There's a chance the budget hole just got deeper, if the courts side with the man tapped to resolve problems with health care in California's prisons.

Clark Kelso, the federal court appointed receiver for prison health care, decided today to pull the trigger on formal legal action to get $8 billion he says is needed to bring medical standards up to a constitutionally guaranteed level.

The action comes after legislative action stalled back in May on a bond package to pay for prison health care. Kelso's filing with the court asks for $6 billion to build new health care facilities, and another $2 billion to complete projects at existing facilities.

And as for the headline... that's a factoid mentioned by Kelso today designed to get the attention of lawmakers, who remain at loggerheads over a new budget. He estimates that if a court rules against the state in this new lawsuit, the costs in the current 2008-09 fiscal year would be $3.1 billion... potentially bringing the budget shortfall up to more than $18 billion.

For now, it seems, Governor Schwarzenegger is maintaining optimism. "The administration will continue to work cooperatively with the receiver and the Legislature to provide the necessary funding for the receiver's efforts," said gubernatorial spokesman Aaron McLear.

BUDGET DAY PLUS 35 -- As various state agencies continue to decide which workers would, and would not, be exempt from Governor Schwarzenegger's executive order suspending all but minimum wages for their work in August, there's now word that two departments are completely off limits.

Late Monday night, the governor's office confirmed that no employees of either the California Highway Patrol or the California Department of Forestry and Fire Protection would have their paychecks cut back... assuming Schwarzenegger's order ends up going into effect (something that was hotly debated yesterday).

"Employees with critical public safety roles, including all of CalFIRE and CHP, are exempt from the governor's executive order," said gubernatorial spokesman Aaron McLear by email.

Still unclear, however, is how many employees of another public safety entity -- the state Department of Corrections and Rehabilitation -- would be exempt from a minimum wage-only paycheck. The issue of prison employees remains unresolved... in part, after the federal court-appointed receiver for prison health care, Clark Kelso, suggested almost 90% of the department's 66,000 employees should be exempt... due to the critical nature of their jobs.

Kelso's statement drew a quick response last week from Schwarzenegger's top lawyer, Andrea Hoch, who wrote to Kelso that such a determination is "beyond your authority."

Nonetheless, the "who is and who isn't exempt" issue across all state agencies is important... because it has a real impact on whether the governor's payroll actions can actually save the state the money his advisers said it would, money he says is needed to keep from running out of cash.

[UPDATE: For more information, see new posting on "Schwarzenegger v. Chiang?"]

Henry Hill: "You're a pistol, you're really funny. You're really funny."

I mean funny like I'm a clown? I amuse you? I make you laugh?"

The new federal court receiver for prison health care, Clark Kelso, has a reputation for a calm and reasoned demeanor. And yet, I can't get Joe Pesci's tough guy character from Goodfellas out of my mind.

This morning, Kelso filed documents with U.S. District Judge Thelton Henderson again demonstrating his intentions to get the money he says is needed to bring California's prison health care up to constitutional standards.

Kelso's new filing adds Controller John Chiang to the state officers listed as defendants. The receiver also filed a request to begin a legal discovery process at Chiang's office to examine the state's bank accounts.

“The reason is simple," says Kelso's filing. "The State has declined to fund major capital projects the Receiver considers essential to fulfilling the charge given to him by this court. As a result, the Receiver may find it necessary to ask this court to order the Controller to draw warrants on the State Treasury to provide the Receiver with the necessary funds."

Today's action is just the latest ratcheting up of the pressure. Last month, Republicans in the state Senate refused to provide votes for a $7 billion bond proposal to improve prison health care.

Part of the problem, said Assembly GOP Leader Mike Villines, is the price tag. Villines, in comments to reporters on Wednesday, said the proposal is the equivalent of giving a mid-size city lavish health benefits.

"We have someone [Kelso] saying they need $7 billion for 180,000 population," Villines said. "It seems astronomical, and it doesn't seem well justified."

Goodfella Tommy DeVito wouldn't like that answer. And it seems doubtful Kelso or the federal courts will, either.

UPDATE [3:30pm] In a written statement, Controller Chiang paints a gloomy picture if the courts simply come in and pluck the money needed from the state's bank account: "If the Court does order the State to make payments as requested by the Receiver, we would be forced to tap transportation, victim’s compensation, mental health and other special funds earmarked by voters for specific purposes. Such action likely would invite protracted and costly litigation at taxpayer expense."