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But work on Schwarzenegger's agenda may be overshadowed next year by his failure to resolve the issue that helped bring him into office four years ago in a historic recall election – a chronic budget deficit. The governor entered office facing a $15 billion shortfall in a general fund that spent $79 billion. Avoiding deep spending cuts, Schwarzenegger used a voter-approved, $15 billion bond to plug a hole in a budget he inherited from former Gov. Gray Davis. Increases in tax revenue from a growing economy helped fuel spending since then. Schwarzenegger now faces an estimated shortfall of at least...

Gov. Arnold Schwarzenegger is warning the state's Republican party to move toward the political center or risk losing voter support. Schwarzenegger is speaking Friday night at a state party convention in Indian Wells near Palm Springs. According to excerpts released in advance of his speech, Schwarzenegger says the party has lost the political middle and "will not regain true political power in California" until the GOP gets it back. He argues the party must tackle issues with broad public appeal, like climate change and building highways, railroads and tunnels.

California Republicans are heading for a showdown over the direction of the party. Gov. Schwarzenegger wants the state GOP platform boiled down to as little as a single page focusing on lowering taxes, limiting the size of government and building a strong national defense. But conservatives say he's attempting to undercut party positions on everything from support of traditional marriage to immigration. State Republicans begin work this weekend on a new platform at their fall convention. The governor is circulating a letter that calls for a trimmed-down platform. It does not mention abortion or gay rights.

The most important thing about the stalemate was that it failed to accomplish the one thing it should have done, which was to force the governor and legislators of both parties to own up to the state's precarious finances and take some concrete steps to improve them. Although Schwarzenegger has pledged to veto about $700 million in spending to bring the budget into operational balance, it's a fiscal house of cards. The budget itself is based on unrealistic assumptions, especially on the revenue side of the ledger, and much of his supposed spending reduction is just bookkeeping sleight of hand...

SACRAMENTO -- California's 51-day budget impasse ended today as Republicans in the state Senate extracted enough concessions from Gov. Arnold Schwarzenegger and Democratic lawmakers to allow the $145-billion spending plan to pass. The agreement is almost identical to the plan passed by the state Assembly on July 20. To overcome the GOP objections in the Senate, Schwarzenegger had agreed weeks ago to use his veto pen to eliminate the $700-million deficit with which the state is expected to end the fiscal year June 30, 2008.

Arnold Schwarzenegger became the first governor in memory -- at least going back to Pat Brown -- to parachute into the district of a legislator of his own party and exhort citizens to browbeat their representative into voting his way.... Senate Republicans assert that's not enough. "They're phony reductions," says Sen. Tom McClintock (R-Thousand Oaks). He cites one example: Schwarzenegger would "save" $160 million by delaying a Medi-Cal payment for one month, shoving it into the next fiscal year. He adds: "What the governor says and what the governor does are two distinctively different things."

Arnold's Health Flop After Arnold Schwarzenegger unveiled his universal health-care plan for California in January, almost everyone was laying down palms in Sacramento. Here was a Republican Governor putting aside political squabbling and "doing big things that Washington has failed to do," as Time magazine put it. What a change seven months later, with the plan on the cusp of collapse. There's a lesson here about health-care "bipartisanship" when it's merely a cover for bad policy. The California legislature is now in the second month of the fiscal year without a budget. Deadlocks are routine because the state requires a...

The chances of another maverick joining Maldonado appear to be fading. Sen. Jeff Denham, R-Atwater, has been specifically targeted because of his being somewhat less conservative than other senators, but he's reacted to the pressure -- including a Democratic Party threat of a recall campaign -- by becoming more adamant. If, as the Field Poll indicates, public pressure is unlikely to crack the GOP solidarity in the Senate, the question now is whether Democrats will feel enough pressure from their constituent groups that are dependent on state financing to give ground on the Jerry Brown demand. This week's rhetorical maneuvers...

In a move that would diminish the clout of his fellow Republicans in the Legislature, Gov. Arnold Schwarzenegger suggested Monday that he could support eliminating the two-thirds voting requirement for passing future state budgets. "Everyone now has come to the conclusion -- all the leaders -- that we must work, as soon as the budget is over, work on a system that allows us to have a budget on time," the governor said. "If that means we should go and shoot for, as some suggested, a simple majority to pass the budget rather than a two-thirds vote, maybe that's the...

As the stalemate over the budget continues into its seventh week, taxpayers are troubled over mischaracterizations in the mainstream media about who is responsible. The negative attention is focused on Senate Republicans who are being portrayed as the obstructionists. But viewed fairly, their position is both reasonable and mainstream. They want to see a balanced budget -- rather than saddle future generations with a massive debt load – and they want to ensure that the $42 billion dollars of bond financing for infrastructure just passed by voters last November is actually spent on infrastructure. Moreover, the position which these Senators...

He accused GOP lawmakers of continuing to withhold their votes, even after all their demands related to the budget had been met, in hopes of extracting other policy concessions. "All of a sudden, now we've got to work on this, we've got to work on that," Schwarzenegger said. "So they are adding things. We say today, don't keep adding things. You are hurting people. People in California are suffering. Lay off. Pass the budget." Though Schwarzenegger didn't mention Cogdill by name, he did single out Cogdill's fellow GOP holdout, Sen. Jeff Denham, a Republican whose district includes nearby Merced. Denham,...

This was to be the year of big ambitions in California politics. In January, Gov. Arnold Schwarzenegger, ever eager to put his stamp on outsized ideas, proposed a $12 billion overhaul of the state's health care system. It would provide universal coverage and give relief to the state's 6.5 million uninsured, a bold plan he hoped would become a national template. At the same time, he wanted a $5.9 billion makeover of California's complex network of reservoirs, pumps and canals to help the state weather future droughts and accommodate an ever-expanding population. And to increase competition for legislative seats, the...

Unfortunately, Senate Republicans, except for Sen. Maldonado, decided they would continue holding up the budget in an effort to address concerns they have with environmental regulations. Let me be perfectly clear - it is unacceptable to hold up the budget, and negatively impact the entire state, over a non-budget issue. Once the Republican senators achieved their promise to balance the budget, they should have joined Sen. Maldonado and passed it. The budget is now six weeks late, leaving one of the world's largest economies without a spending plan. The ramifications are real and far-reaching.