It appears the Schwarzenegger administration will now have to answer one of the legal questions left over from the Gray Davis budget plan: can the state sell bonds to cover the annual amount it pays into worker pension funds without a vote of the people?

At issue are $929 million in pension obligation bonds. The bonds would be a way to save money in the short-term by borrowing the cash for the state’s annual contribution to the pension funds.

In 2003, the Howard Jarvis Taxpayers Association sued the Davis administration, arguing that the California Constitution forbids the state from borrowing more than $300,000 for current operating expenses without a vote of the people.

The Jarvis group, however, dropped the lawsuit last year. And at least one critic, GOP Senator Tom McClintock, accused them at the time of cozying up to the popular governor… at the expense of the state’s Constitution.

Today, the Pacific Legal Foundation and the Fullerton Association of Concerned Taxpayers picked up the fight with a lawsuit filed in Sacramento. They say that even though the governor reworked the bond deal first pitched by Davis, the bonds are still illegal.

Schwarzenegger’s budget spokesman, H.D. Palmer, disagrees. He says the problem with the Davis bonds was that they were being paid back with actual bond proceeds, whereas the Schwarzenegger bonds will be paid back from the state’s General Fund.

Nonetheless, the legal challenge leaves some very big questions over a large chunk of money needed to fill the state’s still-deep deficit hole.