Late word this afternoon that the initiative has been filed for funding the health care reform plan now awaiting state Senate approval, with Governor Arnold Schwarzenegger and Assembly Speaker Fabian Nunez as its official authors.

The initiative asks voters to approve a financing plan to pay for the $14 billion a year reform proposal, and includes contributions from employers, employees, and hospitals and an increase in tobacco taxes.

Probably the most newsy tidbit in the initiative is the size of the new tobacco tax. It tacks a new $1.75 per pack tax on cigarettes, a figure that appears to be the compromise between Democrats (who wanted a $2 hike) and the governor (who preferred $1.50).

"This is the most effective way to fund the reform we need to fix California's broken health care system," said Nunez in an e-mailed statement.

Much of the other components are similar to what's been reported. Businesses will be required to spend money on health care for their employees at a rate that's tied to their total annual payroll. Those employer fees begin at 1% of annual payroll and go up to 6.5%.

The initiative also seeks to inject some protections against rumors that the health care plan could be in violation of a federal law that governs what health care mandates can legally be placed on employers. Whether that passes muster may ultimately be decided by the courts.

The 39-page initiative was received today by the Attorney General's office, where it now will be vetted for an official title and summary.

The timing is important, as the clock is ticking on the initiative's chances to qualify in time for next November's ballot. An aide to Nunez says that the political committee to raise money and gather signatures will be announced next week.

In our final edition of the Capital Notes Podcast for 2007 we examine this week's big developments in Sacramento on health care reform. And we check in on the battle brewing over the term limits initiative, Proposition 93.

Capitol Weekly editor Anthony York and I also examine another battle brewing for 2008: the serious state budget deficit lawmakers will face in the new year.

Happy Holidays!

Related News & Notes
"State Assembly Backs Health Care for Everyone," by Jordan Rau and Patrick McGreevy in the Los Angeles Times

"The Pitfalls of Health Care Financing," by John Myers

"The Politics of the Health Care Vote," by Anthony York

"Year In Review 2007," by Anthony York

"Big Prisoner Release Plan," by Andy Furillo of The Sacramento Bee

Confirming what's been discussed inside the state Capitol for the last few weeks, Governor Arnold Schwarzenegger announced today that he will declare a fiscal state of emergency early next month and will call a special session of the Legislature to resolve it.

The low-key announcement via press release this morning sets the stage for what will easily be the most bleak state budget season since the one Schwarzenegger inherited upon taking office in 2003.

"I firmly believe that the way to solve our chronic budget problem is with fiscal restraint," said the governor in a written statement. "We will figure out how to get spending in line with revenue."

Of course, that's easier said than done. Critics have pointed out that none of the budgets the governor has signed in the last four years have had actual revenues (and not borrowing or reserves) match actual expenses.

An interesting nugget inside this morning's announcement: an official projection from the administration that the current year budget shortfall will total $3.3 billion. That's about $1.3 billion more than the shortfall estimated last month by Legislative Analyst Elizabeth Hill. And it makes conservative estimates of the budget problem over the next 18 months now total more than $11 billion... though the governor has reportedly told some groups the problem is closer to $14 billion.

Schwarzenegger said that he will make the formal declaration on January 10, the same day he unveils his proposed 2008-09 budget. This is the first time a fiscal emergency will be declared under the powers given to the governor in 2004's Proposition 58. The governor also said he's now preparing emergency legislation to send to the Legislature once the special session convenes.

The state's most prominent and politically powerful business organization has decided to formally oppose the February ballot initiative that would modify legislative term limits.

The board of directors of the California Chamber of Commerce has voted to oppose Proposition 93. The measure would shorten the amount of time someone is eligible to serve in the Legislature, but would extend eligible time in either house. It also includes a mechanism for several incumbent legislators, especially the Democratic leadership, to extend their eras of influence.

Interestingly, Cal Chamber president Allan Zaremberg originally supported the proposal, telling the San Francisco Chronicle back in February that it would "bring stability to the Legislature."

But a spokesperson for Zaremberg now says that his support was contingent on term limits reform being paired with reform of the political map drawing (redistricting) process. And Zaremberg's written statement today confirms that rationale:

"If we are going to allow legislators to serve longer periods of time, they must be accountable to the voters. Fair redistricting is critical to creating accountability. We must ensure that districts are competitive and that voters have the ability to hold elected officials accountable at the ballot box for their actions."

The business group's decision is just the latest example of high profile players choosing sides when it comes to Prop 93. Earlier this week, former state controller and Democratic gubernatorial candidate Steve Westly came out in support of the initiative; Westly's decision followed the decision of Insurance Commissioner Steve Poizner to oppose the measure.

The big kahuna, of course, is Governor Schwarzenegger. Zaremberg and the Cal Chamber are longtime allies of his, but that doesn't mean they're in lockstep on all issues. Will he support it? oppose it? Remain silent on it? He artfully dodged the question at an event earlier this week.

Stay tuned.

This is a fun story, just large enough to land on the radar... yet only worth a blogging, in my opinion. Sen. Barack Obama reportedly said he'd consider choosing Republicans like Governor Arnold Schwarzenegger should be elected to the White House.

The story is courtesy of ABC News, and cross-posted at the Democratic blog Calitics. Obama apparently told the audience at a New Hampshire town hall event that Schwarzenegger has caught his eye when it comes to creating a bi-partisan presidential team.

The money quote, according to ABC: "What (he's) doing on climate change in California is very important and significant. There are things I don't agree with him on, but he's taken leadership on a very difficult issue and we haven't seen that kind of leadership in Washington."

The young Dem bloggers at Calitics are up in arms. "Oh Obama," screams the headline. The posting then lists a number of Schwarzenegger positions (or implied positions) that don't appear all that Democratic. Obama apparently also lavished praise on Republicans like Nebraska Sen. Chuck Hagel and Indiana Sen. Dick Lugar.

On the other hand, you've got to imagine the "Barack & Arnold" story won't be that funny in die-hard GOP circles either. And that's why this trinket of political flotsam is so interesting -- because it shows yet again that Schwarzenegger's success has largely rested on his ability to keep everyone guessing.

[11:00pm update: Well, late reports show Obama may have only been talking about Reeps he respects on certain issues... not necessarily those he would like to hire. Still, it goes to show that Schwarzenegger has succeeded in selling his green credentials on the national stage... even if die-hard Dems in California remain skeptical.]

The latest population figures for the Golden State are in, and the slowdown in growth over the last few years continues. That being said, long-term growth is still pretty strong... as California's population is now 11.5% larger than it was just seven years ago.

The new data comes courtesy of the state Department of Finance and is based on California's population as of this past July 1, which also marks the start of the current 2007-08 fiscal year. The population grew by only 438,000 over the last year, part of a trend of slower growth in recent years.

The entire report can be found on the department's website, but some nifty facts to ponder on this Wednesday morning:

* There may be 58 counties in the state, but a full 70% of the population lives in just nine of them: Los Angeles, San Diego, Orange, Riverside, San Bernardino, Santa Clara, Alameda, Sacramento and Contra Costa.

* The fastest growing populations on a percentage basis over the last year were in Riverside, Imperial, and Sutter counties... each growing more than 3%. Riverside also made the list of counties that grew the most in actual numbers of people.

* Three of every four new Californians are natives; only 25% of the population growth came from migration to the state.

* Wanna get away from the crowds? Try Alpine County, in between Lake Tahoe and Yosemite, which has just 1,261 residents. That's the state's smallest county population (of course, it's not a big county size-wise either, at 743 square miles).

The biggest crowds... need you really ask? They're in Los Angeles County where the population is a whopping 10.3 million.

The new Field Poll out this morning obviously shows Sen. Hillary Rodham Clinton with a strong lead among California voters. But the poll is also full of data that points to some real strong undercurrents favoring Sen. Barack Obama.

For starters, while Clinton leads Obama by 14 percentage points among those surveyed (36%-22%), that lead has shrunk in the last few months. In fact, the fastest growing group of Democratic presidential primary voters in the Field survey are those who are undecided.

In March, only 9% of those polled fell into this category; now 20% say they are undecided.

Also good news for the Illinois senator is the new poll's finding that he has a slight lead (30%-27%) among independent voters. These non-partisan ("decline to state" a party) voters are allowed to vote in the February 5 Democratic primary, but not in the GOP contest. Granted, Field projects that the overwhelming majority of Democratic primary votes will be cast by actual Dems. But if the independent voters get engaged... that could be a boost for Obama.

More intriguing is what might happen should the former first lady lose her title -- both here and across the nation -- as the "most electable" candidate in the Democratic field. If so, Obama could again get a California boost... as Field finds that he has higher positive opinion rankings (63%-52%) and much lower negatives (23%-42%) than Clinton.

The poll then asks voters what they will do if the race is down to two front runners by the time they cast their ballot. The scenario Field uses assumes that former Sen. John Edwards would be gone if he doesn't place well in either Iowa or New Hampshire. If that was the case, 40% of the Edwards voters say they'd go to Obama, versus 24% for Clinton.

(The poll has a margin of error of plus or minus 4.7 points, so take that as your grain of salt.)

Granted, this analysis is swimming upstream against the poll's conventional wisdom --namely, that Clinton has a strong in the Golden State and is likely to win the state's votes. But it does remind us that the race is far from over.

Below is an audio link to this morning's edition of The California Report, where we reported on yesterday's health care reform actions here at the state Capitol.

There's also an interesting piece from my colleague Tamara Keith on a brewing eminent domain battle in Sacramento -- one that has shades of the brewing statewide initiative battle on the issue.

If it's true that getting an initiative on the ballot is largely a function of how much money you can raise, the latest measure touted as a new crime fighting law is well on its way.

The initiative, sponsored by Sen. George Runner (R-Lancaster) and "Three Strikes" author Mike Reynolds, aims to crack down on convicted felons with firearms. It also would require those who are designated as "gang offenders" to register with local law enforcement agencies. And it would add 10 years to the prison sentence of anyone convicted of a violent felony.

The initiative has yet to hit the streets, as it's still awaiting a formal title and ballot summary from the Attorney General's office. Democrats have criticized the measure for its mandates on where government funds are spent, calling it a bad example of ballot-box budgeting.

But late last week, the measure's chances for making the ballot improved overnight, when the campaign received a cool $1 million contribution from Orange County high-tech billionaire Henry Nicholas. Nicholas was a backer of Runner's initiative known as "Jessica's Law" and approved by voters as Proposition 83 last November, and he's also been a generous backer of Governor Schwarzenegger.

With apologies to Jimmy Buffett, the headline simply means that the next thing you're going to hear about health care is what happens on the streets in 2008... and not what happens at the state Capitol for the rest of 2007.

The Assembly's passage today of the Democratic health care bill AB X1 means that one hurdle has been cleared in the health care debate. But that bill will not be heard in the Senate this year -- that's the official word tonight from a spokeswoman for Senate President pro Tem Don Perata.

Perata, as blogged here earlier and elsewhere, wants a full analysis of AB X1's potential fiscal impact to the state budget and its sagging fortunes. Assembly Democrats and Governor Schwarzenegger's own staff have declared the bill to be, in legislative parlance, "revenue neutral"-- meaning that it doesn't help or hurt the state's bottom line. They argue that's because the deal calls for a funding mechanism that relies on new money (new employer and hospital fees, new tobacco taxes) and not existing state revenues.

Still, the top Senate Democrat wants to examine it for himself. And that raises another, more possibly challenging problem: it might become tougher to get the financing portion of the health care proposal onto the November 2008 ballot.

Why? Look no further than the intersection of time and money.

The initiative that would authorize all of these new fees still needs to be written. And if the Senate ultimately wants to tweak any of AB X1's language, then those tweaks may need to be reflected in the initiative. In other words, can you really draft an initiative until the legislative process is completed?

Some health care insiders opined today that the Assembly-passed bill allows them to begin drafting the financing initiative now. But still others suggested that everyone will have to wait for the Senate, which apparently is not coming back until 2008.

Perata's spokeswoman Alicia Trost said tonight that the Pro Tem believes that his delay to examine the fiscal impacts will not hurt the health care funding initiative's chances to make the November 2008 ballot, because some initiatives have been qualified very quickly in times past.

That's true, countered some Assembly sources... but this initiative needs to gather more than 1 million signatures. That's far more sigs than initiatives that were circulated and qualified for the ballot in record time had to have.

One thing seems to be for sure: the faster that the initiative process needs to move, the more moolah that signature gathering professionals will likely demand. And that means the health care financing plan could force politicos-- be they Democrats or the governor-- to raise a hefty chunk of campaign cash.