It’s hard not to notice that, in politics and in life, Governor Schwarzenegger seems to be an eternal optimist. But the early word from the Legislature’s non-partisan analyst is that the governor’s new budget may be, well, a tad too optimistic.

Legislative Analyst Elizabeth Hill’s initial look at the governor’s revised budget proclaims that it overestimates the amount of cash left in reserve by $1.7 billion. That’s a pretty sizable disagreement… when you consider that the entire reserve estimated by the Schwarzenegger budget team is $2.2 billion.

So what’s the disagreement?

Hill takes issue with the governor’s plan to transfer money away from public transportation accounts (she questions the legality), his ongoing reliance on a slice of Indian casino profits, and a few other budget proposals. In all, she says the reserve fund would have only $529 million in it by the end of the 2008 fiscal year, not the $2.199 billion the governor proclaimed at his news conference yesterday.

That being said, the LAO is giving some credibility to Schwarzenegger’s call for privatization of the student loan-guarantor agency Ed Fund… saying the proposal “merits consideration.” And Hill’s new analysis also suggests some areas that lawmakers will want to consider when it comes to the other big privatization proposal being floated by the governor– the leasing of the California State Lottery to outside interests.

Hill’s new report is here.

For health care policy wonks, a long-awaited set of numbers are in… an outside analysis that shows that while the two leading Democratic health care plans would not cover all the uninsured in California, they would also cost less than the proposal put forward by Governor Arnold Schwarzenegger.

You’ll remember that the governor’s team estimates the cost of his health care proposal at about $12 billion– a plan that calls for coverage of everyone who’s uninsured, and a plan that mandates everyone sign up for at least a basic coverage program.

Now, a new independent analysis of legislation from Assembly Speaker Fabian Nunez and Senate President pro Tem Don Perata has also attached price tags to their plans.

The Perata plan, contained in SB 48, would cost $10.9 billion… and would be paid for with $11.5 billion in individual premiums, employer contributions and federal matching funds. That would leave about an extra $600 million left over, if everything goes just right.

The Nunez plan, contained in AB 8, would cost $8.3 billion… and would be paid for with about $8.7 billion from the same sources as Perata’s plan.

It’s now believed that both plans would cover about 69% of the state’s uninsured… compared to the governor’s pledge to cover everyone who is uninsured (it should be noted that the governor’s plan was not introduced as actual legislation).

Another major area of difference is who pays. Schwarzenegger wants the cost to be spread out– including new fees on businesses who decide to join a state-sponsored pool for coverage, and new fees on physicians. The Nunez and Perata plans, according to new information, will ask a larger amount from employers (7.5% of payroll, compared to 4% in the governor’s proposal), but their advisers say most employers who currently provide coverage actually spend more than that. And they argue both plans will result in tax savings for businesses and individuals.

So, what does all of this mean? That’s still to be decided in the weeks to come. Clearly these new numbers (crunched through a project of the California Healthcare Foundation) will set the stage for real negotiations about costs, and who pays those costs.

And while the Nunez and Perata plans have some differences (mainly in how they impact the smallest of small businesses), they clearly set a marker for where Democratic leaders can debate the governor over size and scope of health care reform. The real question marks, at this point: how do the varied interest groups (consumers, labor unions, business community) react? And then there are legislative Republicans, who may still be needed for votes if any of these “fees” actually end up being treated as “taxes.”

Today marks the semi-official beginning of a new feature both here at Capital Notes and, eventually, on a few other sites: a weekly podcast on California politics.

We’re calling it Talking Points, and its premise is pretty simple: a weekly chat on all things political from three Capitol reporters– myself, Kate Folmar of the San Jose Mercury News, and Anthony York of Capitol Weekly.

I call today’s podcast semi-official because… well… it’s not quite a podcast just yet. The actual project will hit its stride in a couple of weeks with a new integration into this newsblog, and then distribution on the KQED podcast page and through services like iTunes, etc.

But we figured we’d begin with a version you can listen to here, and download (if you’re so inclined) by right-clicking the link below.

And like a good wine, we hope to improve with time… including better audio than on this inaugural run, an error that rests on the shoulders of the radio guy.

It was a powerful photo op today on the east steps of the state Capitol.

Governor Arnold Schwarzenegger. Three of the leaders of the California Legislature. And the CEOs of a few dozen of California’s biggest, and most successful, companies.

The subject: the health care crisis. The solution: stay tuned.

Over the past few weeks, this coalition of business leaders has been readying itself to join the health care debate here in Sacramento. Meanwhile, private negotiations have continued among a whole host of stakeholder interest groups.

But over the course of today’s event, it became clear that the only real consensus is that everyone should work together. Beyond that, the issue as a news story seems stuck… until someone breaks the stalemate over who’s covered, how to cover them, and who pays.

The new business group, known as the Coalition to Advance Healthcare Reform, has laid out five overarching principles– a mantra espoused today by the group’s leader, Safeway CEO Steve Burd: use “market forces” to lower costs, require everyone to have health insurance, subsidize health care for the poor, promote prevention and healthy lifestyles, and allow taxpayers to write off the cost of their health insurance.

A few of those principles– most notably, mandatory health insurance– have also been espoused by the governor. But back to the issue of who pays… at today’s news conference, I asked Mr. Burd whether he (or any of the CEOs) support the governor’s call for businesses to either provide health insurance or pay 4% of their payroll into a new state pool.

His answer (actually, you can listen to the entire answer here): “We’re not here to talk about a prescription for a solution. We think the best framework is to get some ideas on the table… and look to see where the market can help us solve this.” Toward the end of his answer, Burd said that his group doesn’t want to “prejudge any particular issue right now.”

Burd was deft at avoiding that big sticking point, because he knows that legislative Republicans abhor the payroll fee/tax suggested by Schwarzenegger, as do a lot of small business owners. And while he did discuss ways to find money– including something called “transparency” and by cutting down waste– the bottom line of this debate still seems to be… well… the bottom line of money.

For the past month, everyone from local elections officials to activists have waited for word from Secretary of State Debra Bowen about exactly how she will conduct her upcoming review of voting machines currently used in California.

Today, she announced that the testing will focus on whether the machines comply with existing election laws– and not whether they meet a set of standards that she first suggested in late March.

That resolves one of the initial criticisms of Bowen’s plan– where manufacturers argued that that there isn’t time for brand new voting machine standards, given that local elections officials need to know by early August which machines are approved for next February’s presidential primary.

Instead, Secretary Bowen is now leaving many of the details of the voting machine tests to a panel of researchers she has personally selected. “We have asked the experts to create measuring sticks,” she said today in a conference call with reporters. “They need to tell us where the greatest threats are, and what conditions pose the greatest real world risk.”

But so far, the early reaction from local elections officials has been… skepticism.

Steve Weir, Contra Costa County registrar and president of the California Association of Clerks & Election Officials, says there’s been almost no dialogue between Bowen and the people who actually conduct elections in California’s 58 counties. Several weeks ago, Weir offered up a group of registrars to participate in the testing. “They’ve never been engaged in this,” he said this afternoon.

And there are some eyebrows being raised over the researchers Bowen has picked to do the actual testing, which is supposed to begin as soon as Monday. Many of the people on the list released today have been very vocal critics of electronic voting machines. A quick Google search of many of the individuals finds some pretty strong opinions on the issue.

How, I asked Bowen today, can they be anything but predisposed to a particular recommendation? “Anybody who’s looked at voting systems does tend to have developed some fairly strong opinions,” she said. She went on to explain that no one on the panel of testers has advocated for a universal ban on electronic machines.

(Paper-based systems, it should be noted, will also be tested.)

Step one of the new voting machine testing– a review of all manufacturer documentation– begins next week. After that, the source code of machines will be examined. And finally, a “red team” hack test will be conducted… the first state-sanctioned test of its kind in the nation, says Bowen.

The voting test documents can be found here.

The twist that will make headlines out of today’s three hour Senate hearing on the ’secret’ plan to build a new death chamber at San Quentin: a corrections employee testified that Governor Schwarzenegger’s staff knew about the plan well before it became public… an accusation that seems to contradict the governor’s own statements that the project should have been disclosed.

The revelation came in the afternoon testimony of Kingston “Bud” Prunty, the undersecretary of the California Department of Corrections and Rehabilitation (CDCR). Prunty had been summoned to the hearing after legislators began a long series of questions about exactly who gave the OK to begin construction on the new death chamber– a project pegged at $399,000, just under the fiscal threshold of notification to the Legislature.

Prunty told Sen. Gloria Romero (D-LA) that he was the one responsible (or one of those responsible, it wasn’t completely clear) for giving the authorization to begin construction. [Hear their exchange here.]

And one of the key topics of the hearing was that U.S. District Court Judge Jeremy Fogel had never demanded that the state needs a new death chamber, but rather that the state needs to inform him of what changes the state plans to make to the death penalty process. Nonetheless, several internal state documents show that CDCR officials claimed that Judge Fogel had “ordered” them to create a new death chamber.

But then the questions went beyond who gave the OK… as senators asked Prunty who else had been at the meetings where the decision was made.

Undersecretary Prunty said that there were several meetings (which another witness said began the first week of January) about how to comply with Judge Fogel’s wishes. And he said that one result of those meetings was an agreement to build a new death chamber.

And was the plan, asked Sen. Mike Machado (D-Linden), discussed in the presence of staffers from Governor Schwarzenegger and Attorney General Jerry Brown?

“Yes,” said Prunty. [You can hear that exchange here.]

That certainly seems to undercut the criticism of the process expressed by Schwarzenegger in a news conference on April 24, some two weeks after the death chamber project was made public.

“They went about it in the wrong way by not sharing the information and including the legislators,” he then told reporters.

Late this afternoon, the governor’s press secretary said that while top Schwarzenegger advisers knew that a new death chamber was the preferred plan, they did not know that it was actually being built.

This is unlikely to be the final chapter in this saga. And for some of the legislators at today’s hearing, it also begs the question about fiscal accountability and transparency within the CDCR… just as the state is planning to borrow $7 billion for new prison construction.

As this morning’s long informational hearing over plans to build a new death chamber at San Quentin continues, one early bit of news: the projected cost is more than double what was originally expected.

The controversy began, as you might remember, when it was discovered that– in the wake of court challenges to the way the death penalty is administered– state prison officials had okayed a new death chamber be built at San Quentin. The projected cost was $399,000… just short of the $400,000 “trigger” that would have required notification of the Legislature.

In this morning’s Senate hearing, state corrections secretary Jim Tilton told legislators that the projected cost of the project is now $850,000. More than $600,000 of that amount is the actual construction– an increase of about 50% from the original price tag. The rest was described as “support” costs.

Even so, the project is currently on hold; it was stopped by Governor Schwarzenegger after the issue blew up in public several weeks ago.

Senate Democrats are taking Tilton and his staff to task in the hearing, which is very much a classic ‘what did you know and when did you know it’ kind of event. Secretary Tilton reiterated this morning that he was unaware of the construction project that had been approved by his subordinates. In fact, senators are now pointing to one internal document that reportedly dates back to late January, a document in which 13 people were copied… but not Tilton.

“People made some assumptions without telling me,” said Tilton.

Sen. Mike Machado (D-Linden) said if that’s true, then some corrections officials are guilty of”insubordination.”

Tanker truck safety. Health care. Prisons. Redistricting. Global warming. Indian gaming. Special interests. If this were Jeopardy, that would be the answer.

And the question would be: “what can you ask Governor Schwarzenegger in 20 minutes and 33 seconds?”

On Wednesday afternoon, I sat down with the governor in his Capitol cabinet room for an interview on some of the issues being discussed this year. It was the first extended interview with Schwarzenegger in almost three years– and in it, he maintained many of the positions that he’s espoused in public events on just about every issue.

But the Q&A did shed some light on a few subjects. Probably first on the list was why he remains unwilling to agree to incremental health care reform, especially any plan that provides coverage for all children. The governor said, quite matter of factly, that only a systemic overhaul will provide the cash to pay for full coverage of kids.

“If you just go and cover the children,” he said, “somewhere you have to get the $400, $500 million dollars from.” And he then added: “All of those pieces [of health care reform] only work if it all goes together.” That certainly seems to imply that other ways of paying for health care reform aren’t on his radar.

And Schwarzenegger reiterated his opposition to a single-payer health care system, like the one introduced by Sen. Sheila Kuehl (D-Santa Monica), by blaming the health care crisis in California’s prisons on the fact that it was a government-operated system. I asked him whether it’s fair to compare prisoner medical needs to those of ordinary folks, and he said: “Absolutely, because it’s government running it. Government cannot run things.”

Elsewhere, the governor was quick to shoot down one report from this week that he’s quietly drafting a new redistricting initiative as a backup should Capitol negotiations break down (explaining that it’s being controlled by people who used to work for him). “We are totally against that,” he said.

And on the issue of Indian gaming, the governor took a slightly new tack as to why he’s agreed to as much as a 50% increase in slot machines statewide: it’s good for the economy. “People are going to stay in California more than go to Vegas,” he said. “I want them to spend the money here. I think that that has a residual effect on all kinds of other things. It creates a lot of jobs when you go to these casinos, it creates a lot of really good paying jobs.”

There’s much more… is he really promoting sacrifice enough when it comes to fighting global warming? And do the much ballyhooed “special interests” still, as he said in 2005, run things in Sacramento?

The entire interview can be found here. We ran portions of it this morning in a lengthy story on The California Report, and that broadcast can be found here.

Supporters of California’s existing law on legislative term limits are filing a lawsuit over the proposed ballot initiative to modify that law– specifically targeting the summary of the initiative prepared by Attorney General Jerry Brown.

The lawsuit, to be filed in Sacramento Superior Court, essentially argues that the initiative’s title and summary, something the AG’s office prepares for every proposed initiative, is inaccurate at best… and misleading, at worst.

In a news conference this morning, representatives of the national organization U.S. Term Limits said the summary fails to highlight that the initiative would allow incumbent legislators to serve extra years in their current office.

The existing title and summary says the following:

Reduces the total amount of time a person may serve in the state legislature from 14 years to 12 years. Allows a person to serve a total of 12 years either in the Assembly, the Senate, or a combination of both. Provides a transition period to allow current members to serve a total of 12 consecutive years in the house in which they are currently serving, regardless of any prior service in another house.

Attorney Eric Grant, who filed the suit, called the above paragraph “misleading, unfair, and prejudicial.” He said that referring to an extension of terms of service for incumbents as a “transition” is misleading… and that it should, instead, be called an “exception” to the 1990 law.

The pro-term limits group is focusing its PR effort at Assembly Speaker Fabian Nunez and Senate President pro Tem Don Perata as the most likely beneficiaries. Nunez would get another six years in the Assembly if the initiative is passed; Perata would get another four years in the Senate. But the lawmaker who could actually end up being the longest serving: Sen. Tom McClintock (R-Thousand Oaks), who the group claims could extend his total time in the Legislature to 26 years.

Critics of certain initiatives often attack the title and summary as partisan, and this group says Brown’s summary is not misleading by accident.

The last high-profile fight over an initiative’s title and summary was in 2005, when the summary issued by then AG Bill Lockyer of the pension reform initiative promoted by Governor Schwarzenegger helped kill the measure, due to the summary’s suggestion that the death benefits provided to families of slain law enforcement officers would be reduced.

In a written statement, the proponent of the term limits initiative, attorney Robin Johansen, called the lawsuit meritless, and said the opponents of the proposal “can’t expect to have a title and summary that reflects their campaign literature.”

As I attempt to recover from the extravaganza that was this past weekend’s Democratic convention (and the San Diego hotel near the train tracks that prevented REM sleep), just a few tidbits of political and policy notes on this Tuesday…

* Make The Check Out To… : There are some new, but early, price tags for the 24/7 construction project caused by the weekend accident that brought down a section of Interstate 580 in the Bay Area. At a briefing this morning here in Sacramento, Caltrans director Wil Kempton said the state has spent about $8.8 million in the first 48 hours. Almost half that amount was for demolition work… the rest has gone towards traffic control and yesterday’s day of free rides on mass transit for Bay Area commuters. Kempton also said while state officials aren’t offering up any blank checks for the project, they are “fairly open” to the idea that getting materials– like enough steel– and getting them fast will mean paying a premium price. While the state is putting money upfront to get the work done, officials say a request will be made to the federal government to reimburse the cost of the project.

* Fly On The Wall: Most political reporters would love to be at two unusual events today on Governor Schwarzenegger’s schedule… both of which are private meetings.

This afternoon, the guv is speaking to a meeting of the California Restaurant Association and, we’re told, taking questions from those in attendance. The topic: Schwarzenegger’s health care reform ideas. That’s a proposal about which the restaurant industry has been quite vocal about its unhappiness, especially on the governor’s call for new health care mandates on employers.

Later this afternoon, the governor is scheduled to meet here in Sacramento with GOP presidential candidate Mitt Romney. While the two have spoken on the phone before, the governor’s aides say this is their first face-to-face chat. Romney has been working hard in recent weeks to plant his flag on the conservative side of the GOP universe for the coming primary… a place that Schwarzenegger seems to have taken off his political map. By the way, Schwarzenegger is also scheduled to attend Thursday afternoon’s GOP presidential debate at the Ronald Reagan Library in Simi Valley.

* Anti-Gay Marriage Initiative: Opponents of gay marriage are taking another shot at a ballot initiative, after recent attempts failed to qualify. The initiative submitted for drafting approval today is authored by Randy Thomasson, of the conservative Campaign for Children and Families, and former GOP Assemblymember Larry Bowler. The initiative’s language is pretty simple: no same-sex marriages in California, and no recognition in California of same-sex marriages granted in other states. The draft is here.