Last week, Governor Schwarzenegger was trying to right one of his wrongs from 2005 on the subject of political map drawing. Next week, he’s expected to resuscitate another one of the 2005 “year of refrorm” issues: a constitutional amendment to change the state budget process.

Last time, it was a proposal to allow the governor to make some midyear budget cuts on his own — without legislative approval. It also would have allowed the governor to have the power to, if he so desired, make some of those cuts from the public schools.

This last provision of Proposition 76 — the ability of the governor to trim spending even in K-12 education and thus supersede the firewall protections for school funding under 1988’s Proposition 98 — was the one that probably sunk not only the budget initiative, but the entire Schwarzenegger special election agenda. With tens of millions of dollars in TV ads funded by teachers unions and others, voters rejected all four of the governor’s government reform ideas.

But Schwarzenegger has never let go of the notion that the state’s budget woes can never be fully resolved without a change in the budget process itself. And so it appears next week, he’ll roll out a new proposal.

We don’t know what’s in it. But we do have a basic outline of it, courtesy of this morning’s weekly gubernatorial radio address… this week, delivered by Schwarzenegger’s budget director, Mike Genest:

“His proposal would set aside money in a rainy day fund in the good years that we could tap into when the economy is down. When we see a deficit coming the plan would impose moderate cuts throughout the year to avoid severe reductions all at once.”

So it appears that there will again be some mechanism for midyear cuts. And because this is a true shifting of power from the legislative branch to the executive branch, you can bet there will probably be another battle.

Genest’s speech goes on to say that the governor will be soon campaigning up and down the state to get the voters behind his proposal. Does that mean a return to his former political strategy of “if the Legislature won’t act, I’ll circulate an initiative”?

Maybe. Maybe not. Either way, this year’s budget mess is a particularly pointed time for all of this to resurface.

The leader of the one independent, nonpartisan place for state budget and fiscal information says she will step down later this year after 32 years of state service.

Legislative Analyst Elizabeth Hill released a short notice this morning announcing her retirement, which will take effect at the end of the current legislative session. Hill has served as the top analyst for 22 years and is only the fourth person in that job since 1941.

Hill is one of the most widely respected voices on California public policy issues. And those of us in the press corps trust her and her staff to provide the only true “non-spin” information about what’s going on under the state Capitol dome. No word yet on who will replace Liz Hill; the Joint Legislative Budget Committee will now conduct a search for her replacement.

Size wise, her shoes may be easy to fill… reputation wise, it will be much tougher.

Update: The reactions are starting to come in…

“Her thoughtful, non-partisan stewardship of the Legislative Analyst’s Office is an example of public service at its best.” — Assembly Speaker Fabian Nunez

On this hump day, while the nation is riveted by the goings on at the statehouse that’s 2,852 miles away from Sac Town (hello Albany), here are a few items that… granted… may not be able to compete for intrigue but are worth pondering:

THE CLERK WILL OPEN THE ROLL: Assembly Democrats are poised this afternoon to make good on their threat to force a vote on new oil taxes that would help fund public schools. The bill making a speedy trip to the floor is AB 9XXX, which would impose both a tax on oil drilling in California and a tax on some oil industry profits. Democrats argue that California is the only oil producing state in the nation without a tax on the bubbling crude that’s barreled within its borders. The oil tax idea first rose to the surface (sorry, the pun was unavoidable) as part of Proposition 87, the failed November 2006 ballot initiative with a similar tax that would have funded alternative energy research.

Given the fact that a tax hike takes a two-thirds vote… which means at least six GOP votes are needed in the Assembly… you can consider this one dead on arrival at this point. And that begs the question: is this evening’s vote on a drilling tax a drill of the political kind, designed to simply make a point? Probably. But it’s a point worth making in the mind of Assembly Speaker Fabian Nunez, who said as much in a news conference this morning at a Sacramento elementary school.

“It’s an effort on our part to show voters who’s on the side of education, and who isn’t,” he said.

NIXING TERM LIMITS: Fresh off the heels of voters rejecting a modification of the state’s legislative term limits law, one veteran GOP legislator is pushing something even more extreme –a plan to eliminate the 18-year old term limits law completely.

Sen. Roy Ashburn (R-Bakersfield) announced today he hopes to introduce a new government reform measure that would, among other things, repeal term limits as of December 2016.

“Term limits are not serving the people of California well,” said Ashburn at a Capitol news conference. He also dismissed the existence of any message from the voters when they rejected Proposition 93 by arguing that the defeated proposal’s loophole for incumbents made it flawed from the beginning.

“I’m not sure we know where the public is, exactly, on the issue of term limits,” said Ashburn.

The senator said that his plan’s effective date of 2016 assures that it doesn’t benefit incumbents… though he admitted that there’s no way to stop former legislators from trying to win back their old jobs in 2018.

The proposal would also change campaign finance laws and the way political redistricting is done.

GUV ANTES UP: And speaking of redistricting, the governor’s political operation is digging a little futher into its coffers today to help qualify a redistricting initiative for the November ballot. We’re told that Schwarzenegger’s California Dream Team is making a $250,000 contribution to the effort. That would bring his total buy-in so far to $300,000. As we know in California… it takes money to get signatures.

New data shows that most of the predictions about how much cash would flow into state coffers for the month of February were wrong.

Controller John Chiang released the latest figures this afternoon, and the news is this: Governor Schwarzenegger’s projections for General Fund revenues missed the mark by $82 million, or 1.5 percent.

That may not seem too bad, considering that General Fund revenues totaled almost $96 billion in 2006-07. But it’s another warning sign about the current fragile state of the California economy.

In fact, an examination of the data shows that the shortfall was masked by what looks like a one-time spike in personal income tax revenues.

Chiang’s staff says that personal income tax receipts were $263 million better than expected, or 19.2 percent over projections… and that the money came from taxes withheld from paychecks.

Might more payroll taxes mean larger payrolls for companies, i.e. more jobs and a recovering economy?

Doubtful, says the new report. After all, California lost jobs in January; and it seems unlikely that a big turnaround appeared all of a sudden in February. Rather, the controller’s experts surmize that the extra cash probably came from one-time things like employees selling their stock options and pocketing the cash.

In other words, don’t pop the champagne corks.

And reinforcing that dour mood: sales tax receipts were $191 million below forecast (a 5.1 percent miss) and corporate tax receipts came in $24 million (or 12.5 percent) below expected levels.

That means that without the better-than-expected personal income tax revenues, February’s shortfall in actual state government cash might have been as much as four times worse than it ended up.

Speaking of the governor’s morning event… I asked Schwarzenegger to clarify his position on the idea of cancelling tax breaks to help resolve part of this year’s mammoth budget shortfall.

You may remember that last week, the guv created quite the buzz when it sounded as though he suggested he was willing to consider Legislative Analyst Elizabeth Hill’s suggestion to scrap as much as $2.5 billion in tax credits. Though Schwarzenegger later danced away from endorsing her specific ideas, both Democrats and Republicans are watching him closely on this issue. That’s because GOP legislators in particular define the cancellation of a tax credit as raising taxes.

So does Schwarzenegger agree with his fellow Republicans on that definition?

“We should not get caught up on what something is called,” the governor told me. “That doesn’t bring anyone any health care. It doesn’t bring anyone any education. It doesn’t hire teachers, it doesn’t expand our education program. What we need to do is fix problems.”

You can hear the entire exchange here.

That’s a safe answer that’s sure to please… no one. And at an event earlier in the morning (covered by my colleague Tamara Keith), Democrats made no bones about what’s needed to resolve the current budget crisis.

“Raise taxes,” said Senate President pro Tem Don Perata. “Is that clear enough? Raise taxes.”

And Perata took it one step further… hinting that if it takes a summertime showdown to do the right thing, he’s ready to wait it out. “This is going to be the fight of a lifetime,” he said. “We are not going to be going anywhere this summer.”

Something tells me that while the governor may hope otherwise, we’re going to spend a lot of time in the next few months arguing over what is… and isn’t… a tax increase.

It was this same week back in March 2005 when Governor Schwarzenegger threw down the gauntlet with legislators and interest groups and launched the most dramatic, and ultimately disastrous, chapter of his political career. And so it was worth noting that on the very same week in 2008, he returned to both a neighborhood… and an issue… that tripped him up last time.

Three years ago, the governor marched out of a statehouse press conference, jumped into one of his personal military-style Humvees, and drove himself (press corps in pursuit) to an Applebee’s restaurant in the Sacramento suburb of Natomas. There, he tried to cajole diners into helping him reform state politics — in part, by stripping legislators of their power to draw political districts.

We all know how that turned out.

This morning, Schwarzenegger went back to Natomas — but this time he stopped at the shopping center on the other side of the road (three-tenths of a mile away) — to launch another intiative campaign to reform redistricting. Working the early lunch/late breakfast crowd at a Mimi’s Cafe, the governor promoted a new redistricting initiative, this one written by Common Cause and AARP.

Tagging along was the governor’s old bipartisan pal, former state controller Steve Westly. Westly and Schwarzenegger, who teamed up in 2004 to convince voters to approve the deficit measures Proposition 57 and Proposition 58, will serve as co-chairs for the new redistricting campaign. Their goal is to collect enough signatures to get the constitutional amendment on the November ballot.

Westly was clearly enjoying himself, some 21 months after losing the Democratic gubernatorial nomination to challenge Schwarzenegger. The Bay Area Democrat hugged Schwarzenegger as the guv stepped out of his black SUV, and the two were joined at the hip as they made their way from table to table in the restaurant. (My favorite moment: a young mother asked the governor whether he wanted to hold her little boy. Schwarzenegger seemed as though he never heard her. Westly, on the other hand, jumped at the chance and had the blond haired little tyke bouncing in his arms in no time.)

Schwarzenegger still evokes the Hollywood reaction from average folks. But unlike 2005, he seemed to find a little more skepticism on the menu at this restaurant. One patron in particular, who identified herself as a Democrat, wanted to know why she would ever vote for a measure that would give Republicans a chance to win more elections. Both Schwarzenegger and Westly tried to answer her by talking up the virtues of more competitive races. “You want competition,” said the governor. “You want the best person to win.”

Of course, a bevy of independent researchers have concluded that even a non-partisan drawing of political maps will result in, at best, a few more than a dozen truly competitive seats in the Legislature. Many parts of California have self-segregated themselves when it comes to party affiliation and in those places you can’t draw districts with relatively even numbers of voters who are D’s and R’s.

And neither the governor nor the former controller told diners about what is not in the new initiative: independently drawn districts for members of Congress. “That’s another step we can take later on,” the governor told reporters when asked about that omission from this proposal. In an interview before the governor arrived, I asked Westly whether leaving congressional maps in the hands of legislators wasn’t really a way to keep the two political parties — jockeying for power in Washington — from spending a lot of money to defeat the initiative.

“There is no doubt it will be easier to pass in the current form,” he said.

What will be interesting is what happens next. Will a true bipartisan campaign team develop? What will the political parties do? And what happens to the initiative’s fortunes if voter turnout for an historic presidential election is huge come November? Yes, Governor Schwarzenegger has lent his time and efforts to subsequent initiative campaigns since his 2005 debacle. But this is the issue that time and again he comes back to as the primal political wound in the body politic. And so as he worked the booths and tables of another Sacramento restaurant to again try and change redistricting… just across the street from where he did so in 2005… one had to wonder whether the outcome this time will be different.

Just an update to those of you that haven’t given up on this newsblog… I’ll be back on the Capitol and political beat next week, after seven weeks of paternity leave. Like most new parents, I’m learning to live without sleep.

See you then.

A little political intrigue for the end of the week, as a newspaper report suggests California’s most recognizable conservative lawmaker may be considering a run for Congress from Sacramento.

Washington, D.C. based Roll Call reports today that state Sen. Tom McClintock (R-Thousand Oaks) may run for the U.S. House of Representatives seat representing California’s 4th district. That’s the seat soon vacated by Rep. John Doolittle, who has spent his final term in office under a cloud of controversy trailing back to disgraced lobbyist Jack Abramoff.

Roll Call reporter (former state Capitol scribe) David Drucker writes that a new poll conducted in the district, which stretches from the Sacramento suburbs to the Sierra foothills, shows McClintock with almost four times as much likely support as his nearest GOP challenger. And while Democrat Charlie Brown made a serious run against Doolittle in 2006, this is still one of the most solid GOP seats in the state.

It’s easy to see the appeal of such a job for McClintock, whose long tenure in the state Capitol is coming to an end this year because of term limits. He gained national attention in 2003 by running as a replacement candidate in the recall election, and some die-hard California Republicans wanted him to challenge the way more moderate Arnold Schwarzenegger in the 2006 gubernatorial election. Instead, he chose to run for lieutenant governor and lost to Democrat John Garamendi. Statewide office has eluded the strong conservative before, as he lost a close race for controller in 2002 to Steve Westly.

The location of the congressional district shouldn’t be too much of an issue. As Drucker reports, McClintock’s familys has been living in the capital region for some time rather than commute back and forth between his legislative post in Sacramento and his Ventura county legislative district.

With the clock ticking for legislators to resolve the current year fiscal crisis, Assembly Speaker Fabian Nunez vowed today to do it without Republicans if necessary.

In comments to the Sacramento Press Club, the Los Angeles Democrat emphasized that he hopes to find common ground with GOP lawmakers on how to resolve the $3.3 billion shortfall expected in the current fiscal year. The need for a quick solution is being driven, in part, by Governor Schwarzenegger’s declaration of a fiscal emergency last month. That declaration, made under 2004’s Proposition 58, requires the Legislature to act on the budget crisis within 45 days of the governor’s action.

That deadline is February 24, one Nunez said must be met… with or without Republicans. The speaker declined to list specific savings Democrats will ultimately endorse.

While the state constitution mandates a two-thirds vote of each chamber to pass an annual budget, the language in Prop 58 was silent on whether a mid-year budget crisis must also be approved by a supermajority. However, it seems certain that if that same budget solution included tax increases, then it would require a two-thirds vote.

Nunez called a majority vote solution (also known as one approved only by Democrats) “the last option.” And it seems likely that Republicans would pounce on any deficit solution that does not have approval from their members, leaving the GOP governor squarely in the middle.

In the latest political love poem from the national media to Arnold Schwarzenegger, the new edition of Esquire magazine proclaims that the governor is leading the nation into a “new kind of politics.”

The March cover story, “The President of 12% of Us,” takes a quick tour of recent political goings-on in California en route to its final destination: a thesis that Schwarzenegger’s brand of governing is a model that the rest of America can follow (the title of the article hints that California’s large population makes it a nation state unto itself).

More on why that thesis seems somewhat specious in a moment. But first, California political watchers will enjoy some of writer Tom Junod’s anecdotes, apparently culled in a short visit with Schwarzenegger in mid December. For those who have forgotten, that’s when the health care reform debate was reaching its boiling point and the budget crisis was just starting to simmer.

First is Junod’s recounting of the governor’s private sessions with various interest groups about the budget crisis. The author was apparently in at least one of those meetings, and quotes Schwarzenegger as telling one group that this year, “Democrats are getting screwed, Republicans are getting screwed, we’re all getting screwed.”

In that same meeting, supposedly with advocates of the poor, the author’s adulation is palpable as he recounts the governor’s actions at the start of the confab:

“…the woman is meeting Arnold Schwarzenegger for the first time, and he takes her scarf in his hand, feels it, drapes it over his thick fingers, and lets it drop. Then he says, ‘Cashmere– some rich people here’… And he, the richest person in the room by many orders of magnitude, the most famous and most powerful person in the room by many more orders of magnitude than even that, gets away with it.”

The author’s love of all things Schwarzenegger is also seen in this description of another December meeting, this one with Senate President pro Tem Don Perata. Junod says Schwarzenegger told him that Perata was doing the “kabuki” on health care (that’s the guv’s favorite term for the “theatrical” part of politics):

“Perata had started the meeting doing the Kabuki, telling Arnold that it was not the right time for water and not the right time for health care, either, at least not until he saw the budget. Why did Arnold think this was the Kabuki? Well, for one thing, he thought Perata was playing for leverage because he wanted to be the man on water, and the only way he could do that was to hold out on health care.”

No doubt others will take issue with that characterization, but remember, the premise of this piece is that the governor is above politics as usual. “He was sure that he was on the side of history,” writes Junod of Schwarzenegger. “Hell, history was what he was offering Perata.” (Their emphasis, not mine.)

Back to the thesis that Schwarzenegger’s brand of politics could be emulated on the national stage. Actually, that’s the thesis of Esquire’s headline. The actual article seems to admit that Arnold Schwarzenegger is, as Dan Weintraub’s new book calls him, a “party of one.” The writer spends a lot of time talking about how unique the governor’s brand of governing is, and how much of it would probably have never come to pass had it not been for the governor’s star power. The governor admits as much in an interview with the author, saying about the 2003 recall election: “It was like God said, Hey you want to circumvent the Republican primaries, because you’re not conservative enough for them? Here’s the recall.”

That doesn’t sound like a political formula that’s going to be copied anytime soon… which is probably why the good folks at Eqsuire and others across the nation never seem to tire of stories about the Schwarzenegger persona.