpressed by the plan.

The Los Angeles Times reported more bad budget news: California fire-fighting expenditures topped $1 billion in 2008.

The California Teachers Association, meanwhile, is taking matters into its own hands, filing an initiative to raise the sales tax by a penny.

"It's time for stable and independent funding that cannot be cut by the Legislature or diverted for other uses," CTA President David Sanchez said in a statement.

Meanwhile, State Controller John Chiang went to Texas to visit family, but he was hospitalized there with chest pains. (It was later determined Chiang suffered a mild heart attack.)

From his hospital bed in Texas, Chiang wrote a letter to state agencies saying California may have to resort to IOUs as early as Feb. 1.

First on the list of recipients: state lawmakers.

On the plus side..."Terminator," the 1984 film starring Schwarzenegger, was one of 25 films added to the National Film Registry by the Library of Congress.

In another policy arena, a panel of state leaders is calling for the construction of a canal to divert water around the Delta by 2011. And they're not asking for approval from lawmakers or voters.

Potential Republican candidate for governor Tom Campbell, in an op-ed in the San Francisco Chronicle, makes the case for a temporary hike in the per-gallon gasoline tax combined with a strict spending cap.

Campbell may end up competing with a couple of billionaires (or near-billionaires) in Meg Whitman and Steve Poizner, but he's the first one out with some real, concrete ideas to solve the state's fiscal mess. Not that tax hikes are likely to woo the GOP faithful...

Speaking of Whitman, conservative Red County Placer blogger Aaron Park calls the former CEO of eBay, "Al Checci in a skirt."

Speaking of names from the past, you'd never guess who might toss his hat into the 2010 GOP ring.

Bill Simon, the 2002 Republican nominee, tells the Wall Street Journal he's interested.

In fact, Mr. Simon tells me that he would definitely consider running again for governor or lieutenant governor in 2010. He says that the budget crisis in California, including a deficit which he estimates at approximately $40 billion, will "require very fundamental change. This is an issue I understand. Economic issues are a strength for me."

Meanwhile, Attorney General Jerry Brown, who's a could-be, would-be candidate for governor in 2010, announced he was suing the Bush administration (always a popular move) over enforcement of the endangered species act.

It may seem early, but candidates are already sniffing around the open Assembly seats in 2010. The Fresno Bee says Blong Xiong may run.

Other odds and ends:

Big-time GOP donor Alex Spanos, 85, tells his family about his own battle with dementia.

The New York Times profiled California's congressional Sanchez sisters.

There are high levels of arsenic in Kern Valley State Prison, the Los Angeles Times reported. "It's not that major of an issue," said Kelly Harrington, the prison's new warden.

California's new clout on environmental issues was covered by the Washington Post.

The U.S. 9th Circuit Court of Appeals ruled a prison sentence granted because of California's three-strikes law was unconstitutional.

Former Assemblyman Todd Spitzer has returned to Orange County as a prosecutor. The OC Register reports he lost his first jury trial.

Spitzer told the Register it "was one of only two "not guiltys" he's even gotten in his career as a prosecutor."

Former Assemblywoman Shirley Horton has a new job. She's taking the helm of the San Diego Downtown Partnership.

Health Access' Anthony Wright assessed health care politics in 2008:

In the fight for quality, affordable health coverage for all Californians, the year 2008 was a year of setbacks and steps back--not just opportunities lost, but decisions that will cause many Californians' coverage to be lost.

It started with the end of the proclaimed "Year of Health Reform," as a much-watched, much-negotiated comprehensive health reform stalled in January. The year was marked by the failure of many more bills, big and small, ambitious and specific, blocked by legislative action or a Governor's veto pen.

The Department of Fish and Game labeled 2008 the "Year of Extreme Poachers and Dangerous Encounters," for what it's worth.

Calitics blogger Brian Leubitz dropped his bid for vice-chairman of the California Democratic Party.

The dynamics of these races are, in fact, quite dynamic. When I got in this race, I did so not simply to make a point. I believed, and continue to believe, that I would do an excellent job as the vice chair of the CDP. And with these changes, it is clear to me that I will not have the votes come April in Sacramento. While I am not afraid to run a race that is merely to make a point, I believe the goals of competing in every race and building the party throughout the party will be made.

Those dynamics involved ex-Senate leader John Burton jumping into the chairmanship race and pushing Eric Bauman, chair of the Los Angeles Democratic Party, to run for vice-chair.

A couple of other blogs are closing up shop.

Boi from Troy, the musings of a gay conservative USC alum (Scott Schmidt), has published its last post.

Ditto for California Faultline.

And it wouldn't be a new year without new laws.

The Bee's Rex Babin gave his take (see right) on the most talked -- and texted -- about new statute.

Photo: John Chiang speaking to The Bee Capitol Bureau in 2008. Credit: Brian Baer/Sacramento Bee

Photo: Governor Arnold Schwarzenegger, left listens to state finance director Tom Campbell during a press conference at the Capitol in Sacramento on Tuesday June 21, 2005. Credit: Randall Benton/Sacramento Bee

Gov. Arnold Schwarzenegger and the two Democratic leaders of the Legislature will meet face-to-face today for the first time since Schwarzenegger vowed to veto their deficit-cutting proposal last week.

The leaders and Schwarzenegger spoke Sunday via videoconference in a session where they made "some great progress," the governor said Monday.

But the governor has continued to hammer lawmakers in public appearances. Standing in front of the I-405 freeway Monday in Los Angeles, he declared a deal could be done in "half an hour," if it weren't for the sway that special interests hold over the Legislature.

"But because there are so many stakeholders behind the legislative leaders, and everybody pulling on them saying, don't give in on CEQA, and don't give in on environmental issues and don't give in on cuts and don't give in on that, it makes it very difficult for them," he declared.

Assembly Speaker Karen Bass issued a statement in response saying, "As long as he is in press conference/campaign mode, it is hard to figure out how to convince the governor to accept a responsible compromise."

Still, Schwarzenegger sounded his usual optimistic self.

"It could easily be that before Christmas Eve or Christmas Day that we have an agreement, that the legislators can be brought back between Christmas and New Year's to vote on it," he said.

GOP leaders have been all but cut out of the conversation as negotiations on the package are now between only Schwarzenegger and the Democrats.

"It is unfortunate that the governor and Democrats are only interested in raising taxes, not working with Republicans to negotiate a truly bi-partisan solution," said Assembly GOP leader Mike Villines in a statement Monday.

And it may be Christmas week, but a few brave, media-hungry souls are holding press events today.

In Sacramento, injured worker advocates hold a news conference to highlight the case of Richard Chance, who they say will be cut off from his disability workers' compensation this week after being thrown 35 feet after he was hit by a motorcycle two years ago on the job.

And in San Francisco, local lawmakers (Leland Yee, Tom Ammiano and Fiona Ma) hold a news conference to announce new double-fine zones in two heavily trafficked corridors of the city.

On a final note, this is the last AM Alert until the new year. There will be regular posts today and a PM Alert tonight, but Capitol Alert will be off for the holidays, from Christmas Eve through Jan. 5.

Of course, if news breaks, we will still post it online and e-mail it out. But regular AM and PM alerts will start back up in 2009.

Happy holidays!

What's next in a budget saga that began last January and continued steadily since is unclear.

Gov. Arnold Schwarzenegger promised to veto the Democratic budget plan Thursday afternoon.

The Republican governor didn't quibble with the Democrats' scheme to bypass Republicans or the idea of raising billions in news taxes.

He said the "economic stimulus" component of the package wasn't strong enough.

"From day one," Schwarzenegger said, "I always made it clear to Senator Steinberg and also to Speaker Bass that I will be willing to sit down with them and negotiate but it is clear that I need my - exactly what I recommended - economic recovery package."

Speaker Karen Bass didn't think asking for "exactly what I recommended" sounded much like negotiating.

"The governor claims he wants to negotiate but then says things must be exactly as he wants. That is astonishing given the crisis we face," she said in a statement following the veto vow.

Read full responses from Bass and Senate President Pro Tem Darrell Steinberg.

"They have to get to the cliff and fall off in order to really take this seriously," Schwarzenegger chided lawmakers.

"I'm damn proud of what the Legislature did today," Steinberg retorted.

Bass said that rank-and-file lawmakers won't be returning to the Capitol until January.

"We'll take a step back and keep on working," she said. She and Steinberg will stay, she added.

Amid all that bickering, state Treasurer Bill Lockyer said Thursday California's already woeful credit rating is likely to sink even lower.

Take a break from reading about the budget and check out Bee photographer Brian Baer's photo gallery of the months-long budget fight between lawmakers and the governor.

In a press conference at 4:30 this afternoon, Gov. Arnold Schwarzenegger said of the Democratic budget package, "I will not sign it."

Schwarzenegger criticized the Democratic leadership for watering down his proposed "economic stimulus" package.

"It actually doesn't do anything," Schwarzenegger said of the stimulus plan the Democrats crafted. The governor said he wanted more public-private partnerships, broader exemptions to the state's environmental laws for construction projects and more foreclosure relief.

"They call it economic stimulus but there's nothing there," Schwarzenegger declared. "It fell short on every single level," he added.

The governor did not say he was vetoing the package because it passed without GOP support and he ducked a question about whether he thought the tactic was legal.

"They should stay here and work some more on this budget. I'm willing to stay here. I don't think that anyone should go and celebrate Christmas -- none of the legislators -- and have people out there suffering," he said.

But Assembly Speaker Karen Bass said after the press conference lawmakers won't be returning to the Capitol until January.

"We'll take a step back and keep on working," she said, saying she and Senate leader Darrell Steinberg would remain in Sacramento negotiating with the governor.

The Bee's Dan Walters contributed to this report.

Photo: Gov. Schwarzenegger talks about how he will veto the democrats budget rescue plan, Thursday Dec. 18, 2008. Credit: Brian Baer/Sacramento Bee

UPDATED Assembly Republcians have fired off a letter to Gov. Arnold Schwarzenegger urging the Republican executive to side with the legislative members of his party and oppose the Democratic budget that passed out of the Legislature earlier this afternoon.

The letter calls the $18 billion package of tax hikes and cuts a "blatant attempt by the Democrats to violate the will of the people."

"It is an affront to the voters and taxpayers alike," they argue.

The Republicans argue it is an "illegal tax package" because it was passed out of the Legislature without a two-thirds vote. Raising taxes in California requires that threshold, but Democrats believe they can legally bring in new revenues through a combination of new fees, swapping taxes and leveraging loopholes in the state tax law.

The letter is signed by 28 of the 29 members of the Assembly GOP caucus. Only Assemblyman Paul Cook, R-Yucca Valley, did not sign. He is out due to illness.

Read it for yourself.

UPDATE: Senate Republicans have sent a similar letter, signed by all 15 members of the caucus.

"In addition to our objection to these new taxes, we are adamantly opposed to the Democrats' attempt to circumvent the Constitution by approving these tax increases without two-thirds approval of the Legislature," they write.

Photo: Assembly Republican Leader, Mike Villines speaks during a joint news conference with Senate Republican leader, Dave Cogdill, to unveil their budget proposal, at the State Capitol, Monday, Dec. 15, 2008. Credit: Brian Baer/Sacramento Bee

Plans to vote out a majority-vote budget proposal crafted by Democrats unraveled late Wednesday night, as Gov. Arnold Schwarzenegger demanded more concessions from the Democratic leadership, particularly on the "economic stimulus" part of the package.

Session had originally been scheduled for 5 p.m., before it was pushed back to 7 p.m. and then 9 p.m. and then cancelled for the night, amid closed-door negotiations.

"As the governor has said, we need a balanced proposal that includes legitimate cuts, real revenues and economic stimulus," Schwarzenegger spokesman Aaron McLear said.

"If their proposal does not include these elements, (a) vote will be nothing more than a drill," McLear added.

Senate President Pro Tem Darrell Steinberg and Assembly Speaker Karen Bass pledged to meet the governor "more than halfway."

Both the Assembly and Senate plan to return to the Capitol for scheduled 9 a.m. floor sessions this morning.

Read more about the Democratic plan itself, which would raise the sales tax by 3/4 of a cent, levy a tax on oil produced in California and tack on a 2.5 percent surcharge to income taxes. It would also replace currently taxes on gasoline with a 39-cent-per-gallon fee.

Despite netting California billions in additional taxes, Democrats have structured the plan, they say, in such a way that it does not require the typical two-thirds support of the Legislature.

As John Myers of KQED put it on his blog, "If this were the Olympics and even if you hated it, you'd have to score some style points on the acrobatic budget maneuver."

Judge (and Assembly GOP leader) Mike Villines wasn't so generous. He accused Democrats of "raising taxes on people and playing funny math and calling it fees...(that) is not governing, that's trickery."

Not surprisingly, a legal challenge to the still unpassed Democratic proposal is already being prepared.

The conservative group Americans for Prosperity has organized a 10 a.m. news conference to announce its intent to file a lawsuit, saying the Legislature is illegally raising taxes without a two-thirds vote.

"Obviously, I and my colleagues -- and I am sure a lot of other people in the state -- will believe that what they've done is illegal," Senate Republican leader Dave Cogdill said in an interview Wednesady. "I would fully expect there'll be challenges filed."

Among the attendees at the event will be Howard Jarvis Taxpayers Association President Jon Coupal.

On Wednesday, the governor appeared alongside Coupal to tout the passage of Proposition 11, the Schwarzenegger-backed redistricting measure. The governor praised a bipartisan list of supporters, and happened to thank Coupal twice.

"And then Jon Coupal," Schwarzenegger said the second time, before pausing. "... who I mentioned already. I better mention him twice so maybe he won't attack me when I raise the taxes."

Good luck with that, governor.

The Assembly's budget session on the Democrats' latest budget proposal lasted into the night Tuesday.

Republicans, as they have throughout the year, blocked passage, standing firm in their opposition to any new taxes to solve Califronia's nearly $40 billion deficit through July 2010.

No one seemed too surprised. Partisan tensions ran high during much of the debate.

The state Senate takes its budgetary turn this evening, with a 5 p.m. floor session.

Plans are afoot in the upper house, led by Senate President Pro Tem Darrell Steinberg, to craft a majority-vote package that could pass without GOP support.

Meanwhile, today the Pooled Money Investment Board will vote to suspend financing of infrastructure projects across California.

State Treasurer Bill Lockyer has released a detailed list of infrastructure projects that would be affected.

The board -- composed of Lockyer, Finance Director Mike Genest and Controller John Chiang -- meets at 10 a.m.

At 1 p.m., Gov. Arnold Schwarzenegger will return to the site of one of his signature events of the recall campaign -- the California State Railroad Museum.

Schwarzenegger will tout the passage of Proposition 11, the redistricting measure, and promise more political reforms going forward.

Open primaries anyone?

The railroad museum location is all about symbolism, as the state's pioneering political reformer Gov. Hirman Johnson led a series of reforms to curb the influence of railroad barons.

Five years and three months ago, Schwarzenegger declared there that in Sacramento, "the contributions go in, the favors go out, and the people are punished with wasteful spending and high taxes."

He promised a fundraising ban during while negotiating the budget, overhauling redistricting, better open records laws, and to veto any bill that didn't receive a full public hearing.

After the success of the Proposition 11 campaign, Schwarzenegger seems destined to continue to use the Legislature as his foil for political reform.

You know, creating things like a ticking deficit clock.

The Assembly has voted down the budget proposal before them along an initial party-line vote.

"We're going to remain in session for a while," Assembly Speaker Karen Bass pledged after the vote.

Here's some of the high-(or low)lights of the debate:

Assembly Majority Leader Alberto Torrico said he hopes that every year the Legislature won't put together the budget with "scotch tape and chewing gum."

"Every year, I'm disappointed," Torrico said.

Thirty minutes into the debate, he chided his GOP colleagues, saying he was "shocked" that no Republican had even "dared to even raise your mic."

GOP leader Mike Villines responded that he planned to be the only GOP speaker and to speak last. The Republicans were silent because they were "trying to bring the right tone to this discussion," Villines said.

"Not because we didn't care," he said.

Assemblyman Mike Feuer, D-Los Angeles, said constituents were expecting lawmakers to "feel a sense of urgency."

"Today in this room, I don't feel a sense of urgency yet," he added.

Assemblyman Jared Huffman, D-Marin, snapped at Republicans that they have to choose between their no-new-taxes pledge and their "pledge to uphold the state Constitution of California."

"We have reached a point where you've got to chose," he said telling them it was time to "elevate the interests of the people of this state over Grover Norquist."

2010 U.S. Senate candidate and GOP Assemblyman Chuck DeVore derided the Democratic plan as "proposed taxes that will kill our economy."

Republican Assemblyman Mike Duvall, in an animated speech, blamed environmental regulations for slowing economic growth. Let's "knock some of this CEQA stuff out of the ballgame," he declared, referring to the state's landmark environmental law.

Our favorite analogy of the evening was Republican Assemblyman Ted Gaines comparing the California government to the American auto industry.

Finally, former comic and freshman Assemblyman Tom Ammiano, D-San Francisco, said of picking which taxes to raise, "It's like choosing who's your favorite Menendez brother."

Assembly Speaker Karen Bass announced Tuesday that her house would vote late this afternoon on a $19 billion package of cuts and new taxes to chip away at the nearly $40 billion deficit California faces over the next year and a half.

But, amid no solid indication the $19 billion package has the GOP support needed for passage, Bass said she was prepared to lock the doors of the lower house to force her Republican counterparts to the table.

"I'm certainly hoping we that won't need to lock the doors and lock people in," the Los Angeles Democrat said. "But I will tell you that I'm so concerned about the situation that we're facing today, if I'm worried some of the members might run away off the floor, it just might have to get to that."

State Treasurer Bill Lockyer has said he will stop funding infrastructure projects in the state beginning as early as Wednesday to conserve cash. The state faces potential insolvency in February if no new revenues or spending cuts are adopted, fiscal officials say.

Raising taxes in California requires a two-thirds vote of the Legislature. For all of 2008, GOP lawmakers have rebuffed attempts by Democrats and Gov. Arnold Schwarzenegger to do so.

Bass said she has had "informal discussions with various members of the Republican caucus" about supporting new taxes. Today's session, in part, appears to be an effort to ferret out those supporters.

Bass said she was "hoping that this proposal might generate some votes."

"We are not certain," she said.

The Democrats released only a broad overview of their package Tuesday afternoon. Bass said the new revenues, which will account for $11.3 billion, would include a three-year hike in the state sales tax, a new oil severance tax of 9.9 percent and a nickel-a-drink tax on alcoholic beverages in the state.

Those are all tax hikes Schwarzenegger has embraced, though Bass added that, "This is not his plan. The governor supports his plan."

The $6.9 billion in cuts, she said, would largely mirror those proposed by Democrats at the end of November, which were thumbed down by Republicans. The package also does not include any of the so-called "economic stimulus" proposals advanced by either Schwarzenegger or Republican lawmakers.

Session is scheduled to begin at 3 p.m., when lawmakers will first put the plan to a vote.

"We might put it on call for a lot of hours," Bass said. "I'm hoping that during those hours that it's on call that we can get down to what it will really take to get Republican support for the package."

Legislative Republicans unveiled their budget plan Monday and crossed their fingers that majority Democrats wouldn't immediately toss the $22 billion proposal in the waste bin.

Republicans proposed $15.6 billion in cuts (more than two-thirds of which target education) and $6 billion in revenues. Those revenues, however, are from pots of money approved by voters specifically for health care for children and the mentally ill.

It included no new taxes. Taxes "will only cause (the state) more harm at the end of the day," declared Assembly Republican leader Mike Villines.

"We would hope they wouldn't dismiss this proposal out of hand," said Senate GOP leader Dave Cogdill.

Cogdill better hope harder.

"This isn't a negotiated compromise," complained Gov. Arnold Schwarzenegger spokesman Aaron McLear. "This is a drill."

Schwarzenegger and legislative Republicans have been at odds recently, and the GOP deficit-cutting plan takes subtle shots at the governor in at least two places.

For one, the plan proposes to eliminate all state funding for the so-called Hydrogen Highway, a pet project of Schwarzenegger's. The move saves a mere $6 million, but merited a separate line-item in the Republican cut list. The GOP plan also cuts $550 million in funding for the state's after-school programs, which were created by the Schwarzenegger-backed 2002 initiative, Proposition 49.

(It's also of note that the GOP plan's biggest chunk of revenues comes from taking money from Proposition 63, the mental health initiative co-authored by Senate President Pro Tem Darrell Steinberg.)

All told, it looks like the Democrats will give the plan 24 hours to live. The Senate will have budget committees consider the proposal this afternoon. The Assembly Budget Committee will review the plan this morning.

Don't expect the hearings to be friendly for the GOP.

The Assembly will meet today at noon for a floor session, but the Democratic leadership is keeping plans for the session under wraps.

Finally, here's some sobering budget math: If you took every cut Republicans proposed (from eliminating transit funds to cutting payments for the aged, blind and disabled to $10.6 billion from schools) and added it to every tax the Democrats propose to raise (tripling the car tax and suspending the indexing of tax rates), you'd still only solve $23.7 billion of the nearly $40 billion deficit.

Photo: Assembly Republican Leader, Mike Villines listens to Senate Republican leader, Dave Cogdill, behind, as they unveil their budget proposal, at the State Capitol, Monday Dec. 15, 2008. Credit: Brian Baer/Sacramento Bee.

Legislative Republicans proposed a total of $22 billion in cuts and revenues to help close California's estimated $41.8 billion budget deficit on Monday.

Of that $15.6 billion were in cuts to existing programs.

Education, the state's biggest expenditure, takes the biggest hit, with more than $10.6 billion of the cuts allocated to K-12 schools and community colleges. That would bring school funding to just about the minimum required by state law.

The GOP lawmakers also proposed to eliminate funding for state transit agencies and an across-the-board 10 percent cut to the University of California and California State University systems.

Deep cuts in welfare and Medi-Cal programs also were proposed. The plan also would change eligibility rules to make it harder to enroll in those programs.

In a symbolic move, the GOP leaders also proposed a 5 percent cut (worth $26.2 million) to the Legislature itself, including the salaries of lawmakers. But that cut is smaller than the proposed lowering of monthly cash assistance to the poor, elderly, blind and disabled (where couples' monthly SSI/SSP grants would be dropped from $1,524 per month to $1,407.)

A list of the cuts is after the jump:

Gov. Arnold Schwarzenegger put the blame for the budget problems squarely on the back of the state Legislature in his Wednesday press conference.

That is not all that surprising, as the governor has long wagged his fingers at lawmakers when things turn south in California.

But this time Schwarzenegger took aim at GOP lawmakers, in particular Assembly GOP leader Mike Villlines' list of demands to be taken up before any discussion of tax hikes.

The governor did not distance himself from the policies Villines is advocating, saying "when you read through (the governor's) package you will see we address all of those issues."

But he took issue with the GOP approach.

"I have been to many meetings; none of those things were discussed. So I think it's very hard for the Democrats, in a way, to negotiate when no one puts that on the table and says here is the list of things that we ask for and if we have this list then we're willing to increase taxes and to come up with extra revenues. But it's always very vague and nothing specific and I think that makes it sometimes frustrating in those negotiations," Schwarzenegger said.

Schwarzenegger continued:

But I'm happy that the Republicans have a list now. But again, as you have just said, you can't go with a list like this and say if you commit to those things and if you're willing to make those changes, then we are willing to talk about revenue increases. That is not the way you negotiate. You have to say this is what it takes and then I'm ready to increase the revenues and I will get my people upstairs to vote for a revenue increase.

So that has been a holdup. I have felt many times that Republicans did not come prepared and Republicans have not been specific of what they need. They have been very vague.

Senate Republican leader Dave Cogdill did not take kindly to the governor's words.

"Bullying the legislature to adopt tax hikes won't make the ticking clock the governor unveiled today go away," he said in a written statement. "In fact it will only make our budget problems worse. Raising taxes doesn't solve the underlying problem of California's budget, which is the state spends more than it takes in."

Cogdill continued, "Now we've been told that unless we support tax increases - which would harm the economy - the Legislature will not consider enacting these common-sense reforms. We should all agree that economic stimulus will protect taxpayers' jobs and homes and we should have done it by now."

Nor did Villines.

"But let's be clear - Republicans have always entered budget negotiations with Democrats and the Governor fully prepared and fully engaged. For more than a year, we have offered countless proposals both publicly and privately - including specific budget reforms to help us live within our means, specific economic reforms to promote job creation and specific government reforms to ensure our tax dollars are spent more efficiently," he said.

We've posted a full transcript of the governor's press conference after the jump, courtesy of the governor's office, as well as Villines' and Cogdill's full statements:

Assembly Republican leader Mike Villines provided this list to The Bee Capitol Bureau on Tuesday of regulatory and environmental changes Republicans want considered before they agree to talk about tax hikes.

In the interest of time, Capitol Alert presents the list to you without detailed explanation, but we can tell you that "Carl Moyer programs" relate to air quality standards.

Villines said he had provided a similar list to the other state legislative leaders and Gov. Arnold Schwarzenegger.

REGULATORY CHANGES - EMPLOYMENT LAW FLEXIBILITY
Employee Schedule Flexibility
Expanding Health Care Options for Employees (Health savings accounts)
Reducing Unwarranted Litigation
Overtime for high way earners
Meal and Rest clarification
Eliminate "needs test" to allow more apprenticeships

REGULATORY CHANGES - BUSINESS DEVELOPMENT
Design-build
Public Private Partnership
ADA compliance
Streamline small business certification process for micro businesses and sole proprietorships
Reclassify "destination management companies" (DMS) as consumers rather than retailers (SB 1628)
Streamlining the permitting process (THPS, development)
Contracting out

ENVIRONMENTAL FLEXIBILITY
Expanding deadlines for engine retrofits (on and off road)
Extending deadlines for greenhouse gas regulations (AB 32
Carl Moyer program changes
Regulatory flexibility for agricultural industry
3rd party analysis of economic impact of ARB regulations

TAX CREDITS
A new employee tax credit for businesses that hire out-of-work Californians
A manufacturing investment credit to help businesses purchase the equipment they need
Capitol gains reduction for businesses that invest in California
Modification of the tax code to encourage companies to locate jobs in California
Suspension of regulatory burdens that "discourage job creation"

More from Mike Villines' visit to The Bee.

E.J. Schultz of the Fresno Bee reports Villines is off to the nation's capital for meetings with congressional leaders and a "personal engagement."

He'll be back Friday. "I'll for sure come back earlier if we need to. What is important is that we continue to work...If we're going to do a conference call, great. If it needs to be in person, we'll come back early," he said.

Assembly Speaker Karen Bass was in Washington D.C. today meeting with the transition team of President-elect Barack Obama and talking about federal aid for the state, according to Orange County Register.

So much for immediate budget action.

Solving the budget stalemate is simple enough, Assembly Republican leader Mike Villines said in a visit to The Bee's Capitol Bureau Tuesday. Democrats have to capitulate to GOP demands for the 8-hour work day, meal breaks, looser environmental regulations, permanent budget cuts and a stiff spending cap, among other things.

Then, and only then, will Republicans come to the table to discuss -- but not necessarily agree to -- new taxes.

"We think you have to do these reforms first, cuts first and make sure that you're doing an economic package that puts people back to work," Villines said. "Then you have a discussion about revenue - and only then."

Even if Democrats were to agree to the GOP preconditions -- an unlikely scenario -- the Clovis Republican was careful not to commit Republican lawmakers' support for new revenues in the form of higher taxes. He floated other revenue possibilities, such as selling state property and collecting debt owed to the state.

Nearly all the items on the Villines' December wish list are anathema to the Democratic majority.

"This is very hard for Democrats to accept," Villines said of his list, which he said he had been distributed to the governor and other legislative leaders. "They'll say that look, 'This goes right to the heart of many things that we care terribly about and we just can't go there.' I understand that because we feel the same way about revenues."

Jim Evans, a spokesman for Senate President Pro Tem Darrell Steinberg, D-Sacramento, challenged the Republicans to "put a specific $17 billion, half cuts, half revenues, deficit-reduction plan on the table and then we can begin productive conversations."

Villines is holding out hope Democrats will cave. "I think that they'll ultimately come around to this," he said.

Assembly Republican leader Mike Villines announced his full leadership team on Tuesday.

And boy did he mean full.

With a 29-member caucus, no less than 14 of the Republicans are "leaders" of the caucus.

Only two - Assemblymen Nathan Fletcher and Jeff Miller -- are legislative rookies (one of "freshman," Assemblyman Jim Nielsen, previously served as Senate GOP leader in the 1980s). And only one - Assemblywoman Jean Fuller - is a woman.

The team:

Republican leader: Villines

Assembly Republican Caucus Chair: Assemblyman Cameron Smyth, R-Santa Clarita

Republican Floor Manager: Assemblyman Sam Blakeslee, R-San Luis Obispo

Assistant Republican Leaders:
Assemblyman Roger Niello, R-Fair Oaks
Assemblyman Bill Emmerson, R-Redlands
Assemblyman Ted Gaines, R-Roseville
Assemblyman Van Tran, R-Costa Mesa
Assemblyman Martin Garrick, R-Carlsbad

Chief Republican Whips:
Assemblyman Anthony Adams, R-Hesperia
Assemblyman Chuck DeVore, R-Irvine
Assemblywoman Jean Fuller, R-Bakersfield

Republican Whips:
Assemblyman Nathan Fletcher, R-San Diego
Assemblyman Jeff Miller, R-Corona
Assemblyman Jim Nielsen, R-Gerber

The entire state Legislature will meet today in a "joint convention" to get even more dire news about California's woeful financial situation.

Treasurer Bill Lockyer, for instance, will tell lawmakers that unless a budget is adopted the state will stop financing construction projects for roads and other infrastructure. That's not just bond sales for future projects -- those will stop, too. It means projects that are underway will no longer be able to draw down cash from the treasurer's pooled account as the state's general fund moves toward insolvency. Thousands of jobs could be lost.

"No budget, no state financing," said Lockyer spokesman Tom Dresslar. "The spigot is completely off. We're talking about a complete shut-off of state infrastructure financing unless we get a budget fast."

Lockyer, Controller John Chiang, Department of Finance Director Mike Genest and Legislative Analyst Mac Taylor will describe the consequences of failing to reach a budget compromise.

The state faces an estimated $27.8 billion deficit over the next year and a half.

Barring moves by the Legislature, Gov. Arnold Schwarzenegger said in a letter to state lawmakers last week that, "The state will experience a cash-flow crisis beginning in February or March."

After the lame-duck Legislature failed to reach a budget accord, Schwarzenegger called for a special session of the new Legislature to address the state's "fiscal emergency." The new members -- including 25 "true freshmen" -- were sworn in only a week ago.

Outside of the annual State of the State address or speeches by visiting dignitaries (such as the presidents of Mexico and Spain, in 2003 and 2001, respectively) - joint sessions are rare for California.

"There have been presentations by heads of state and distinguished policy experts but in those instances they were sharing their expertise with the Legislature," said Dotson Wilson, the Assembly's chief clerk and parliamentarian.

"This particular joint convention is much more interactive," Wilson added.

The format of the joint convention -- which is set to begin at 3 p.m. -- allows all 120 lawmakers to ask questions of those testifying before the Legislature.

"All the members are on the floor discussing a policy," said Wilson.

Also, late Friday Senate President Pro Tem Darrell Steinberg named the membership and chairmanships of the upper house's five budget subcommittees. See who they are.

Photo: The Assembly Chambers in Nov. 2008. Credit: Brian Baer/Sacramento Bee.

Assembly Republican leader Mike Villines named GOP Assemblyman Cameron Smyth as the caucus chair, the No. 2 slot in the GOP hierarchy.

Smyth replaces Bob Huff, who left the Assembly to join the state Senate.

THIS JUST IN: Alyson Huber, the Democratic candidate in Assembly District 10, has taken a come-from-behind lead in the tight race, possibly bringing Democrats to 51 seats in the Assembly next session.

Sieglock had been leading for the three weeks since the election. More votes remain to be tallied, but counties must certify their results by next Tuesday.

Meanwhile, the 2008 legislative year ended with a whimper Tuesday.

That, and a lot of cross aisle finger-pointing.

In the end, Democrats put forth a 50-50 package of cuts and taxes that would have eaten away at roughly $17 billion of California's budget deficit in the next two years.

But Republicans just didn't budge on new revenues.

Senate GOP Dave Cogdill told the Democrats that they have "got to find another way."

What exactly that other might be is starting to visibly frustrate many Democratic aides and lawmakers.

"What are your choices?" incoming Senate President Pro Tem Darrell Steinberg asked in his floor speech. "What do you propose?"

"Of course I'm disappointed," Assembly Speaker Karen Bass declared after the vote.

Assembly Republican leader Mike Villines said Tuesday's plan didn't have key GOP elements: a spending cap, economic stimulus or enough cuts.

"All we're saying is, if we're going to solve the problem, let's do the whole problem," Villines said.

Speaking of whole ... you might have noticed that the whole Legislature wasn't there last night, as some lawmakers seemingly decided that California approaching a fiscal abyss wasn't worth cutting short trips overseas.

If you know where exactly the missing lawmakers were, do tell.

After the whole thing was said and done, Gov. Arnold Schwarzenegger compared lawmakers to a bunch of kindergarteners.

Funny, the Legislature is usually compared to high school.

Maybe Schwarzenegger just liked Rex Babin's cartoon.

Did we forget to mention that 28 freshmen Assembly members will be sworn in next Monday?

A handful of those members were on hand Tuesday night watching from the back of the chambers. Reports that both their fingers and toes were crossed in hopes of achieving a budget accord before their arrival could not be confirmed by press time.

With both houses tentatively scheduled to return Tuesday, legislative leaders are scheduled to meet with Gov. Arnold Schwarzenegger today at 1:30 p.m. in a last-ditch effort to save the state budget before giving way to the next class of lawmakers.

Senate President Pro Tem Don Perata last week said Tuesday is the absolute deadline for lame-duck legislators to take action, though the session technically ends Sunday.