The latest ad from Governor Schwarzenegger's campaign has a clear message: if you're opposed to a tax increase, vote yes on Proposition 76. But when you examine the way Prop 76 would impact the state budget process, you're likely to conclude that the ad is a pretty big stretch.

The ad features three "average" people sarcastically asking for a tax increase, higher state spending, and modifications to the property tax initiative Proposition 13.

"This is how Sacramento thinks we think," says the narrator. The ad ends with a plea to "Say yes to 76, say no to a tax increase next year."

While Schwarzenegger may oppose a tax increase next year, Prop 76 does not prevent him from changing his mind.

New tax revenues would simply be subject to the Prop 76 spending cap. In other words... the initiative only limits how much money is spent, not how much money is collected.

Legislators and the governor would still be free to raise (most) taxes any time they want. If the Prop 76 spending cap is calculated to be higher than revenues, then those new tax dollars could be spent immediately.

The only impact on a tax hike comes if state spending is already maxed out under the Prop 76 spending cap. Even then, a tax hike would be allowable; Prop 76 would simply force the new dollars to be held in reserve.

The ad's implied message about tax increases is even more intriguing when you consider it has been debunked by none other than Schwarzenegger himself. At last week's televised forum in the Bay Area, the governor argued that Prop 76 wouldn't force a budget deficit to be solved through cuts alone-- that tax hikes could still be part of the solution.

The ad also implies that Prop 76 would restrict current state spending. But the measure would probably not force a lower level of state spending next year-- that's the assessment of both the non-partisan Legislative Analyst and the governor's own outgoing finance director, Tom Campbell.

In an interview earlier this month, Campbell told me that he believes the first forced restraint on spending under Prop 76 probably wouldn't happen for another few years.

As for the issue of Prop 13, the legendary "third rail" of state politics... Prop 76 offers no long-term protections of the property tax initiative. If lawmakers or voters decide to modify Prop 13 in the future, Prop 76 will play no part in that decision.

You can watch the ad here.

The final week of this special election campaign will apparently include a new strategy from the opponents of Governor Arnold Schwarzenegger: an attempt to link the unpopular GOP governor to the unpopular GOP president.

A progressive/liberal group of California Democrats calling themselves the Courage Campaign today unveiled a TV ad linking the governor to President George W. Bush. The goal, says a release from the campaign, is to help fuel more progressive/liberal voters to turn out at the polls on November 8th.

"Arnold's ballot initiatives," says the voiceover on the ad, "are the same misguided George Bush policies that have put America on the wrong track."

The ad buy appears to be pretty small (about $50,000) and the group clearly hopes to get a lot of "free media" coverage by rolling it out to those of us covering the campaign.

It's an interesting strategic decision, considering that polls have shown all of the governor's initiatives already struggling. Campaign stops and endorsements in 2004 aside, few political pundits would go so far as to say Schwarzenegger and Bush are the same on the issues. The governor's moderate stance on social issues certainly puts him in a different corner of the GOP.

Will the new campaign seal the deal for Californians who seem grumpy about the governor's proposals? Or might it lead swing voters to feel the anti-Arnold forces are overplaying their hand? Or, in the end, will it simply blend into the cacophony of homestretch election noise?

If you received an envelope with the slogan "JURY DUTY IS GOOD CITIZENSHIP" on the outside... would you think it's a jury summons?

Supporters of Proposition 77 think so... which is why they say they're mad enough to file a formal complaint over a "No on 77" mailer that went out this week, in an envelope with no other language on the outside other than the above phrase.

Inside, the mailer is targeted specifically to Republicans, claiming that everyone from U.S. House Speaker Dennis Hastert (R-Illinois) to GOP National Chairman Ken Mehlman are opposed to the redistricting initiative. The mailer goes on to say that "Governor Schwarzenegger is sincere, but like a moth to a flame, he is drawn to 77 by the state legislature." It goes on to urge a "yes" vote on the governor's other preferred initiatives-- Propositions 74, 75, and 76-- but a "no" vote on redistricting.

The mailer says it comes from a group called Citizens For Good Government. They are not, I'm told, affiliated with the official "No on 77" campaign. In fact, it took several hours for anyone to call back with some explanations.

The person who finally did call back was Tom Kaptain, who identified himself only as a "slate mailer." He confirmed he's the one behind this piece of mail, but wouldn't say who paid for the mailings... saying he was too busy to keep talking.

The only other clues to the group may be in its mailing address, which happens to be the same mailing address used in the past for activities affiliated with Democratic Assemblymembers Jerome Horton (D-Inglewood) and Tom Umberg (D-Santa Ana), and with U.S. Representative Diane Watson (D-LA). It was also the address listed in voter information guides for the campaign supporting last year's Indian gaming initiative, Proposition 68.

That's not to say any of these folks are affiliated with this mailing, simply that someone who has done work for them is now working on this issue.

The last big-picture glance at campaign cash is in reports filed today with the Secretary of State, and they seem to confirm the obvious: this election ain't been cheap.

The reports from the various and sundry committees are still trickling in, most (but not all) for the period between September 25 and October 22. The documents also give a year-to-date accounting of fundraising, and cash left on hand as of last week.

A few notable reports are in as of Thursday evening. Governor Schwarzenegger's California Recovery Team reports raising almost $15.9 million in the past month, and more than $33 million for all of 2005. The CRT has spent most of it-- about $31 million-- and reports having about $4 million left in the bank.

On the other side, the governor's opponents at the Alliance for a Better California report raising $21.3 million over the last 3 months, for a 2005 total of $31.2 million. ABC has spent $32.6 million this year, and had about $1.1 million left in the bank as of last week.

The other big report, as of now, is from the California Teachers Association. One of the CTA's main committees reports raising a whopping $42.8 million in the last month, for a total of $50.7 million in 2005. Cash on hand as of last week in this CTA account: $66,517.

More reports are coming in... we'll keep you posted.

If there's one thing at least some of the opponents in the special election campaign can agree on, it seems to be that they don't like the title and summary for some of the season's initiatives.

The "No on Proposition 75" camp released a new TV ad today that implores voters not to be "fooled" by the union dues initiative.

"To read it, you'd think it was written to help public workers," says the announcer. The ad goes on to claim that Prop 75 is really a ploy by Governor Schwarzenegger and his allies in the corporate world.

It's an interesting criticism of the official initiative wording process, given that's largely the same argument made for weeks (and reiterated today) by Team Arnold about the budget initiative, Proposition 76.

Prop 76's title and summary draw particular attention to the possible impact on school funding, one of the issues that, so far, seems to have found resonance with voters. Schwarzenegger campaign spokesman Todd Harris calls it "very difficult wording."

That seems to be something on which both sides can agree, albeit on different initiatives.

With most analysts saying his poll numbers are still struggling, Governor Arnold Schwarzenegger is trying something different in his new TV ad: what sounds like humility.

Amid the loud chatter today about polls... both a soon-to-be-released public poll and private polling... comes word from Team Arnold of their new TV ad that features the governor speaking directly to the camera for the entire spot.

"I've had a lot to learn and sometimes I learned the hard way," says a seemingly subdued Schwarzenegger. "But my heart is in this and I want to do right by you."

The ad is now online here.

The governor's political team, in a Q&A with Capitol reporters this morning, said the ad was not in response to any new concerns about the governor's image. But it clearly is a marked turn from his tough talk in weeks past.

Advisers claim the ad buy will be, in their words, "massive"... and that the ad will run up through Election Day.

More on the new statewide poll tomorrow, when the results are officially released...

Just passing along a note from our online team at KQED that several radio productions, including our statewide newscast The California Report, can now be subscribed to as podcasts.

If you're one of the iPod generation, click here to learn more about how to sign up.

We're also featuring podcasts of our public affairs talk show Forum, our weekly Asian issues newsmagazine Pacific Time, and our occasional audience commentary feature Perspectives.

You can subscribe through either iTunes or Odeo. Happy podding.

Governor Arnold Schwarzenegger taped an hour-long forum this morning for Spanish language Univision, a discussion that veered into some of the issues--and complaints-- that Latino voters have had with the man in the corner office.

While there was discussion of some of the initiatives on the special election ballot (with very little different from the Walnut Creek event), there were many pointed questions about Schwarzenegger's relationship... or lack thereof... with Latinos in California. One recent polls found the governor's job approval ratings among Latinos at a dismal 17%.

It was no surprise that the issue of driver's licenses for undocumented immigrants came up. The governor attempted to broaden the discussion into one of illegal immigration in general, and maintained that it's an issue for the feds to deal with.

"It's not for the governor to decide. It's for the president, for Senate, Congress, for them to decide how to deal with that issue," he said.

Schwarzenegger also made it clear his opposition to amnesty for those who are here illegally. He says it sends the wrong signal. "Let's create a guest worker program," said Schwarzenegger. "Let's do it in a legal way."

The governor was also critiqued for the number of Latino judges he has appointed. "Any great names that you have, may I remind you, please present [them] to us," said the governor.

The questioner, however, followed up by saying that the National Council of La Raza has already submitted names, none of which have been accepted.

"I'm not the one doing the beginning stages of picking the judges and all this stuff," Schwarzenegger replied. "I have experts doing that. But I will look into that."

Democrats complained that there was no role for opponents in the forum, and blamed that on Univision CEO Jerry Perenchio, a major Schwarzenegger donor.

Later this week, the governor is headed to Fresno... with speculation that the Democrat's perspective at the forum will be offered by the area's former assemblymember, Lt. Governor Cruz Bustamante.

A few sidenotes of interest from last night's televised forum in Walnut Creek-- one that, as we reported this morning on The California Report, didn't seem to break much new ground, either in subject matter or rhetoric.

* PROP 76 MISSTATEMENTS: Both sides made statements about the budget initiative, Proposition 76, that don't quite add up with how the initiative works. First up: Senate President Pro Tem Don Perata, who at one point said, "the problem with [Prop] 76 is, it just across the board requires cuts in schools, in in-home support services... it makes those cuts without retaining any respect to the reality, at all."

But that's not quite right. While Prop 76 would give the governor the power to make cuts after a budget deficit impasse, it doesn't specify where those cuts would come from. In fact, given its vagueness, some budget analysts say it may not force a governor to make any cuts. The scenario laid out by Perata sounds like ACA 4X, Schwarzenegger's budget proposal in the Legislature-- similar to, but not an exact copy, of Prop 76. Perata may have reason to believe the governor would make those kinds of cuts, but the initiative doesn't mandate them.

Later, Governor Schwarzenegger seemed to mischaracterize how Prop 76 works if a budget deficit occurs. "The legislators may decide that they want to do, if there's $3 billion dollars that we're out of sync, that $1.5 billion is an increase in taxes and $1.5 billion is in cuts." Trouble is, that solution's largely unworkable if state spending is already at the max allowed under 76's spending cap formula. The Legislative Analyst's Office says that in that case, new revenues from any tax increase must be put into the reserves... where they could only be used once there was room under the spending cap to spend them. In other words, a state government that is already spending the maximum allowed would have to cut by $3 billion.

WHY CAN'T WE BE FRIENDS?: The noisy crowd outside the forum last night was pretty predictable, with union members on one side (chanting things like "he's our governor, not our king") and a smaller, but passionate, group of Arnold supporters on the other side. But just before the event began, something unexpected happened. The two sides began singing patriotic songs together, including God Bless America. A few minutes later, though, it was back to the name calling.

ABORTION, CHEAPER DRUGS, ENERGY: These topics never made it to the televised "Special Election Showdown"... which bypassed any discussion of Propositions 73, 78, 79, and 80.

MICHAEL IS A CAPRICORN AND LIKES LONG WALKS ON THE BEACH: The format included two journalists who introduced the voters asking questions. But at some point, the intros started sounding like a matchmaker service. The first one seemed to be when Walnut Creek resident Michael Wilson's intro included the fact that he is single. He laughed, and then asked his question about Prop 75. Every so often afterwards, the journalists would offer similar nuggets about other questioners, single or married. After the intro of Menlo Park resident Christie Heaton, Governor Schwarzenegger finally joked, "this sounds a little bit like a dating service here."

AIM HIGH... ER, LOW: Governor Schwarzenegger is well-known for his seemingly eternal optimism, and always says he intends to win with all of his ballot initiatives. But after the event, top Schwarzenegger consultant Mike Murphy seemed to hint at what the "spin" might be for a much less rosy election outcome.

I asked him what would constitute a victory on November 8th. "I think if we win anything, it's a victory," Murphy said. He then added, "we've had more obituaries than Count Dracula."

Do voters already have their minds made up about the special election initiatives, or can those minds be changed?

That's the $64,000... umm, $150 million question... at stake-- in part-- tonight in Walnut Creek.

The Lesher Center for the Arts is the site of an unusual, 90-minute event featuring Democrats and Governor Arnold Schwarzenegger fielding questions from an audience of average voters. Truth be told, the 2 sides will not appear on stage at the same time, which makes this much more of a conversation with the audience than a debate.

[The event will be broadcast, tape delayed, on KQED Public Radio at 9:00pm tonight... 88.5 FM in the Bay Area, 89.3 FM in Sacramento, online at kqed.org]

State and national reporters are expected to descend on the event en masse, as well as spinmeisters from both sides to instantly declare winners and losers. Those of us in the media, by the way, are being accommodated in a makeshift press room at nearby Massimo Ristorante, and not actually inside the arts center.

It will be the first event of its kind this election season-- especially for the governor, who hasn't faced a crowd that wasn't hand-picked by his campaign or its allies. In fact, early negotiations between Team Arnold and the sponsors (KTVU-TV, the Contra Costa Times) reportedly included demands from the Schwarzenegger camp that they get some say in picking the audience. But as far as we know, they didn't get it.

The Q&A format is one at which the governor does well... though he's often cagey at giving an answer that's anything other than the familiar campaign message (as I and other Capitol reporters found out last month).

Aside from answers to policy questions, expect the following questions to be on the minds of the political world as the lights go up at 6:00 pm:

* Can the governor convince skeptics that his self-described reforms are either urgent and/or the best course of action?

* Will Democrats be asked to justify their perceived reticence for any real negotiations on these issues earlier this year?

* Will the substance of any of the measures actually be considered, or will the discussion again be relegated to phrases like "live within our means", "power grab", "union bosses", and "paycheck protection (or deception)"?

* Will there be ANY discussion of Propositions 73, 78, 79, or 80... three of which have largely been devoid of a media campaign?

* Will the Bay Area audience come down strongly on one side or the other, given polls showing Schwarzenegger as especially unpopular there?

* How will media coverage affect internal tracking polls, or public opinion polls (the next of which is expected as soon as the end of this week)?