Ah, where to begin?

Governor Schwarzenegger’s new budget proposal reminds me of the old adage that journalists have used so much that it’s become a badge of honor in our profession: if people on both sides of something are mad at me, then I must be doing something right.

Of course, it’s never that simple… in the news biz, or with this state budget plan.

The $144 billion spending proposal seeks to erase what the governor’s advisers say is a $17.2 billion shortfall (to be fair, it’s actually $15.2 billion in red ink, with $2 billion more for a reserve). $9.1 billion of the solutions are spending cuts. Those are, in several cases, serious cutbacks… many in health and welfare programs.

But it’s the new revenues the guv is counting on that are getting a lot of the attention.

And more than 60% of those new revenues are found in Schwarzenegger’s unusual… and already controversial… plan to sell bonds repaid by future profits from the California Lottery. The governor’s team doesn’t like that many of us are calling it “borrowing.” Call it “securitization,” or “selling future lottery profits,” they say. But it’s also true that the state would be asking for a loan from Wall Street investors for $15 billion in future lottery earnings up front, to be paid back with interest.

Only $5.1 billion of that loaned cash would be used now; the rest would be stashed away. The entire plan would have to be blessed by voters in November, because the lottery itself was created by an initiative in 1984.

The lottery idea isn’t a new one. Three other states — Oregon, Florida, and West Virgina — have already embarked on somewhat similar lottery bond offerings.

But what is new is the ultimatum that Schwarzenegger and legislators (who’d have to agree to place it to the ballot) would be sending to voters: agree to change the lottery… or the state will enact a 1% sales tax increase.

The threat of a tax increase immediately had legislative Republicans threatening to go to the mattresses. But it may also become perceived as a “give us your money one way or the other” kind of strategy: buy lottery tickets or pay more in sales tax at the register.

And how might you get more people to play the lottery? Many of the ideas were discussed back in March when a state Senate committee considered the idea of lottery privatization: more marketing… perhaps even to younger Californians… more machines in more neighborhoods… and bigger jackpots. Those same kinds of changes are currently enshrined in SB 1679 by Sen. Dean Florez (D-Shafter), a lottery reform bill upon which the governor’s plan appears modeled.

But bigger jackpots means that the long-standing guarantee of 34% of lottery sales going to education must be eliminated. And that’s raised the ire of the powerful California Teachers Association, which formally opposes SB 1679.

Education’s role in lottery revenues would be further diminished by something made explicit today in a Q&A between reporters and Schwarzenegger’s budget director, Mike Genest: Wall Street investors would have first dibs at future lottery revenues. “Education revenue is subordinate” under this plan, said Genest.

Something tells me that’s going to be a tough pill to swallow.

There will be much more to examine on this issue… and the budget battle… in the coming weeks. But one other thought to ponder on this sweltering day in Sac Town: the lottery proposal and the governor’s much ballyhooed budget reform plan both have to be on the November ballot.

The first (and official) deadline for getting them on the ballot is June 26. That’s fine if the budget’s enacted in time, too, for the July 1 fiscal year. But almost no one in Sacramento thinks that will happen… meaning elections officials could also be scrambling to get these two measures included in the fall lineup.

That title has only been used once before in the California Assembly (and then only under unusual circumstances), but it’ll be the buzz word for today when Karen Bass is sworn in as the 67th speaker of the lower house.

Bass hooked the top job several weeks ago, but today formally assumes the title and the power. The 53-year-old Los Angeles Democrat replaces Fabian Nunez at the helm, three months after Nunez’s gambit to modify the existing term limits law was rejected by voters.

Speaker Bass spent some time with several Capitol reporters over the past few days, including a brief interview with me late last week.

In such a setting, it quickly becomes clear that she’s much more succinct than the often verbose Nunez. That truncated communication style may be the perfect fit for her similarly slim agenda as leader of the Assembly. In almost every recent interview, including ours, Bass has said that there are only three things on her to do list: solving this year’s budget mess, examining systemic reform of the state tax code, and strengthening California’s overburdened and often neglected foster care system.

Click below to hear my profile of Bass that aired this morning on The California Report.

Aside from the big items on her agenda, a few other comments on recent issues from my interview with the new “Madam Speaker”:

Redistricting: Bass says she supports an effort to remove political map drawing duties from the hands of the Legislature… but she’s stopping short of an endorsement of the proposal that appears headed for the ballot thanks to the work of Governor Schwarzenegger and government reform groups. In fact, she expressed reservations about the proposal, and a desire to see what might come out of a new effort on the issue pledged by the outgoing Speaker Nunez.

Health care reform: Bass also said she’d like to return to last year’s discussion on changes to the state’s health care system… and dismisses any speculation that legislative efforts on the issue are all but dead in the near future.

Foster care reform: And back on her pet issue, Bass explained her interest in a future ballot initiative to find a new way of paying for the state’s troubled foster care system… and why the needs are so great.

Today’s big ceremony in the Assembly chambers will feature a who’s who of VIPs, including many of the politicos who once held the job of speaker. And then it’s back to work… and Bass’ greatest challenger… as Governor Schwarzenegger unveils his much anticipated revised budget tomorrow afternoon.

If you’re one of those folks who are following the latest discussions about the fiscal troubles of the state, a word of advice: believe everything. Or nothing. Or something in between.

Spending and revenue estimates in Sacramento are always like the latest fad in fashion… they come and they go. They’re hip one day, tragically dated the next. That’s been true for years, way before Governor Schwarzenegger took office.

But few other chief executives have sparked so much chatter… and offered so many estimates about the budget… in so few days.

The latest guesstimate came on Monday, when Schwarzenegger told an audience in Garden Grove that the state budget is “$20 billion out of whack.” That would lead to a budget crisis second only in magnitude to the shortfall that helped spark the recall of former governor Gray Davis in 2003.

As of yesterday, the official word was that the governor was “speaking rhetorically.” Might that then mean that the governor’s numbers aren’t necessarily rooted in reality? After all, my handy Webster’s Dictionary offers one definition of rhetoric as “the use of exaggerated language; bombast.”

But today, Capitol reporters were told that the number could, in fact, be real.

“[Schwarzenegger] has internal estimates” that show as much as an additional $10 billion in budget red ink, according to gubernatorial press secretary Aaron McLear. “That’s why we need to start working on this now.”

McLear declined to reveal any more about those internal projections, though may have more later on whether this is a lack of revenue, an abundance of spending, or both.

But he did lay out a rationale for how you’d get to $20 billion:

The governor’s budget team believes that as of this winter the state faced a $7.4 billion deficit in fiscal year beginning in July, down from $16 billion and thanks to a series of possible money saving proposals were enacted. Add to that $2.8 billion, says Schwarzenegger spokesman McLear, for the governor’s desired rainy day fund. Then add on the still nebulous $10 billion in new problems… and you get pretty close to $20 billion.

Of course, the rainy day fund isn’t really part of the deficit… i.e., an actual shortfall in revenues or an abundance of mandatory expenditures. Take that out and the governor’s new number maxes out at a little more than $17 billion.

Now, the caveats. We’re still waiting for a clearer picture of revenues. And while the April 15 checks are still being totaled over at the Franchise Tax Board, there’s new word that things might be looking better than (or not so bad as) expected. That, however, is only one piece of the revenue pie: there are also corporate tax revenues and sales tax revenues that figure into the issue.

But if the deficit projections start inching toward the big two-oh, it’s hard to see how even the governor’s 10% across-the-board cuts (strongly opposed by Democrats) would erase the problem. And yes, that probably brings us back to a debate over some kind of a ____ increase.

You can fill in the blank, can’t you?

It looks like the flow of moneycoming in to state coffers has picked up as personal income tax returns are processed, but there’s still a long ways to go.

As mentioned last week, Controller John Chiang has a new page on his website where you can see (with a time lag) the tax revenues come in each day in April. You may have mailed your check on time, but it takes a while for all of that cash to be processed.

New data shows Monday was the biggest day so far in April, with almost a net of $1.6 billion in tax dollars (that’s the amount after refunds). That brings the total for the fiscal year up to almost $40 billion.

But the burning question is: will this be enough? Governor Schwarzenegger’s current budget plan predicts that total will be $45.3 billion by the end of the month. That means the state still has a way to go as all of those remaining envelopes are opened at the Franchise Tax Board.

Yes, it’s April 15th. Yes, it’s not a fun day for those of us (myself included) who wrote a check to the state. But this year, it’s even worse if you’re a state lawmaker trying to balance the books for the fiscal year that’s about to begin.

New data out today from the budget shop of Governor Schwarzenegger shows that revenues collected in March for the state’s General Fund were $912 million less than expected for the month… and as a result, total revenues for the year are almost $1.2 billion behind projections. Keep in mind that those revenues come from several sources, only one of which is personal income taxes; corporate tax revenues were also down, for example.

But in April, it’s personal income taxes that everyone cares about. After all, this is the month where most of those taxes are paid for the year. And the presence (or lack thereof) of those revenues are why state budget writers go back and revise their proposals in May… just weeks before the new fiscal year begins on July 1.

Every day this month, the folks at the Franchise Tax Board are opening those tax envelopes and adding up the totals on the checks. This is a process budget wonks have been keeping tabs on for years. This time, however, it’s easy for anyone to monitor. Controller John Chiang has a new page on his website where daily preliminary tax receipts are being released.

In other words, you can see for youself how much is coming in… and how it compares to the tax revenues that came in during April of last year.

As of yesterday, the site shows almost $1.6 billion in personal income taxes have been mailed in this month. That seems to be running slightly ahead of 2007 (though the report is lagging by a day or so). No data has yet been entered for today. And remember, just because you mail it by tonight… the folks at the FTB may not actually get it in their hands for a few more days.

It will be interesting over the next two weeks to watch these totals, and to see just how in the hole the state really is. Remember, most everyone assumes that the budget-balancing actions taken by the governor and Legislature earlier this year may have only solved about half of a problem estimated at near $16 billion.

But remember, revenues were already behind projections when April began. And the governor’s budget assumes a whopping $12.1 billion in personal income tax revenues will come in this month alone. How close will we get? The controller’s website will have some answers over the coming days.

With April 15 right around the corner, state tax officials have released their list of the biggest tax debts owed to the Golden State… and it’s hard to miss the name of O.J. Simpson coming in at #15.

Actually, the official list from the state Franchise Tax Board lists him as “Orenthal Simpson” of Miami, Fla. The notorious celebrity owes taxes and penalties totaling $1,527,925.92.

There aren’t many other instantly recognizable names on the list, though a little searching revealed that one of those fingered by FTB officials is Altovise Davis, wife of the late singer/actor Sammy Davis, Jr. She comes in at #8 on the public list, with a state tax debt of $2,708,901.75.

The list of tax debts adds up to some $123 million in money owed to state government. Granted, that’s not much when compared to a current budget deficit of at least $8 billion. But tax officials say what’s fair is fair, and the list is publicized in hopes of, well, embarrassing some of these folks into coming forward.

Something tells me, though, that it might be hard to embarrass O.J. at this point.

The full list is here.