“He’ll work with the legislative leaders to address the budget deficit,” spokesman Aaron McClear said, “and continue to take on the big issues, like education, health care, water and political reform.” Beyond the budget deficit, which is big enough to stifle any ambitious agenda on its own, 2008 also presents a host of other political obstacles: a potentially bitter campaign over term limits, the distraction of lawmakers running for re-election, and a possible change in the Democratic legislative leadership. All of which suggest that any vestiges of Schwarzenegger’s short-lived era of post-partisanship may be ground up in purely partisan politics. Another issue confronting lawmakers is that they haven’t finished this year’s work. The special sessions on health and water will spill over into next year – along with the divisiveness they’ve already engendered. Assembly Speaker Fabian Nu ez’s hopes of getting health care reform done before the Feb. 5 vote on term limits hit a snag when Sen. Don Perata, D-Oakland, refused to take up the issue until a fiscal analysis of its impact on the budget is completed. But the most pressing issue will confront lawmakers as soon as they return to the Capitol on Jan. 7: a fiscal emergency declared by the governor and a special legislative session to address the current fiscal year’s $3.3 billion revenue shortfall. They’ll have 45 days to act on a plan, which could provide a hint of which way the meat cleaver will fall on the 2008-09 budget. Republicans say they don’t take pleasure from the prospects of cutting programs, but do believe the crisis could work to their favor. “Nobody likes to come in and swing an ax knowing there will be people affected,” said Assembly Minority Leader Mike Villines, R-Fresno. “But I do believe this is an opportunity to live within our means.” Schwarzenegger also has said that the looming crisis could provide an incentive to fix the budget system. Fixing it, however, means different things to different people. Democrats would like to eliminate the two-thirds requirement to pass a budget, while Republicans would prefer to put in constitutional hurdles to spending. The problem is exacerbated because the state is running out of creative solutions – or what Republicans have called gimmicks. In the 1991 budget crisis, for example, when the government operated without a budget for 61 days, then, Gov. Pete Wilson was able to tap into a number of revenue sources that are now off limits, such as transportation funding, the pension fund or the Williamson act that protects agricultural funds. When Schwarzenegger entered office, he used bonds to borrow the state out of its huge debt – also no longer an option. This year, legislative leaders have already ordered lawmakers to refrain from pursuing bills that require spending or tax cuts. “Democrats ran for office to solve problems, and you can’t solve problems without money,” said Steve Maviglio, Nu ez’s chief of staff. “It’s very frustrating for members knowing they have only six years to get something done and are essentially cut off at the knees. It’ll be another summer of discontent if everything lines up the way it looks like it’s going to.” Amid all this is the very real possibility of turmoil at the top that could breed even more discontent and instability. If Proposition 93, the measure to loosen term limits, fails, the scramble to succeed term-limited legislative leaders Nu ez and Perata will burst into the open and might even undercut budget negotiations. Most observers say they expect the Senate to move more slowly than the Assembly in replacing its leader, partly because Sen. Darrell Steinberg, D-Sacramento, doesn’t appear to have a serious competition for the post and is willing to allow Perata to leave on his own terms. There are, however, at least five Assembly members seriously maneuvering to replace Nu ez. Many predicted that the two leaders will be allowed to keep their posts until at least after the budget is resolved. But others say that ambitious lawmakers, no matter how green they are in negotiating budgets or maneuvering through crises, won’t hesitate to make the move as soon as the two leaders assume lame-duck status. “The fallout of a defeat of Prop. 93, which is quite likely, and all the jockeying that will come with it, will create an unstable environment,” said political consultant Frank Schubert, president of Schubert Flint Public Affairs. “There’s a natural tendency to fill a leadership vacuum as soon as possible. The history is that when the speaker is on his way out, someone will move quickly and members will tend to want to shape campaign strategy and raise money for the fall. “We could be headed for a period of great instability,” he said, “which doesn’t lend to significant accomplishment.” Even if Nu ez and Perata hold on to their power through the budget season, they will have the thankless task of saying no to their constituencies and fending off what they fear will be Draconian cuts in human services and other programs. “I’d anticipate you will see significant reductions in Gov. Schwarzenegger’s proposed budget,” said Jean Ross, executive director of the California Budget Project, an organization advocating for poor and middle class. “But, I would hope to see a balanced approach that looks not only at cuts, but potentially for new revenues. “It’s time we have an honest conversation with voters about the reality of the state budget.” A difficult conversation in what might very well be an especially difficult year in Sacramento. [email protected] 160Want local news?Sign up for the Localist and stay informed Something went wrong. Please try again.subscribeCongratulations! You’re all set! AD Quality Auto 360p 720p 1080p Top articles1/5READ MORECoach Doc Rivers a “fan” from way back of Jazz’s Jordan ClarksonThe big ideas that Schwarzenegger wanted to chisel into his legacy may be out for next year, along with any other proposals that come with price tags. “It will be the year of low expectations,” said Garry South, a Democratic consultant who served under former Gov. Gray Davis. “And those probably won’t even be met.” That doesn’t mean the Capitol will be a dull place. Democrats are already grumbling about Schwarzenegger’s announced plans to slice 10percent off of every state agency’s budgets, and are saying it’s time to start thinking about increasing taxes. Republicans, emboldened by the power they wielded during this year’s budget stalemate, may have even more reason to be obstinate in 2008. For his part, Schwarzenegger is still optimistic he can tackle an ambitious agenda, a spokesman said, though he’s already told educators that, unlike health care, which the governor resolved to fix with one sweeping proposal, education reform will happen incrementally. SACRAMENTO – If you thought this year at the Capitol was ugly, wait until next year. This was a year of unfulfilled expectations, during which lawmakers failed to produce hoped-for reform in health care, water storage and political behavior. And the prospects are strong for even more legislative paralysis and partisan sniping in 2008, with lawmakers and Gov. Arnold Schwarzenegger focused on digging out of a projected $14 billion budget hole. Forget the once-promised Year of Education Reform, political analysts say.