While state leaders debated California's budget, a rally outside the Capitol on Wednesday brought out several hundred people – many who said that during an economic downturn, state budget cuts are wrong:

Assembly Speaker Karen Bass used hers to fund voter registration efforts to elect more Democrats. Former Senate President Pro Tem Don Perata used his to bolster his legal defense fund. Gov. Arnold Schwarzenegger used his to pay for his political operation for the last two years.

Legislators who know a proposal isn't going anywhere often like to announce they have "thrown down the gauntlet."

Gov. Arnold Schwarzenegger is running out of good things to say about California. As he prepares to give his annual State of the State address today, he faces a $40 billion budget deficit, rising unemployment, sinking approval ratings and demands from activists who want to protect their programs from budget cuts.

The state's nonpartisan Legislative Analyst's Office confirmed Wednesday that California could run short of cash as soon as Feb. 1 unless lawmakers and Gov. Arnold Schwarzenegger immediately cut spending and raise revenues.

Nearly 800 advocates for California's "working families" gathered in downtown Sacramento on Tuesday, and they had plenty to talk about.

The Assembly and Senate will not impose the mandatory furloughs required of most other state workers, but both legislative houses announced plans to cut spending Tuesday.

Anybody who watches the California Legislature up close probably understands the voters' impulse to pass measures tying the hands of lawmakers when it comes to managing the budget. When the Legislature's approval rating hovers around 15 percent, the public isn't going to trust the politicians to make important decisions.

A coalition of more than 50 labor unions Tuesday urged the California Supreme Court to overturn a ballot measure that banned same-sex marriage in the state.

Being a good Samaritan can land Californians in court – and cost them plenty, perhaps.

One of the odder – and more interesting – aspects of the Capitol's budget stalemate has been a scheme by Democrats to increase revenue by billions of dollars without, or so they say, running afoul of the 31-year-old constitutional requirement that tax increases require two-thirds legislative votes.

State Sen. Dean Florez is sticking up for a felon in the man's tussle with the state over his family's business – a Bay Area card room that has donated to the senator's political campaigns.

If you're running for office, it's never too early to grab endorsements before someone else does.

There was a time, a few decades ago, when "Valley Republican" had a special meaning in the state Capitol.

The old saying among Capitol insiders that "what goes around comes around" is especially applicable to the perennial battle over financing public schools, by far the largest single item of the state budget.

Under the governor's latest proposal to balance California's budget, school districts can shave five days off next school year to save money.

Defense spending in the 1980s, high-tech startups in the 1990s and housing-fueled consumer spending in the 1990s – all were California economic bubbles that burst spectacularly, leaving recession and government deficits in their wake.

Worried that Kaiser Permanente may be letting unlicensed staffers make medical decisions, the state is investigating the giant HMO's call centers and plans to demand documents that Kaiser has refused to surrender.

Dozens of California Assembly employees can thank the state's fiscal crisis for padding their pensions through a controversial program pushed by Assembly Speaker Fabian Núñez before he was termed out last year.

John Doolittle left Capitol Hill with his legal troubles unsettled, but his financial future appears to be a bit more stable: Congress is giving him a $45,000-a-year pension that he can begin collecting in 2012, when he turns 62.

Sacramento's economy stands to lose around $1 billion over the next 18 months because of layoffs and unpaid furloughs imposed on state workers by Gov. Arnold Schwarzenegger.

Gov. Arnold Schwarzenegger's administration announced Friday that California will be closed for business the first and third Fridays of each month starting Feb. 6 as the state grapples with a $40 billion budget deficit.

Agencies outside the governor's direct jurisdiction and exempt from furlough orders but subject to other budget cuts as approved by the Legislature and governor:

The California Teachers Association has put together an initiative that would raise the state sales tax by a penny and dedicate all of the resulting revenue to education.

Some were furious. Others were sad, even tearful. Many more accepted the news with graceful resignation, trying to hide their worries.

Former Senate leader John Burton is making a political comeback.

When former Assembly Speaker Fabian Núñez was termed out of office recently, lawmakers made sure he wouldn't have to "run" for anything ever again – they bought him a $5,100 bicycle.

In the wishful thinking department, we have Assembly Bill 89, by Assemblyman Tom Torlakson, D-Antioch.

Five years ago, a newly inaugurated Gov. Arnold Schwarzenegger beseeched California voters to pass a $15 billion bond issue to refinance the state's burgeoning budget deficit and "cut up the credit cards" with another measure that prohibited any budget that spends more than its revenues.

Golden State golfers are mobilizing to fight the governor's proposal to slap the state sales tax on the game/sport/religion.

Legislative Analyst Mac Taylor may have a fallback solution to the political paralysis that has thwarted a state budget solution – let the people decide.

In a decision with broad implications for health care consumers, the California Supreme Court has ruled that medically insured patients may not be billed for emergency care that their health plans refuse to pay.

Jim Foutz doesn't drive much anymore at 87, but the license plate on his car tells his story: the North Highlands man survived the attack on Pearl Harbor.

For political expediency, the state is trying to weasel out of continued cooperation with a court-appointed receiver's effort to bring prison health care up to constitutional standards

Citing missed work deadlines and other problems, the state has terminated a $69 million contract with BearingPoint Inc. of McLean, Va.

As he compared political divisions in the state Capitol to feuds in Northern Ireland, Gov. Arnold Schwarzenegger said Wednesday he hopes Democrats and Republicans reach a budget accord in three weeks despite long-standing disputes.

With the clock ticking toward insolvency, talks on fixing California's budget this week hit a bottleneck on Highway 50 in Rancho Cordova – where officials are at odds over the state's iconic and controversial environmental protection law.

Robert T. Monagan, one of the few Republicans to serve as speaker of the California Assembly and a longtime fixture in Capitol politics, died Wednesday in Sacramento. He was 88.

State Senate President Pro Tem Darrell Steinberg said Wednesday that he had a commitment from Gov. Arnold Schwarzenegger to nominate a labor representative to a long-vacant position on the three-person occupational safety appeals board.

Friday's court date could be delayed for the lawsuit brought by the California Association of Professional Scientists and Professional Engineers in California Government against the state employee furloughs ordered by Gov. Arnold Schwarzenegger.

A crisis doesn't build relationships. It reveals them.

Unemployed workers seeking jobless benefits have overwhelmed state phone lines, leaving some frustrated callers to give up and instead pile into employment offices in hopes of speeding up the process.

Gov. Arnold Schwarzenegger, sparring with legislators over the state's impending fiscal meltdown, has postponed his annual state-of-the-state address until Jan. 15, perhaps hoping that by then he can describe California's condition as anything but undeniably bleak.

Nearly 700 subscribers whose policies were canceled by Blue Shield of California will be reinstated as part of a settlement reached with the California Department of Insurance, state officials announced Tuesday.

Gov. Arnold Schwarzenegger's deficit-closing plan to temporarily raise sales taxes by 1.5 cents on the dollar has drawn predictable howls of protest from the right. Now the left has weighed in with equal disgust.

State budget negotiations collapsed Tuesday in a war of words and a round of vetoes, as Gov. Arnold Schwarzenegger rejected a Democratic deficit reduction plan that fell short of meeting his demands.

The ethnic, linguistic, aptitudinal, cultural and economic diversity of California's 6 million public school kids has expanded greatly over the past few decades, but the school system itself has become more centralized, more politicized and more rigid in its pedagogy.

Any budget agreement between Democrats and Gov. Arnold Schwarzenegger that skirts the state's two-thirds vote requirement for new taxes will almost certainly be challenged in the courts – and there's a significant chance the state would lose, some legal experts said Monday.

A convoluted and highly questionable scheme to generate billions of dollars for the state via local redevelopment agencies is being revived as Gov. Arnold Schwarzenegger and legislative leaders race with the calendar to close an enormous budget deficit.

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