The money spent by state government may be bottled up by the lack of a new budget (now one month late), but the campaign cash is still flowing.

Hundreds of campaign finance reports are being filed today, as various candidates and committees meet reporting deadlines to show not only what they’ve raised, but how much they’ve spent, and how much they have left in the bank.

The reports span a time frame ranging from a few weeks to a few months, but all of them show total campaign fundraising activity through June 30.

Some of the more notable findings…

Governor Arnold Schwarzenegger continues to raise money at a pretty good clip in a non-election year, as his campaign pays debts incurred from the 2006 reelection campaign. Schwarzenegger’s candidate committee reports raising $4.2 million in just the five weeks between the end of May and the end of June. However, the campaign actually paid $9.8 million in bills during that same period. In addition to paying back money the governor lent to his campaign through his company Oak Productions, the campaign reports paying more than $7 million for TV ads last fall, and another $15,000 in campaign consulting fees to his official gubernatorial chief of staff, Susan Kennedy.

By the way, the governor’s 2006 challenger Democrat Phil Angelides has paid off about $240,000 in 2006 expenses this year while still owing himself about $35,000.

Elsewhere, the campaign to reform the state’s term limits law seems to be drawing cash from a wide array of interest groups. The campaign raised about $2.6 million between early April and the end of June, while spending about $1.5 million (the bulk of that, about $1.2 million, for signature gathering). By comparison, the main opponents to term limit changes have raised very little cash– only $50,000 reported as of June 30.

And in a blast from the past… the biggest backer of one of the biggest ballot initiative fights last fall may actually have been a lender, not a donor. The battle over Proposition 87– the defeated plan to assess an oil drilling tax for alternative energy research– was one of the most expensive initiative contests in years. But new campaign finance reports show that the biggest backer of Prop 87, Hollywood producer Stephen Bing, is now listed as loaning the campaign money last year. And apparently he wants it back. How much? Filings show that the Prop 87 campaign owes Bing $32.5 million. Ouch.

And finally, what does a former officeholder do when he or she can’t take surplus campaign cash with them? Usually they move the cash to another campaign account, even if they never plan to run for the office in question.

As examples, look no further than two former legislative leaders, Republican Kevin McCarthy and Democrat John Burton.

McCarthy, the former Assembly GOP leader, has about $125,000 sitting in account for a run at lieutenant governor. But it’s hard to imagine McCarthy wanting that job, given the one he landed last year… as a member of Congress representing Bakersfield. Meantime Burton, the irascible former leader of the state Senate, has $407,000 sitting in the “Burton for Superintendent of Public Instruction” campaign account. Burton, a San Francisco political icon, seems more happy these days running his non-profit organization than itching for a return to elected politics. In other words, don’t expect to see these two pols on a statewide ballot anytime soon.

What does it mean for a voting machine, or an overall voting system, to be secure?

For years, there has been almost no agreement on an answer to that question. And the long running debate about the potential for elections to be rigged will take a new turn in California by this Friday. That’s the date by which Secretary of State Debra Bowen will decide whether to perhaps ban some of the voting systems used in California’s 58 counties as recently as last November.

Bowen is holding a lengthy public hearing today here in Sacramento to examine the findings of UC researchers who over the past few weeks poked and prodded several currently approved voting systems. Among their many tasks, the researchers looked for ways that hackers could game an election.

But back to the main question: what’s the definition of security?

Local elections officials and representatives from voting machine manufacturers say the recent tests were of limited value, because the existing security practices used in each county weren’t considered. At today’s hearing, they told state elections officials that the newly released reports should be taken with a grain of salt.

“By ignoring the operational (real world) environment, the…team tested the system out of context,” said Neil McClure of Hart Intercivic Voting Systems in his testimony this morning.

The researchers don’t seem to dispute that accusation, but they do dispute that such an omission invalidates their testing. Instead, they argue that the makers of voting machines shouldn’t assume that the machines will always be monitored or protected by poll workers and elections officials.

“The vendors should assume that components are used in completely untrusted environments,” said Matt Bishop, a UC Davis computer scientist and one of the study’s lead researchers.

It should be noted that the researchers tested more than just the “hackability” of voting systems. They also tested whether the existing systems comply with laws mandating accessibility for disabled voters. And researcher Bishop today flatly said that no system had full accessibility for the disabled… a major issue that has led to lawsuits in recent years.

The big question now is what will Secretary of State Bowen do? She seems to have three options: let the voting systems be used in February as they are (which seems unlikely)… ban some of the machines (the most extreme measure, and one which could lead to legal challenges)… or impose new rules designed to mitigate the security and usability flaws.

This final option may be the most likely scenario, but it’s also unlikely to appease either those who oppose high tech voting machines, or local elections officials who say time is tight.

The state budget stalemate continues, and is the main focus of this week’s Capital Notes Podcast. Senate Republicans demand more budget savings, Democrats reject many of the ideas, and Governor Schwarzenegger urges action.

With the regular crew: John Myers, Kate Folmar, and Anthony York.

Related Information:

“Budget Drama ‘07: hurt feelings, term limits, gerrymandering and… Jeff Denham?,” by Anthony York, Capitol Weekly.

“State Budget Impasse Drags On,” (audio) by John Myers, KQED’s The California Report.

Two very big political stories landed with a boom Friday afternoon: referendum measures were filed to invalidate the revised casino deals with four powerful Indian tribes… and a long-awaited report on the security of voting machines raises a lot of questions about this February’s statewide primary.

Tribal Casino Referendum Measures: Late this afternoon, the political director for the union of hotel and restaurant workers filed four separate referendum measures to appear on the February ballot.

The measures seek to overturn the recently ratified agreements for the Agua Caliente Band of Cahuilla Indians, the Morongo Band of Mission Indians, the Pechanga Band of Luiseno Mission Indians, and the Sycuan Band of the Kumeyaay Nation.

A list of the referendum documents can be found here.

This has the potential to be a very nasty and expensive political battle that could overshadow even the presidential primary. While organized labor is taking the lead at this point, led by Jack Gribbon of the UNITE-HERE coalition, it’s widely believed that both the horse racing industry and a handful of equally powerful Indian gaming tribes will also bankroll the referendum campaign. Cick here for extended comments late this afternoon from Gribbon, who filed the formal petitions with the state Attorney General.

So how big of a battle could be on the horizon? One political analyst at a meeting with reporters two weeks ago suggested campaigns that could easily total some $20 million per referendum measure.

If enough signatures are gathered… and the pro-referendum forces have only a matter of weeks… voters will be asked to vote either yes (validate the actions of the Legislature and Governor Schwarzenegger) or no (overturn those actions). The referendum will be decided by a simple majority; the backers need a total of about 2 million signatures for the four measures to qualify for the February 5 ballot.

The pro-referendum forces have many reasons for disliking the four casino compacts– from provisions related to casino workers and their rights to organize, to the slice of revenues these tribes must share with the state (compared to the revenue deals other tribes agreed to back in 2004).

A spokesperson for the governor says that Schwarzenegger stands behind the tribal deals now being challenged. In a written statement, Pechanga tribal chairman Mark Macarro said that his tribe “will do what it takes to protect our agreement with the state.”

Much more to say on this brewing fight… stay tuned.

Voting Machine Test Results: A long awaited review of voting machines used in California elections is raising a lot of questions… not only about the reliability of the actual machines, but about the actual testing process itself.

This afternoon, Secretary of State Debra Bowen released the testing results compiled by a team of University of California-led researchers on the voting machines used in dozens of California counties.

The report says that the researchers found numerous vulnerabilities in the security of the machines, including electronic touch-screen devices. The report concludes: “The security mechanisms provided for all systems analyzed were inadequate to ensure accuracy and integrity of the election results and of the systems that provide those results.”

The testers examined devices made by Diebold Elections Systems, Sequoia Voting Systems, and Hart Intercivic Voting Systems. The examples of vulnerabilities, according to the report, run the gamut from allegations that screws could be loosened to bypass locks (Sequoia) to internal server systems that could be bypassed by hackers (Diebold) to accessing internal menus that probably should be locked with passwords (Hart).

The manufacturers of these machines will have their chance to respond at a formal public hearing on Monday. And almost no one apparently saw these reports until late this afternoon; in fact, reporters were invited on a phone conference call with Secretary Bowen without yet having seen the documents that were ostensibly the subject of the discussion.

But even with all of those reported vulnerabilities, the researchers make note of something that local elections officials say is the real point: it’s possible many of these security flaws, if true, are already negated by the procedures used in individual counties. “The results of this study,” writes lead researcher Matt Bishop, “must be evaluated in light of the context in which these election systems are used.”

Steve Weir, president of the statewide association of county elections officers, called the results “inconclusive.” And in her remarks to reporters today, Secretary Bowen said she hasn’t yet decided whether to allow these systems to be used in February as they now exist… or whether to order changes, or outright bans, on some systems.

That’s Governor Arnold Schwarzenegger’s message to the state Senate, as the 26th day of the budget impasse comes… and goes… with no spending plan in place.

Schwarzenegger held a news conference this afternoon on the fiscal fight at the state Capitol where he seemed to play the role of The Motivator more than the role of… well… you know.

“Pass it and move on and get on to the next thing,” he told legislators, “because there’s a lot of very, very important issues that we want to tackle.”

Schwarzenegger focused his attention on the impacts to state government of a prolonged impasse, which in a week’s time would be the longest stalemate since 2002. In particular, the governor said his staff has prepared an executive order that he will sign in the event of an emergency like a wildfire, allowing the state to spend whatever it needs. Officials from the California Department of Forestry said that some vendors who help keep firefighting aircraft in the air have said they may no longer do business with the state if they’re not guaranteed of getting paid.

While the governor didn’t exactly point the finger of blame at Senate Republicans, who still refuse to approve the one-week old budget proposal, he did pretty much reject most of their talking points.

On the GOP demand that all of the so-called structural deficit (the imbalance between current year revenues and expenditures) be erased, Schwarzenegger said this: “I don’t believe that we should do that.” Instead, he said, legislators should agree to reform the budget process later this year (something first pitched several months ago by Senate President pro Tem Don Perata).

And he again tried to inject a dose of optimism into the grumpiness that seemed to manifest itself in public the past few days. “I think that with the spirit that we’ve had over the last year and a half here,” he said, “with both parties work together and did always what was right for the people, I think with that spirit we have to really tackle this budget.”

Click here to listen to Schwarzenegger’s response to whether the Assembly budget should be reopened, and the lower house brought back to Sacramento from their summer recess to approve changes made by the Senate.

Republicans are also demanding changes to the state’s environmental laws when it comes to the impact on global warming of existing construction projects. I asked the governor about that proposal… and while he didn’t endorse it, he did endorse some reform of the law in question (the California Environmental Quality Act). Click here for that answer; it’s doubtful Democrats agree with him on this one.

So, what does all of this mean? At this point, not much. The impasse in the Senate still seems to exist… with Republicans demanding more budget savings, and Democrats demanding a formal floor vote of solidarity from the 15 Senate Republicans before they consider what to do next.

Anyone have any weekend plans?

Lawmakers quickly convened and adjourned this morning, but not before the 15 members of the Senate Republican Caucus finally handed over a list of cuts they say are necessary to pass a new state budget… a budget that’s now 25 days overdue.

Senate GOP Leader Dick Ackerman gave the list of cuts to Capitol reporters this morning, even though the package of proposals is more likely to land in the wastebaskets of Democrats than on their desks.

The package goes beyond the roughly $722 million in projected “operating deficit” (that’s the red ink created by more expenses than revenues in the fiscal year itself, but which in reality would be cleaned up by surplus cash left over from last year). The Republicans are proposing an additional $120 million in spending reductions beyond that operating shortfall, for a grand total of $842.4 million less spending that the budget approved by the Assembly last week.

The list has 39 items on it. Listed below are the major ones with projected savings:

* Implement Governor Schwarzenegger’s CalWORKS reform proposal that has been rejected by Democrats: $300 million savings

* Reduce money paid to counties for the CalWORKS program: $45 million savings

* Eliminate 6,000 vacant state jobs: $50 million savings

* Take surplus cash in the state’s public transit account and use it for general government spending… this proposal would add to the amount taken from the account by the Assembly-approved budget does, while still slightly using slightly less of the transit money than the governor originally suggested: $100 million savings

* Cut state funding for the drug treatment initiative Proposition 36, Republicans saying that counties should pay for it if they like it: $120 million savings

* Expand a program used in San Diego County to root out welfare fraud: $35 million savings

* Cut salary increases for those at the county level who administer Medi-Cal… and reduce funding for money paid to HMOs that provide coverage to some Medi-Cal recipients: $71.5 million savings

Those proposals alone basically would get the state to a “zero” operating deficit. The GOP list also includes perennial partisan faves like no money for the University of California’s Institute for Labor and Employment, and a cut to the budget of Attorney General Jerry Brown for lawsuits related to global warming and the state’s landmark law, AB 32.

While it only takes two GOP votes in the Senate for a budget, the party’s leaders say they have an agreement among themselves that two votes won’t be picked off by Democrats. They also dismissed rumors that all 15 Senate Republicans aren’t yet on board with the new proposal.

Senate President pro Tem Don Perata criticized the list of cuts, even saying that many of the proposals have been off the negotiating table for some time. “We’re being held hostage to a very narrow ideology,” he said.

Senator Ackerman, in response, told reporters that his colleagues simply want a balanced budget. “We need to rein in spending, and I think the people of California understand that,” he said.

Perata has now scheduled floor action on the proposal for tomorrow morning, a proposal that seems all but certain to be dead on arrival.

A major political battle appears to be brewing, as the campaign to reform the state’s term limits law for legislators has begun submitting signatures to qualify the proposed initiative for the February 2008 statewide ballot.

More than 1.1 million signatures have reportedly been gathered for the Term Limits And Legislative Reform Act, according to the campaign’s chief political consultant, Gale Kaufman. That’s about 400,000 signatures more than what’s required to qualify the initiative for the ballot. Kaufman said those signatures are now being submitted to elections officials in at least 23 counties.

The proposed initiative would shorten the amount of time a lawmaker can serve in the Legislature from 14 years to 12 years, but would allow all 14 years to be served in one house– rather than the current rules limiting it to six years in the Assembly and eight years in the Senate.

The initiative to retool California’s 17-year-old term limits law (itself a voter-approved initiative) is a political “two-fer”… shortening the potential Sacramento careers of future legislators by two years, while potentially lengthening the reign of both Assembly Speaker Fabian Nunez and Senate President pro Tem Don Perata. Both are currently scheduled to be termed out of office at the end of 2008. The initiative would allow Nunez to serve another six years in the Assembly, and Perata another four years in the Senate; several other incumbent legislators would also be eligible for longer stays in office.

This is clearly the biggest campaign this year for those who watch the inside game of California politics. The alliance supporting the initiative includes both traditionally Democratic and Republican interest groups, and is being led by both Kaufman– Speaker Nunez’s top political consiglieri– and former Arnold Schwarzenegger campaign adviser Matthew Dowd. Schwarzenegger has said he will only support the idea if it’s also linked to reform of political redistricting and campaign finance laws, issues whose fates are quite uncertain at the state Capitol.

Meantime, there’s been a lot of discussion as to just how the current budget stalemate impacts the term limits campaign, and thus the initiative’s overall chances for success. Many have suggested the impasse hurts the effort, including the political consultant running the campaign against the initiative, Kevin Spillane. In an e-mail statement, Spillane writes: “Talk about being politically tone deaf. The Legislature can’t even meet its most fundamental responsibility [to pass a budget] and yet the politicians are claiming they deserve to be rewarded with more time in power.”

But pro-initiative consultant Kaufman says she thinks the budget battle actually proves the proposal’s point. [Click here for her comments in an interview this afternoon]

For now, the only sure bet is that the campaign will be hard fought. Supporters will no doubt claim that the proposal would help lessen the pressure for legislators to stay in perpetual campaign mode; opponents will use Nunez and Perata as the poster boys for why existing term limits are the right way to go… much the way that another powerful legislator, former Assembly Speaker Willie Brown… was the personification of why the original initiative was launched back in 1990.

The state budget impasse is our focus on this special early week edition of the Capital Notes Podcast.

We take a look back at the negotiations and standoffs from last week, and we also quickly examine a new look at the liberal/conservative spectrum of the California Legislature.

I’m joined by Anthony York of Capitol Weekly, and guest podcaster Brian Joseph of the Orange County Register.

“Capitol Weekly Ranks the Legislators,” by Anthony York.

The state budget impasse is the subject of an unusual (our first!) Capital Notes Podcast alert.

A mini podcast, if you will, because the state budget… while being approved by the Assembly early this morning… remains, for now, stuck in the Senate.

I’ve included some comments to reporters from both Senate President pro Tem Don Perata and Senate GOP Leader Dick Ackerman.

We hope to be back to a full podcast, with an analysis of the budget (deal, continued impasse, or who knows) on Monday. Until then… stay tuned.

“Back where we started. Here we go ’round again. Day after day, I get up and I say, ‘c’mon do it again.’” –The Kinks

Even though the Senate has yet to vote on the budget plan passed by the Assembly early this morning, there’s some sobering news from the nonpartisan Legislative Analyst’s Office.

The deficits will be back.

The LAO has just distributed a quick glance at the budget bill, and concludes that the state will face budget shortfalls of $5 billion in each of the next two fiscal years.

What makes this even more difficult to grasp is that the LAO says the new budget is actually pretty balanced.

The analysis concludes that, under the budget being debated today, revenues are projected to grow from 2006-07 levels by 6.5%, expenditures are only projected to grow by 1.3%.

But the prediction that the so-called “structural” deficit is far from being eliminated means more tough budget decisions next year… not only for legislators who seem very philosophically divided, but also for Governor Schwarzenegger– who bragged about eliminating the structural shortfall this past January, only to now see those projections fizzle out six months later.