Perhaps no operation of state government has been sized up for reform more in recent years than the California Lottery.

Lease it... sell it... remove the existing restrictions... all have been discussed in hopes of getting higher profits out of a lottery that's more than two decades old and, in the eyes of many, not making as much money as it should.

In two weeks, voters will be asked to approve a relatively mild tweak to the California Lottery, but one worth major bucks to the state budget. This morning on The California Report, we examined the proposal at the heart of Proposition 1C.

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The first public polls on any ballot measures before election day should usually be taken with a grain of salt; after all, the voters still don't know very much about the proposals, and the election is usually a long ways off.

That's not altogether true in the poll out today.
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The audio is here:

In next year’s special election, voters will be ask to change… and essentially sever… the almost 24-year relationship between the California Lottery and public education. They’ll also be asked to approve a borrowing plan related to the lottery with no specific limits.

On this morning's edition of The California Report, we examined the measure being sent to voters next year to "securitize" future profits from the long struggling California Lottery, a plan now estimated to provide $10 billion to the state budget over the next two years.

Securitization is, for all intents and purposes, borrowing… in that it asks for money now, to be paid back over time. In this case, Wall Street investors would receive their money back – with interest – over 30 years from lottery revenues.

The proposal that will appear on a special election ballot (June 2, 2009 as it now appears) will ask voters to remove K-14 education from its historic place as the recipient of lottery revenues. Instead, an amount roughly equal to current lottery education dollars ($1.2 billion) will be built in to the Proposition 98 school funding guarantee. The existing lottery revenues, says Governor Schwarzenegger's budget team, will then be sent to the state's General Fund to cover that extra Prop 98 funding.

But the interesting changes lie elsewhere in the deal.

For starters, the ballot measure voters will consider removes all limits on how much revenue can be pushed back into prizes, thus ensuring the biggest jackpots in California Lottery history. Bigger jackpots, as other lotteries know, bring more revenues… and the lottery's new focus will be almost exclusively on bringing in more money.

That's because those extra revenues will go to investors who loaned the state money. And while the investors won't be holding debt backed by the "full faith and credit" of the state (as in general obligation bonds), it will no doubt be in the state's interest to have those payments made, with interest. Might that put the state's General Fund on the line if everything goes bust? Perhaps.

The real question, says Jason Dickerson of the Legislative Analyst’s Office, is how much will Wall Street lend the state… and at what interest rate? Dickerson says it's likely that lottery notes will require a higher interest rate, simply because they’re not backed up – technically – by the state treasury.

"This is a good investment," said Schwarzenegger's finance director, Mike Genest, in a budget briefing with reporters yesterday. He rejects any concern that the current volatility on Wall Street might affect the appetite for lottery debt.

The existing plan is to borrow $5 billion for the 2009-2010 budget year, and another $5 billion the year after that. But is that the end of it?

Maybe. However, our reporting discovered that neither the actual constitutional amendment to be approved by voters nor the accompanying bills signed by the governor Tuesday mention that $10 billion amount.

"The measure going before the voters would allow unlimited borrowing in the future," says Dickerson. Finance director Genest says that's an unrealistic assumption, because the financial markets have only a limited appetite for such a product. However, he conceded on Tuesday that there technically are no limits to how many times future lawmakers could go back to Wall Street and ask for more. Of course, that would require even more revenue from the lottery.

The other question that voters probably won't know the answer to: how much more money can be squeezed out of the lottery? The governor’s original plan for allowing new games to be offered was rejected by the Legislature; the proposal that will appear on the ballot only removes the specifics on how lottery revenues must be divvied up.

Schwarzenegger bragged earlier this year about doubling lottery profits; expect such promises to get some serious scrutiny should voters approve what might amount to a serious expansion of state government’s gambling enterprise.

[Below was tonight's "live blogging" of the Assembly budget debate and vote. Thanks to all of you who wrote in while it was happening. By the way, the original Sunday budget preview posting is now here.]

8:16pm Budget fails to get a two-thirds majority. Vote: 45-30. The two in attendance who didn't vote: Assemblymember Greg Aghazarian (R-Stockton) and Assemblymember Nicole Parra (D-Hanford). And with that, it's off to the post-vote press conferences. More tomorrow morning. It was a long debate... and it begins again in earnest tomorrow.

8:15pm The vote. The bell sounds. The tally board is lit up.

8:15pm: We're now officially at four hours for this budget debate. Laird appears to be wrapping up. "I think it's time to get to a solution," he says. "One dollar of revenues for two dollars in cuts and solutions... it's a good budget," he says.

8:06pm: Assemblymember Laird closes and asks for an aye vote. 49 total speakers, he says (and jokes that all Californians are probably glad that there weren't any more). Laird then reminds members of all of the spending in recent times that didn't actually go to state programs. "I don't think there was a single thing on that list," he said, "that was a partisan Democratic item." He also claims the GOP spending cap idea would've led to $18 billion in cuts this year, with $9 billion coming from K-12 education. And he then adds that at least a few Republicans voted for all of those budgets that the GOP now says spent too much. And Laird disagrees with the notion that half the tax increase would have to go to public schools. His argument is interesting, but the hour is late. You can sense the members are ready to vote.

7:55pm: And so it's ending. Assembly GOP Leader Mike Villines rises to speak, and focuses on tax increases of the past -- namely, those enacted by former governors Reagan and Pete Wilson. And he hones in on the Wilson tax hike. "There was less tax money on the table" as a result, he said. Villines said he doesn't know which taxes are now on the table -- sales tax, income taxes. "I just know it's a lot of taxes," he said.

"I think we can do a much better job than this budget," he tells assemblymembers. Villines go on to suggest tax cuts as an economic incentive, even in the face of the current budget shortfall. And as to the fact of a possible deadline to get items on the November ballot-- he calls attention to the fact the Senate is not in session. Translation: a budget deal wasn't going to happen tonight anyway.

7:52pm: Assemblymember Keene gets up to speak, and tells Democrats that their proposed tax increase would actually result in only about half the money for general government services, while the rest would automatically go to public schools through the Proposition 98 guarantee. He mentions this as way of arguing the numbers don't add up. "You start out upside down. Do you realize that? Or does it even matter?"

7:48pm: Thanks to all seven live blog readers for emailing in. The cookies were chocolate chip.

7:45pm: Three and a half hours. The visitors gallery is now up to a whopping seven citizens! One is a young girl... she's chewing gum and leaning over the rail, looking down at the legislators like she's on a weekend trip to the zoo.

7:41pm: For all the rhetoric, a lot of Democrats and Republicans do... gasp... seem to like each other personally in here. Several small bipartisan groupings can be seen from my perch off the floor. Dems and Reeps chatting, even listening to the debate.

7:32pm: "You are all good and decent people. Until you got in this room." -- Assemblymember Mike Eng (D-Monterey Park). He was making a joke, in case it doesn't come through here.

7:30pm: Cookies are being handed out by fellow Capitol reporter Marcey Brightwell. Homemade. Seriously. Good. She apparently just got off the news set at local ABC affiliate News10. That's dedication.

7:23pm: "Let's just get together." -- Assemblymember Wilmer Carter (D-Rialto), who then proceeded to tell a story about how she has a knack for working with "difficult" people. She then pleaded with her colleage to "please don't let me be in trouble" with constituents by having to go home and tell folks she couldn't bring everyone in Sacramento together.

Carter's remarks received applause. Call it the feel good moment of the afternoon/evening.

7:20pm: I had to take a break and finally eat that packed away sandwich. Turkey and cheese, if you're curious. Debate continues, and repetition factor of main points remains high. Visitors gallery is now empty. Thanks to all three of you still reading this for sticking around.

7:09pm: Assemblymember Anthony Adams (R-Hesperia) channels Jack Nicholson as Colonel Nathan Jessep in telling Democrats who say the state needs more money: "You can't handle the truth."

7:07pm: In the interest of reporting a little news, Assembly Speaker Bass just briefly chatted with reporters just off the floor and said she intended to rekindle budget negotiations first thing tomorrow, knowing full well this vote will come up short. She also seemed a little less-than-optimistic that Democratic legislators would be traveling to Denver for the Democratic National Convention.

7:05pm: I'm told three assemblymembers are missing today: Assemblymember Nell Soto (D-Pomona) remains in poor health, as does Assemblymember Sharon Runner (R-Lancaster). Assemblymember Alberto Torrico (D-Fremont) is stuck in Miami, where he traveled to meet his kids returning from Bolivia... and where he ran smack dab into bad weather, courtesy of a hurricane.

7:02pm: An "unidentified" legislator tells me the Harris Ranch joke was actually about a horse in the men's room called "Budget Surplus." I stand corrected. I also will now let sleeping horses lie.

6:55pm: Assemblymember Guy Houston (R-Livermore) just mentioned something about staying out of the restroom at Harris Ranch. The chamber chuckled; I'm told it had something to do with a previous comment about said men's room and some kind of steer enshrined in there. Sorry to tell you I must've not been paying full attention. My apologies.

Also, gallery update: the three optimists left. Two glum new visitors arrived.

6:47pm: Just as the last two citizens in the visitors gallery went home... and all hope was lost... three newbies just arrived. They're smiling. I love their optimism.

6:45pm: Three hours, baby. And... wait for it... yes, more microphones just went up. Hopefully some smart reporter is keeping a full tally of the number of speakers. I've obviously given up on the substance of the debate as it's become... sorry, assemblymembers... repetitive. Not enough revenue... too much spending... all brought to you by the Office of Redundancy Office.

6:43pm: Three hours under our belts. I just saw Assemblymember Bill Maze (R-Visalia) sneak some kind of candy out from under his desk, shared by Assemblymember Rick Keene (R-Chico). I can't seem to get over there to ascertain exactly what kind of candy that was.

6:34pm: More microphones just went up of assemblymembers wishing to speak. Sigh. And wait... oh, man... one of the three remaining gallery visitors just left. Lucky guy.

6:30pm: Assemblymember Ted Gaines (R-Roseville) just mentioned the ill-fated Donner Party. They ate their fellow travelers, you know.

6:28pm: The lifeguard left. I now count three visitors in the gallery.

6:15pm: Two hours. Who had two hours in the pool? You lose. Onward we go.

6:01pm: "A lot of things are broken in this state, including my microphone." -- Assemblymember Bonnie Garcia (R-Cathedral City). Then she tells the chamber she's tired of the annual budget ritual and offers this... unusual... way of expressing her feelings: "I'm sick and tired of the 'you show me yours, I'll show you mine.'"

And then in conclusion, pleading for more discussion on Monday, said Garcia: "Come in your sneakers, wear your damn pajamas... let's get down to work!"

5:54pm: Governor Schwarzenegger underwent arthroscopic knee surgery last night and isn't in Sacramento today. Lucky guy.

5:48pm: Assemblymember George Plescia (R-San Diego) invokes record Olympic medal winner Michael Phelps. See, who says legislators can't speak in ways the common person understands? But I kind of lost the analogy after that.

5:45pm: We're now at the 90 minute mark of the budget debate. I just remembered, somewhat excitedly, that I packed a sandwich in my gear bag. Let 'em keep talking, I say.

5:37pm: More visitors just walked into the gallery above the Assembly floor. They seem puzzled. One teenager has a "lifeguard" t-shirt on. He should stick around; we may need him.

5:28pm: Assemblymember Mike Duvall (R-Brea) brings up the historical record of Calvin Coolidge and tax cuts. Now he's on to lamenting tax increases under Franklin Roosevelt and blames them for the Depression. Actually... and I hate to focus on the historical record... but the Depression is widely agreed to have begun in 1929 when Herbert Hoover was the prez. The comment reminds me of the classic college flick Animal House, where John Belushi's character says the Germans bombed Pearl Harbor.

"Germans?" says one of Belushi's frat brothers. "Forget it," says another brother. "He's rolling."

5:17pm: Oh no, he didn't. Assemblymember Chuck DeVore (R-Irvine) says 2004's Proposition 58, which created a rainy day budget fund, was "completely ineffectual," and he says the strength of the original proposal was "negotiated away". And who does he think did that? Well... He ends his soliloquy with an angry jab at Democrats. "Shame on this body!" he says, plopping down in his chair and pushing his microphone down.

Debate running time currently 1 hour, 2 minutes.

5:13pm: Oh no, she didn't. Assemblymember Loni Hancock (D-Berkeley) drops the name "Grover Norquist"-- the conservative anti-tax crusader who helped orchestrate an event where every GOP member of the Assembly except one (Niello) signed a pledge to not raise taxes.

5:11pm: Okay, sorry to disappoint. But given the repetition of arguments now appearing in floor debate, I think I'll stop chronicling everyone who speaks. Sorry, assemblymembers. But I think we've got the picture... for now.

5:06pm: Assemblymember Mimi Walters (R-Laguna Niguel) slams the tax increase idea.

5:00pm: Assemblymember Juan Arambula (D-Fresno) rises to ask Assemblymember Laird to talk about how last year's reserve evaporated after several doses of bad luck for the state. Arambula then tells the chamber that those things weren't the fault of Democratic leadership.

Update: remember how I said this might not be a long floor debate? Ummm... the number of microphones raised to speak keeps increasing. Oh well.

4:50pm: Assemblymember Bob Huff (R-Diamond Bar) rises to speak. Ah, here come the verbal slings and arrows we were expecting! On Dems calling this a compromise budget: "Compromise with who? Are you talking to yourselves?!?" And then there's this from Huff: "We have a systemic lack of leadership within the Democrat majority party." One Dem legislator shook his head in disgust. Now he calls Sacramento "La La Land." See, who said a Sunday budget debate wouldn't be fun?

The three citizens in the gallery upstairs seem unfazed. I wonder why they showed up?

4:46pm: Assemblymember Mike Feuer (D-LA) rises to speak. He must be an optimist, because he tells the chamber he hears agreement on how to solve the budget problem. Wait, he's a first-term lawmaker. Ah, that explains the optimism.

4:44pm: The following isn't meant to impugn all assemblymembers, but there do seem to be a fair number during this debate who are busy checking the BlackBerries, printing documents off their desktop computers, reading the news online [Olympics, anyone?], chowing down at their desks. Hey, it's Sunday.

4:39pm: Assemblymember Doug LaMalfa (R-Biggs) rises to speak to deride excessive spending and the ills of a tax increase. He, too, laments the lack of bipartisanship. [this just in: Assembly reaches accord... on a lack of bipartisanship. Film at 11. --JM] LaMalfa goes on to tell his fellow legislators to consider the fact that a new cap on state spending, a key GOP demand, might give some pols "cover" when it comes to pointing the blame to reduced state services.

4:37pm: Assemblymember Gene Mullin (D-South San Francisco) is up, channeling a "Can't we all get along?" theme.

4:33pm: Assemblymember Sam Blakeslee (R-San Luis Obispo) rises to speak, saying that Democrats have a "minority among" them that doesn't want to cooperate with Republicans. "Republicans ideas for reform," he says, "are dying in committees."

Blakeslee then delivers this little zinger: "No justice, no peace. If you want us to work with you, then you're going to have to work with us."

4:31pm: Assemblymember Mervyn Dymally (D-LA) offers some historical perspective about another celebrity GOP governor who famously agreed to a tax increase-- Ronald Reagan. Dymally should know; he was in the Legislature at the time. Dymally repeats the call of Democrats for GOP assemblymembers to put their own budget if they don't like this one.

It should be noted that most members of the Assembly are reading a relatively small summary of what's in the budget proposal being debated.

4:30pm: "It is time for Democrats to take their heads out of the sand... What are we doing here?" --Niello

4:27pm: Assemblymember Roger Niello (R-Sacramento) opens up debate for the GOP position. He says he's been getting lots of calls and emails telling him to "hang tough" and oppose the tax increase. He reads from an email written by a citizen who refers to Niello and his colleagues as "you Democrats" in his anger about taxes. Ummm, nope. And to the point of the day: "This is not a compromise budget," says Niello, "and it has no chance of passage."

4:24pm: Assembly Speaker Karen Bass is speaking. [Might this mean a short floor debate? --JM] Bass says this year's budget needs to be mindful of not exacerbating next year's problems, when the economy will again likely be dragging. She tells assemblymembers that a longer budget impasse may cost the state $300-400 million in fees tacked on by Wall Street investors for any borrowing needed to keep the state afloat. Bass calls the state's problem "an extraordinary situation" that requires a tax increase.

4:22pm: Assemblymember John Laird (D-Santa Cruz) opens up debate, saying that "only Democrats have put forward a real plan." And yes, he admits that today's outcome is a foregone conclusion.

4:15pm: Budget debate has begun... earlier than expected. Closed-door caucuses only lasted about 45 minutes, and now the full Assembly is considering both the original budget conference committee proposal, AB 1781, as well as the proposed changes highlighted below.

BUDGET DAY PLUS 28 -- For more than a year, the California Lottery has been a tempting, and theoretical, treasure chest for lawmakers in search of a government cash infusion.

But there's no guarantee that the treasure chest actually has treasure in it.

In the second day of our in-depth look at the Californa Lottery on The California Report, we took a look at the most recent plan to use lotto cash -- Governor Schwarzenegger's proposal to ask Wall Street investors for a loan to the state, paid back over time with future lottery revenues.

Hear it here:

This is actually the second lottery plan from Schwarzenegger, who last year considered leasing the 23-year-old operation to a private vendor in exchange for upfront cash to help fund his (ultimately ill fated) health care reform plan.

There are two main issues to consider about the lottery bond proposal: what will it take to pay off those bonds? And what are the policy and social implications of a major expansion of the California Lottery?

First, the bonds. Although legislators have voiced skepticism about the plan (more on that in a moment), the governor's budget team has continued its discussions with Wall Street bankers about a bond offering of $15 billion for budgetary needs, with $5 billion to be used this year.

But detailed projections from the Department of Finance reveal a much larger borrowing plan, almost $19.8 billion in total bond borrowing. Part of the extra cost is due to the governor's promise to maintain the lottery's current $1.2 billion contribution to public schools, while hundreds of millions of dollars in fees will be handed over for bankers to carry out the transaction.

Also worth noting: the bonds would not be paid back in full for 36 years, a time frame that appears longer than when the proposal was unveiled in May.

As to what it would take to pay off the bonds... lottery director Joan Borucki sent the governor's budget team a memo last month that outlines some of the ways the California Lottery would grow in order to pay back investors. The document, which has not been widely publicized, gives the most revealing look to date of what kind of lottery expansion and change is being contemplated. Some highlights:

* Lottery sales would have to double in the next five years and triple by 2018.
* 18 million Californians would need to be playing lottery games by 2011, which works out to more than six in every 10 adults.
* The instant winner "Scratchers" games would include $10 tickets by 2010 and $20 tickets by 2012, each offering larger grand prizes.
* More games would offer more winners, and more "second chance" ways to win.
* Parimutuel betting, which was mandated by a 1996 court ruling that banned fixed prizes, would end by next year... thus allowing lottery officials to return to publcizing the exact amount of prizes. And overall, the lottery reform plan calls for much, much more marketing.

The revenue projections for a lottery freed of the restrictions contained in the original 1984 initiative are optimistic. Perhaps too optimistic.

"The lingering uncertainty about what's going to happen to the economy over the next few years affects the ability of the lottery to achieve these optimistic sales growth assumptions," says Jason Dickerson of the Legislative Analyst's Office.

Economic issues aside, let's not forget that gamblers already have a of options in the Golden State, from card rooms to horse tracks to more than 50 Indian casinos. "There's a fierce competition for the entertainment dollar here," says lottery director Borucki.

Even if the assumptions do pan out, there have been concerns raised about the social effects of more people placing more money, and hope, on winning it big. "Lower income individuals spend a disproportionately high percentage of their income compared to higher income individuals on the lottery," says LAO researcher Dickerson.

And if that isn't enough, let's not forget the political hurdles to getting these lottery changes approved. The education community has been concerned, if not officially opposed, to almost every lottery reform plan over the years. While the gambling enterprise brings in less than 2% of education funding, it's been relatively reliable. And perhaps even more telling: lottery cash, unlike most all other education funding, comes without strings attached by Sacramento lawmakers. And according to data provided by the state Department of Education, almost 65% of the lottery money sent to the schools goes to educator salaries.

Word around the Capitol is that squeezing more cash out of the California Lottery is unlikely to be part of this year's plan to bridge the $15 budget gap... but that legislators could consider such a plan for future cash needs.

Of course, any changes must be approved by voters; and in a few short weeks, the last chance to get a lottery proposal on the ballot before June 2010 will have passed by.

BUDGET DAY PLUS 27 -- With this year's budget negotiations continually coming back to some scheme, any scheme it seems, to extract money from the California Lottery, some context seems to be in order.

On this morning's edition of The California Report, we begin a two day examination of the Golden State's 23-year-old lottery... created by voter initiative and sold as a great way to help fund public education. But the lottery has never proved to be the goose that laid the golden egg for the schools; while last year it sent some $1.3 billion dollars to K-12 and higher education, that's pennies on the dollar for what it takes to educate California's kids.

In the meantime, the lottery has had dramatic turnover in leadership, has struggled to market itself, and over the past year has been called everything short of a failure by elected officials -- most notably, Governor Schwarzenegger.

Trouble is, almost every expert agrees that the lottery's real problems stem from the initiative approved by voters in 1984... an initiative that created the most regimented, and restrictive, revenue distribution system of any lottery in the nation.

The initiative mandates that 34% of all revenues must go to education. That guarantee sounds good, until you consider that it automatically also caps how much money can go back into prizes and jackpots. "The more that goes to prizes, the more that people buy lottery tickets," says Jason Dickerson of the Legislative Analyst's Office.

And therefore, the more money that would actually end up flowing into the schools.

"If all of the restrictions were gone today," says lottery director Joan Borucki, "in ten years from today I would [be able to] more than double the amount going to the good cause."

Other restrictions hindering the lottery's operations include legal rulings that have decreed new technology and guaranteed prize amounts for some games to be off limits; both limitations rarely -- if at all -- exist with any other lottery in the United States.

The governor's attempt to hike the lottery's profits, either through leasing to a private entity or this year's push to borrow against future lottery revenues, requires these restrictions to be lifted. And analysts have concluded that means going back to the voters.

“It's an asset that is underperforming," said Schwarzenegger at the news conference unveiling his revised budget in May. "And I think that as governor, or I think the legislators also, we have a responsibility to make sure that government performs at 100 percent.”

But those kinds of changes are frought with pitfalls, both political hurdles and larger, societal questions about government's role in encouraging more and more legalized gambling. Those issues are examined in tomorrow morning's report.

Audio from today's broadcast can be heard below.

BUDGET DAY PLUS 16 -- Today's confab between legislative leaders and Governor Schwarzenegger certainly didn't resolve the budget impasse, but it did feature some serious talk on a familiar subject: the California Lottery.

The roughly two hour meeting of the "Big Five" came as both houses of the Legislature sit in recess with rank-and-file members on what many critics have called an undeserved vacation. And while leaders exiting the meeting indicated there was a lot of broad discussion on issues, all confirmed that the governor's team brought in analysts to discuss ways to squeeze money out of the lottery.

You'll remember that Schwarzenegger placed a plan on the table several months ago to balance the budget, in part, through the sale $15 billion in bonds repaid with future lottery revenues. The specific pitch never gained much traction at the state Capitol, with Democrats saying it was unrealistic to expect the money to show up in time to help this year's dilemma... and Republicans decrying the lottery proposal's backup plan -- a sales tax increase.

A phalanx of financial advisers, along with the governor's economic guru, David Crane, were seen exiting the meeting just after noontime. And yet Democrats still said the issue was a possible source of cash for the future... but not now.

"I think it's pretty conclusive that it's a not a budget solution for this year," said Senate President pro Tem Don Perata.

Of course, the voters haven't seemed hot on the idea, either.

Republicans came out of the meeting saying they remain focused on some kind of budget reform proposal, still a tough sell to Democrats.

And as for what happens next... don't expect full legislative action soon. Almost two weeks ago, Democratic leaders vowed to work towards a full budget vote in both chambers by next week. Will that still happen?

"I don't believe so," said Assembly Speaker Karen Bass.

With the future of the California Lottery still under discussion in this dismal budget season, one state legislator is pitching a way to increase lottery sales: gas giveaways.

Sen. Dean Florez (D-Shafter) said today that he'd like to see lottery officials take a page from the playbook of other states, where lottery prizes now include free gas cards.

"As we look for ways to think 'outside the box' to make the lottery attractive to new players," Florez wrote in a letter to California Lottery director Joan Borucki, "this is one idea that should be given serious and prompt consideration."

Florez was apparently inspired by a story in today's edition of The New York Times chronicling a free gas giveway -- for life-- now being offered as a prize by the Florida Lottery. At least four other states are also now dangling gas giveaways as prizes for lottery winners.

Early summer is deadline season at the state Capitol. Legislation must move out of policy committees, the state budget is supposed to be enacted, and... in an election year... legislators and the governor must act to place proposals on the fall statewide ballot.

As of today, scratch that last deadline off the list.

Using the state's election laws... and counting backward from election day... today is the deadline for measures to be in place for the November 4 ballot.

11 proposals are already on the weighty November ballot, 10 of them placed there by voter circulated initiatives and one -- the previously delayed high-speed rail bond -- placed there by the Legislature.

Governor Schwarzenegger has been pushing for three more ballot measures: a budget reform plan, a proposal to modify the California Lottery and borrow money against its future revenues, and a bond measure to solve the state's water woes.

The budget reform issue and the lottery borrowing plan are both mired down in the seemingly going nowhere negotiations over a new state budget. And while some sort of lottery proposal has support in both parties, Democrats have pretty resoundingly shot down all budget reform ideas placed on the table.

The water bond's fate is especially murky, even in the midst of drought like conditions across the state, and no new signs of compromise have appeared.

Having said all this, missing today's deadline doesn't mean any -- or all -- of these measures have missed the November ballot. Lawmakers have stretched their time limits on ballot proposals several times in recent years. And the reality is that once they blow past today's official deadline, it becomes a question of how long do local elections officials need to design and print their ballots... and how much are lawmakers in Sacramento willing to spend to send out an extra ballot pamphlet to millions of voters?

"I love deadlines," British author Douglas Adams is quoted as once saying. "I especially like the whooshing sound they make as they go flying by."

The main story out of today's news conference from Governor Schwarzenegger is, of course, important news: the governor has officially proclaimed a drought in California but has stopped short of imposing water restrictions, opting instead to first try and get the word out for more water conservation.

Schwarzenegger is using the proclamation to renew his push for borrowing $11.9 billion to create long-term solutions to California's water woes. Water bond negotiations broke down here in Sacramento months ago and have been in limbo ever since.

And so now to our minor but noteworthy point: the governor hopes to add the water bond to the ever-growing ballot that voters will be handed at the polling place on November 4.

"Put it on the ballot this November [and] pass it," he said at today's Capitol news conference, "so that we can start building, and so that we can secure the water for the future."

For those not keeping score at home: the November ballot already consists of eight measures-- seven voter-circulated initiatives, one measure placed on the ballot by the Legislature. That includes the proposition that's likely to crowd out all others for attention, an attempt to amend the state constitution to ban same-sex marriages.

Add #9 if Schwarzenegger's political team successfully gathered enough voter signatures to qualify a redistricting reform measure. And most politicos think that they did.

Add #10 if you think the victim's rights intiative known as "Marsy's Law" will qualify. And that, too, seems likely.

Add #11 for a $5 billion bond encouraging fuel-efficient vehicles and energy research.

Add #12, #13, and #14 if the governor gets his trifecta of budget reform, authorization to sell $15 billion in bonds against future California Lottery revenues, and now... water bonds.

14 ballot measures is a heck of a hefty ballot. Not that there haven't been hefty ballots in years past in California. But it certainly would seem that this particular myriad of complicated subjects, layered on top of an historic presidential campaign, could saddle the voters with quite a challenge.

Needless to say, Schwarzenegger thinks they're up to the task. "I think that the people enjoy participating in the political process," he said.

His complete answer, which focuses more on the policy issue at hand, can be heard here.

Having lined all of these proposals up, perhaps it's time for a reality check. The budget reform and lottery ballot measure plans are the stickiest of wickets, so much so that the odds of both of these making the November ballot currently seem a little long.

Reality check #2: the Legislature and governor are technically supposed to submit any ballot measures for November by June 26. Ummm... okay. That formal deadline has been stretched to the point of breaking in the past, and would apparently have to be stretched again this time.

Reality check #3: negotiating multiple complicated things at the same time is a tough act to pull off at the Capitol, even though Schwarzenegger today (as you can hear below) urged legislators to give it a shot.

But were it all to come true... 14 ballot measures, four of which would be near and dear to Schwarzenegger's heart... then consider this: which one(s) would he campaign for? Which would he raise money for?

In other words, how many ways can you slice the time... and spread the influence... of the state's most recognizable politician?