By Eric Bailey
Los Angeles Times
July 14, 2009

Reporting from Sacramento — These are desperate days in the California statehouse.

Lawmakers are floundering as they attempt to halt a financial meltdown. Their popularity has plunged even lower than usual.

Now the 120 women and men of the California Legislature face another daunting challenge: a growing push to reconstruct the way state government works. If legislative leaders and Gov. Arnold Schwarzenegger don't take steps to overhaul their operations, it might be done for them.

The unraveling budget has spurred groups of the political left, right and center to press full speed ahead with campaigns for what each considers the remedy for dysfunction.

A bipartisan organization sponsored by several foundations is finalizing a menu of potential solutions. Those are expected to include a change in budgeting practices and a possible shift of state-run programs such as health, education and welfare to local governments that may enjoy more public trust.

A deep-pocketed Bay Area business group that includes Google and Yahoo is pressing ahead with plans for a constitutional convention. In that scenario, 400 California residents of all stripes would ponder the state's problems in a months-long session and draft a new blueprint for government that presumably would land on the statewide ballot.

State employee unions are pushing for a repeal of the Legislature's two-thirds vote requirement for tax hikes and budget approval. And conservatives have been authorized by the state to collect signatures on what they hope will become a ballot measure that would return the Legislature to part-time status.

"We may be at a Howard Jarvis-Paul Gann moment," said Assemblyman Michael Villines (R-Clovis), referring to the authors of Proposition 13, the 1978 initiative that launched a nationwide tax revolt. "There's a huge frustration among the electorate right now, and there's a lot of wind in the sails of these reform movements."

California has reinvented itself before.

The last true constitutional convention took place in 1878. Progressive-era reforms meant to overcome the power of railroad barons led to changes in 1911 that ushered in the initiative process. And a commission toiled for more than a dozen years in the 1960s and '70s, enacting a slew of constitutional revisions that included the birth of a full-time Legislature.

In 1994, a similar commission pondered more fixes in the wake of a fiscal crisis sparked by the demise of the state's aerospace industry. But by the time the commission produced nearly three dozen recommendations two years later, the dot-com economy was roaring and nothing became of them.

Few expect a rerun. Experts anticipate a long slog before California's economy rebounds and public ire dissipates.

"People are going to be looking for reforms at least up through next year's election," said Thad Kousser, a UC San Diego political scientist. "That will keep the pressure on the Legislature to do something."

Ideas for change abound: a more business-like budget process, election adjustments to lure more moderates, modification of term limits, a higher bar for approval of initiatives.

Put the right ingredients together, "and we have a shot at a functional Legislature again," said Bill Hauck, California Business Roundtable president and chairman of the 1990s constitutional revision commission. "But obviously it's easier said than done."

A tax commission launched by Assembly Speaker Karen Bass (D-Los Angeles) and Schwarzenegger will release a report later this month on changes to the state Tax Code that they say are needed to ease California's boom-bust budgeting cycles. Bass has also spoken of a possible special session later this year on reforming government.

Senate President Pro Tem Darrell Steinberg (D-Sacramento) sees room to focus on perhaps one idea for now. His pick: pushing more state government services to local control. But the budget crisis has allowed only halting steps toward change inside the Legislature and has fueled the movement on the outside.

The well-financed nonprofit foundation California Forward has been studying proposals and expects to present ideas for potential ballot measures to the Legislature this year.

Bob Hertzberg, a Democrat and former Assembly speaker from Los Angeles who co-chairs the group, calls its effort a "statewide diagnostic," with dozens of meetings to test ideas with everyday citizens. The goal has been to hit a bipartisan sweet spot, homing in on proposals that appeal to conservatives and liberals alike.

Hertzberg likes the idea of shifting state budget approval and local tax hikes to a simple majority vote, but conservatives in the group are resisting. If California Forward's effort flops and the Legislature balks, a constitutional convention looms.

Steinberg considers the convention a stalking horse, but backers say it's a serious attempt to undertake a government overhaul. The proposal is being pushed by the Bay Area Council, which represents 275 of the San Francisco region's biggest employers, including Hewlett-Packard, Wells Fargo, Safeway and Chevron.

Their motivation is simple, said John Grubb, a spokesman for the effort: California's education system is among the worst in the nation, the prison system is in the hands of a federal judge, there is an endless water war, "and the Legislature fails to act."

Although the group hopes lawmakers find a way to fix government on their own, members also hope to enlist an army of volunteers to collect the nearly 700,000 valid signatures needed to put a constitutional convention proposal before voters.

Schwarzenegger has called a convention "a brilliant idea," but doubters say it could be overrun by special interests -- big business, labor unions -- and devolve into a debate over red-hot issues like abortion and gay rights.

Grubb said the proposal is being tailored to thwart such risks, with an agenda focused on reestablishing a better framework for government drawn up by citizens selected at random, as jury pools are formed.

Whatever path is taken, change is in the air, said Mark Paul, a senior scholar with the New America Foundation, a Washington-based think tank.

"I can't think of a moment when there's been more consensus that California government doesn't work anymore -- and that we need to fix it," he said.

eric.bailey@latimes.com