Nunez

Today the Senate Health Committee voted 7-1 not to advance AB 1x1 the massive health care reform bill championed by Speaker Fabian Nunez and Governor Arnold Schwarzenegger. That means health care reform legislation is killed for the year given the timing to make it on the ballot. Chron:

Shortly before the committee hearing, Senate President Don Perata, D-Oakland, said in a letter to Gov. Arnold Schwarzenegger that he does not support the measure because it lacks adequate funding and could worsen the state's budget problems.

The measure, which passed the state Assembly last month, needs the backing of a majority of legislators in each house before it can be sent to the governor, who supports it.

Schwarzenegger, speaking to the editorial board of the Chronicle, said he will do everything he can to keep the measure alive.

"I'm not taking 'no' for an answer," he said. "We've come a long way to get as far as we have ... this is the last mile."

The $14 billion plan was the product of more than a year of negotiations between the Republican governor and leaders of the Legislature's Democratic majority. The proposal had the backing of a diverse group of corporate, labor and consumer groups but failed to attract the necessary six votes from the 11-member health committee largely because of concerns over the long-term costs of the plan.

The amount of resources mobilized for this fight was enormous. Many groups and organizations poured many man hours and dollars into advancing this cause and then this specific piece of legislation. It is a bitter end to a noble goal: reforming our health care system. Our health care system is a disaster, yet fear of the unknown determined the outcome. We could not ensure that the expenses would not out strip revenues a crucial calculation given our state's current precarious fiscal state. It was not clear how much this bill would impact working middle class Californians. The plan was attacked from the right and the left.

The good thing is that this is not the mid-nighties all over again. When the budget situation improves we will again have a shot at reforming the system. This loss does not mean we have to wait a decade before working hard to enact sweeping change.

This is a victory for the status quo today, but we have a chance in the not too distant future to enact the reforms legislators dared against all odds to advance this past year. There were many more reasons for this to fail than to pass. That will not change the next time we take a shot at it. Hopefully we will learn some lessons from this fight and have a better chance the next time. They sure did a lot better than we did nationally in the mid-90s.

Arnold refuses to take a comprehensive look at the problems that have created our budget deficit and now appears to be pushing what essentially amounts to Prop. 76. It is a power grab, short and simple. The voters rejected it overwhelmingly in 2005, with 62.4% voting NO. It was a bad idea to give the governor more power over the budget then and it is still a bad idea now. SacBee:

Heading into a week in which he's expected to deliver grim news about the state's fiscal health, Gov. Arnold Schwarzenegger is also preparing to propose changes to the budgeting process.

The Republican governor will offer a "budget reform" plan when he outlines his goals in his State of the State address Tuesday. Such a proposal, if successful, would likely give the executive office more authority in making cuts even after the Legislature has passed an annual spending plan.

When Arnold talks about budget reforms, he means being able to cut the budget whenever he feels like it. Meanwhile Nunez has some ideas of his own.

A spokesman for Assembly Speaker Fabian Núñez said lawmakers will have to wait to see what the governor proposes. The Democratic leader from Los Angeles has suggested changing the minimum vote for passing a budget, from the current two-thirds to a simple majority. The move would greatly diminish the role of Republicans, who are a minority in the Legislature.

"Reform is in the eye of the beholder," said Núñez's spokesman, Steve Maviglio.

Indeed. California's budgetary process is a mess with the 2/3rds requirements and the Republicans refusal to do anything other than make cuts. Hardly any other states put such limitations on their legislature. The solution is not to give the governor more power, but to untie the hands of the legislature.

See also Dave Dayen on the same subject.

One could call this a deal, or a breakthrough, but with so little time for people to figure out what is really in this thing, there is a decent amount of confusion. The Assembly has passed a health care reform bill that is supported by Arnold. It is massive and if passed would be one of the most significant changes to our health care system ever. The details are emerging, but what is clear is that the huge coalition of groups working to get reform enacted is split and that is partially due to the speed at which this proposal moved forward.

So while Andy Stern, the president of SEIU international is featured in this picture accompanying the article in the LAT, Art Pulaski and the California Labor Federation has not taken a position.

The state Assembly on Monday approved the first phase of a $14.4-billion plan to extend medical insurance to nearly all residents, giving Gov. Arnold Schwarzenegger and his Democratic allies their first victory in a risky yearlong campaign to overhaul California's healthcare system.

The measure, negotiated by Schwarzenegger and Assembly Speaker Fabian Nuñez (D-Los Angeles), would require almost everyone in California to have insurance starting in 2010. It would provide subsidies and tax credits for those who would have trouble paying their share of the premiums.

The authors estimate that it would bring medical coverage to 3.6 million Californians, including 800,000 children, who currently don't have it. But the plan cannot go into effect unless it passes the state Senate and voters approve a companion initiative that Schwarzenegger and Nuñez are planning to place on the November ballot to finance it.

See Dave more on a few significant issues with the funding. The initiative to fund the program, if they can manage to get it on the ballot faces an uncertain future without a united front behind it.

I know I am sounding really cynical now about the prospects of this plan, but I am a pretty pragmatic observer. The Senate refuses to come back to consider this before the end of the year. We don't know what they will determines once they have a chance to really thoroughly examine the proposal. It is unclear if they have gone far enough on affordability and there is a huge concern that there has not been enough headway on reforming the health care system itself. The labor community is split. The state has serious budget issues. We have no clue what the climate will look like in November 2008, if this makes it on the ballot.

There are a lot of reasons not to be excited about this development. However, there have been significant improvements made as negotiations progressed. This bill would drastically improve health care access for hundreds of thousands of Californians. The question is will it do a lot of harm to thousands more? Who benefits the most, Californians or the insurance industry? And does this have a real shot at passage?

Hopefully we will find out some more answers in the coming weeks. This too big of an issue to ram through without careful examination.

This year was supposed to be the year of health care reform. Next year was supposed to be the year of education, or so pronounced he of the grandiose titles and ambitions: Arnold Schwarzenegger. And you know what, we really need to have our state government make some headway on those issues. Unfortunately, we have a big pressing problem, the huge budget deficit. Health care negotiations have bogged down as the budget gap has risen.

Now Arnold is calling a fiscal emergency. Even prior to that came this LAT article:

Legislative leaders said Thursday that more taxes would be needed to fill a projected $14-billion budget gap next year, and the state Senate president said a healthcare overhaul -- Gov. Arnold Schwarzenegger's priority this year -- will have to wait.

Assembly Speaker Fabian Nuñez (D-Los Angeles) said lawmakers would have to consider raising a host of taxes, including those on Internet purchases and on foreign companies that do business in California.

"We've got to close those tax loopholes," Nuñez told reporters at a news conference. "We can generate billions by doing that."

Senate President Pro Tem Don Perata (D-Oakland) said some sort of tax increase would be necessary, mostly likely in a ballot measure for the public to consider. He said he doubted Republicans would provide the votes necessary for the Legislature to raise taxes.

Raising taxes in California requires a 2/3rds vote and the Republicans are simply calling for more cuts across the board. Those two desires are incompatible, thus there will be a predictable bloody battle to get the budget down.

Nunez thinks they are close enough on health care to call a vote next week. Perata is signaling that he won't go along and is pushing a water bond. Arnold wants cuts, health care and the moon. Republicans don't want anything but a smaller government.

Yes, I am pessimistic this Friday, but I think it is understandable when looking at the situation. The system is dysfunctional right now and I am not confident that they will be able to do the hard work to fix the fundamental problems.

Anthony York has a nice bit of analysis on health care over at Capitol Weekly in an article of the same name. I would not be surprised to see this make the jump into the big newspapers. His main point is that the bar was raised for any deal when Arnold made the decision not to try and get any Republicans support and instead to pass a bill with a simple majority and get the funding approved on the ballot.

But in the process, the governor created a new problem. Now, the Legislature is charged with devising a plan that stakeholders will not simply passively support. Schwarzenegger and Speaker Fabian Núñez must now find a way to concoct a plan that supporters are willing to spend millions of dollars on to get the funding mechanism approved on the November ballot.

That is the crux of the new health care balancing act: How far toward the governor can the speaker stretch while still ensuring that labor unions and major players in the health care industry will be willing to open their pocketbooks?

“When the governor made the decision to go to the ballot for financing, he raised the threshold of what the deal needed to be for different stakeholders,” said Anthony Wright, director of the consumer group Health Access. “There’s a difference with what they’d be willing to tolerate versus what they’re willing to campaign for.”

It is a very difficult problem and at the heart of the debate over affordability. Indeed it speaks a lot to the current internal struggles within SEIU. There are legitimate differences of opinions within all of these stakeholders as to what exactly they will support and if they will actually give money to get it passed.

No matter what there will be well-funded opposition, but will there be well-funded support for any eventual deal? That is key to its viability.

Nobody said this would be easy, no was it guaranteed that there would be a deal. To be honest there are a heck of a lot more reasons for the legislature and Arnold to fail to get a major health care reform package passed than for it to get done. Every day that slips by is reducing the chances of a deal.

There has been a lot agreed to already, but the two sides are still apart on many elements of the plan. Unfortunately politics are getting in the way right now. Chron:

Schwarzenegger and Democratic leaders also face an increasingly tight deadline for passing the bill out of the Legislature in time to gather the required number of signatures to qualify the financial package for the ballot.

The fate of the health care bill is also tied to Proposition 93 - a measure on the Feb. 5 ballot that would extend term limits for some incumbent lawmakers, including Assembly Speaker Fabian Núñez, D-Los Angeles, and Senate President Pro Tem Don Perata, D-Oakland, both key supporters of health care reform.

Some political analysts said Tuesday that growing concerns about the economy and the term-limits measure put passage of the health care measure into the long-shot category.

"You have to cut these deals when the iron is hot," said Garry South, a longtime Democratic strategist who was chief of staff to former Gov. Gray Davis. "Part of the problem is that everything is left until the last minute. That's not an environment to make significant progress on an issue like health care."

It is not surprising to see South be the naysayer here. He does not have a dog in the hunt, so he dogs everyone.

The calculations around the term limits initiative are the worst sort of politics, self-interest and power rather than good policy. But they should not be ignored. The political climate has markably worsened in the last month. The economy and thus the state's revenues have gone down and the Speaker loses political power based on the weakening polling of Prop 93.

That does not mean that talks have ended. The Speaker is still vowing there will be a vote:

Still, supporters of the overhaul insist an agreement is near. Schwarzenegger said Monday that he continues to be optimistic that a deal can be reached.

Steve Maviglio, spokesman for Núñez, said that talks will continue around the clock and that he believes a vote will be taken before Christmas.

I am still holding out hope, but am not confident that there will be a deal and I am even less confident that such an agreement would be affordable for Californians. We shall see.

Of course it is scheduled the same day as the Republicans are scheduled to be down in San Diego, but Assembly Speaker Nunez insists that they are running up against a deadline. SacBee:

But despite the GOP lawmakers’ plans to be hundreds of miles away, Nunez’s office says the speaker won’t reschedule the vote.

“The dates are driven by the secretary of state’s deadline for putting a measure on the November 2008 ballot,” said Steve Maviglio, a spokesman for Núñez. “We don’t have much of a choice. Deadlines are deadlines.”

Assembly GOP leader Mike Villines says he has spoken with Núñez, who told Villines he would “try to accommodate” but didn’t promise to push back session from Dec. 5, when both the Senate and Assembly GOP caucus will be in San Diego.

This does not mean that there is a deal. That would need to be agreed to before a vote can take place. With the dearth of information coming out about any movement on the legislation itself this qualifies as news, small it may be.

Thanksgiving is over and the legislature is getting back to work. That does not mean that any bills are close to passage, particularly on the two biggest issues dominating the special session: water and health care. There are no votes scheduled and quite a bit of pessimism floating around at this point. AP:

California lawmakers had been scheduled to return after the Thanksgiving break to vote on sweeping health care reform and water proposals, after weeks of promises that compromises were near on both issues.

Instead, there were no signs of any deals on Monday as Gov. Arnold Schwarzenegger and legislative leaders tried to salvage something from the special legislative sessions called in September.

Senate President Pro Tem Don Perata, D-Oakland, canceled a vote on the water bond he had hoped to put before voters in February. Assembly Speaker Fabian Nunez, D-Los Angeles, postponed a vote on the health care plan he had been negotiating with Schwarzenegger.

No vote means not deals. That does not mean that everything is dead in the water, just that big breaks are not imminent.

Schwarzenegger then summoned Perata, Nunez and their Republican counterparts in the Senate and Assembly to his office for what legislative aides described as a last-ditch effort to find common ground.

"Clearly, there still remain serious negotiations on both," said Adam Mendelsohn, Schwarzenegger's communications director. "The governor just feels like coming out of the delayed vote, he felt it was important to have a discussion."

Discussions are a very good thing. We shall see what comes of it.

Man this reads as if I could have written it. LAT:

Gov. Arnold Schwarzenegger swept into office in 2003 promising to end the state's pattern of "crazy deficit spending," cut up the government credit cards for good and force the state to finally live within its means.

So much for that.

He has never had the willpower to actually sit down and make tough decisions.

Experts say the state's spending habits are no more restrained than they were when Schwarzenegger arrived in Sacramento four years ago. The budget has grown by a staggering 40%. Costly programs have been launched.

And spending has continued to outpace tax receipts year after year -- even years when housing and tech booms led to cash windfalls.

Now the governor finds himself in a predicament similar to that of his predecessor, Democrat Gray Davis: staring at a crippling budget shortfall that threatens to overshadow all other business in the Capitol and tarnish his political legacy.

It is all too predictable. We never solved the fundamental problems that make our revenue is very cyclical. Thus when we hit hard times we run into big problems. Yesterday's LAT had this quote.

"We never fixed the problem," said Chris Thornberg, a principal with Beacon Economics. "It's been Scotch tape and glue and staples and just praying we will never have to face the reality that state government is on a path that is not sustainable."

Today's:

"There has been lots of talk and lots of gimmicks, but none of the state's underlying budget problems have been dealt with," said Ryan Ratcliff, an economist at the UCLA Anderson Forecast. "Even in the middle of a revenue boom, we kept spending more than we take in."

Arnold has been talking about making next year the year of education. Speaker Nunez seems to have nixed that idea. How about we make it the year of the budget. It sure isn't sexy, but it is damn important.

Months ago, Arnold introduced his official health care plan. Only it was not an actual usable piece of legislation. He could not find a single legislator willing to flesh it out into a real bill and introduce it in the Assembly or Senate. Now, for some reason he is insisting he has actual legislation, a revised more detailed version of his original plan. And still it is orphan legislation, without a legislative sponsor. And still it is unacceptable to all sides. There is no way that this thing actually gets passed as written. SFChron:

The governor unveiled a revised health care plan that included leasing the state lottery to a private company to help pay for expanding coverage to uninsured residents and give a tax break to low- and middle-class families.

But the proposed changes drew only a passive response from Democratic leaders, while consumer and labor groups said the plan does not do enough to protect the working poor from escalating costs.

The key is affordability. Individual mandates are unacceptable if people are forced to purchase insurance they cannot afford and does little in terms of actually covering health care costs. Of course, he is claiming that he already solved that problem.

Schwarzenegger's new plan would provide a tax credit that would be worth about $2,000 a year for a family of four earning up to $72,000 a year.

"We think we've taken a significant step toward increasing the affordability of health coverage for low- and middle-income Californians," said Amy Palmer, spokeswoman for the state Health and Human Services Agency.

Uh. No. Not good enough. Not even close. While Nunez and Perata put out non-committal statements, labor leaders were more blunt.

"He's leaving the middle class out in the cold," said Art Pulaski, executive secretary-treasurer of the California Labor Federation, AFL-CIO. "He's offering some support for individuals making up to $35,000 a year, but if you make more than that, there's not support but you are still expected to go out and buy a policy in the individual market."

The individual market is inefficient. Group purchasing drives down costs, as it spreads risk across a larger population. AB8 goes much further in terms of creating large pools that individuals can participate in.

And of course, Arnold is relying on gimmics to help pay for it. This time, he has gone back into the privatize the lottery for more revenue.

Another key change in the governor's plan would lease the state lottery to a private company and use the new revenue to help pay for expanded coverage. The governor's office expects the lottery could generate $2 billion a year for health care.

Schwarzenegger also introduced a sliding scale for determining the cost employers would be asked to pay for worker coverage.

Rather than requiring all employers to pay a 4 percent payroll tax, the governor wants contributions based on the size of a company's payroll. For example, a small firm with highly paid employees would pay more than a similar size company of low wage earners.

Employers providing health insurance for their staff are already paying 7-8% of payroll to cover health care costs. It is beyond me how Arnold thinks that halving, or quartering that is going to pay for health care coverage. The numbers just don't work. Keeping it that low will encourage employers to drop their health care coverage, not add it.

Consider this to be the latest bargaining position for Arnold. The Democrats have AB8, which he vetoed today as their base position. Time is of the essence now. It's make or break it for health care reform. Will they get it done? Millions of Californians are counting on them.

See Anthony Wright for way more details on Arnold's plan.

Did anyone really think that Arnold would actually settle for tiny changes around the edges on health care? The man only knows how to do one thing and that is go big. It works sometimes (global warming) and is a disaster other times (special election). So, it is no surprise to see him bashing his fellow Republicans for their “Mickey Mouse” concerns.

Gotta love the pop culture references… LAT:

At The Times, Schwarzenegger, who wants to change the way insurers and hospitals function, expressed optimism that a healthcare deal with state Democratic leaders could succeed at the ballot.

He said he was confident labor unions, business groups and hospitals would back an initiative that would place a new tax on healthcare providers and require employers to spend a specified sum on healthcare or pay into a state fund that would help workers secure insurance.

I think he is right. They will end up supporting something, if it makes it out of the legislature, but they are putting a lot of positive pressure on Speaker Nunez to ensure that the end result is a good plan. The business interests will most likely be small businesses. They are the easiest to pull out. Most of these folks really want to find a way to provide insurance for their employees, but it is way to expensive with the current system to insure small groups of people. That can change with the solutions the legislature and Arnold are discussing.

Asked whether voter anger about illegal immigrants, which led to the repeal of a 2003 law to let them obtain drivers' licenses, might be used by opponents of his healthcare plan to doom it, Schwarzenegger said: "Those are Mickey Mouse things compared to immigration reform.

"The real big elephant in the room is that for years and years and years the people have been angry and the federal government hasn't been doing anything about it," he said.

Schwarzenegger said his plan would not give illegal immigrants any new healthcare opportunities but would allow counties to shift all the money they spend caring for the uninsured now -- often in emergency rooms -- to less expensive clinics. The outline of the plan the governor released in January estimated that counties would receive about $1 billion a year that could be used to treat about 750,000 undocumented immigrants who lacked coverage from employers.

The Republicans love to fire up their base about immigration. It is good to see Schwarzenegger putting the smack down. The current system is inefficient and that is due in part to the way undocumented people are treated. Than can change and it should.

Keep the momentum going.

Health care reform continues to be a moving ball. Everything seems to be on the table right now. Unfortunately an initiative to provide funding seems more likely than not. It is a significant risk to go to the ballot, but if it is the only way to ensure affordability, then so be it. Heavens knows the Republicans in the legislature are not interested in making that happen. SacBee:

The Los Angeles Times reported Saturday the Republican governor and Democratic speaker are fashioning a strategy to raise business and hospital taxes through a ballot measure and circumventing Republican lawmakers who oppose any new taxes.

Under the scenario outlined by the newspaper, the Democrats who control the Legislature would pass a bill that doesn't include funding for health care and ask voters to raise taxes.

I really should just leave Arnold's no new taxes pledge alone, but it amuses me to no end to see him breaking that. He seems to have come to the understanding that you have to have a way to pay for his policy goals. I know, complicated right?

Speaker Fabian Nunez has made it clear that they are not close to an agreement, quite yet, but they making headway. He has promised that he would not leave all of the funding on the ballot.

The speaker said Assembly Bill 8, which he put together with Senate President Pro Tem Don Perata, would provide 75 percent of the money to cover the 6.7 million Californians without health insurance. Núñez said a possible ballot measure could provide the remaining 25 percent.

Schwarzenegger has said he will veto AB 8 because it would place the economic burden on employers. The governor believes costs should be shared by employers, employees, insurers and government.

Leaving all the financing to the ballot is not an option, said Núñez, D-Los Angeles.

"I'm not going to compromise to put all of the funding for AB 8 on the ballot and be left with a shell (bill)," Núñez said.

They are still leaving the possibility of holding a special session to iron out all of the details. That may be necessary since there are only 5 working days left, due in part to the Jewish High Holidays.

Another day and no sign of a deal, but things seem from the outside to be progressing reasonably well. Still, each passing day is worrying, since there is not much time left. Chron:

Gov. Arnold Schwarzenegger and Assembly Speaker Fabian Núñez opened a new round of closed-door meetings Thursday on plans to overhaul the state's troubled health care system to offer coverage to a record 6.8 million Californians without health insurance.

The move came after Núñez, D-Los Angeles, withdrew his threat to put the governor's health care plan before the lower house for a vote Thursday, knowing that it would not get much support from Democratic or Republican lawmakers.

Both sides characterized Thursday's talks as productive, but there was no sign of a breakthrough.

"I'm not going to embarrass the governor," said Núñez. "I think the governor understands at this point the votes are not there. That was my message all along. He now got the message.

"The governor in his heart of hearts believed firmly that he was going to get Republican votes for his health plans and he now knows if we put his plan up for a vote today the votes are not there," Núñez said. "In fact, I was going to try to get as many courtesy votes as possible from Democrats but it turns out not many Democrats want to vote for the governor's plan."

Aaron McLear, a spokesman for the governor, said the meeting was "very positive" but Schwarzenegger remains committed to his proposal.

Arnold was in S.D. today and not in the Capitol. Hopefully, that does not slow things down even further. It is time to get this thing done and pass affordable health care reform.

Seriously man. I get that you really like your plan and that you wish the Republicans would come on. But it just isn't going to happen. You would have had a hard time getting them to play ball at the height of your influence with them, let alone now, when the level of cooperation is arguable at an all time low. I know that Speaker Nunez is bringing you the same message and it is the right one. SacBee:

But as Núñez notes, that's simply too many taxes and mandates for Republican legislators to accept, and the sooner Schwarzenegger acknowledges that reality, the better.

Nunez is still planning on bringing Arnold's plan up for a vote, where he predicts that he will be the only one voting for it, simply as a courtesy to the governor.

"I'm going to take him from the stratosphere, and I am going to ground him," Núñez told me in an interview in his Capitol office. "He needs a little grounding. Nobody likes his plan." [snip]

"I just want him to engage," Núñez said of Schwarzenegger. "Let's get it done. The governor has got the power to do it. He is either going to do it or not. If he doesn't do it, he's failed.

The Speaker also announced that he would support Arnold's proposal for a fee on hospitals as an add on to AB8, not something that would reduce the percentage of the payroll fee, as in Arnold's plan. He wants it to work towards covering more of the uninsured, not reducing the fees on businesses. The worry is that reducing the percentage of the payroll tax on companies will encourage them to drop their coverage to lower levels. Plus, AB8 needs more funding in general.

[Update] In a sign progress is being made. Nunez will not be putting Arnold's plan up for an embarrassing defeat.

Nothing much changed outwardly on the politics of passing health care reform. Arnold and Nunez are still being optimistic. Perata is Eeyore and is feeding right into the Republican's talking points, that we should go for little fixes instead of comprehensive reform.

John Meyers and Anthony Wright have been playing off of each other in the blogs today, with an interesting theory by Meyers that the negotiations may be proceeding like AB 32 did. Meyers:

The narrative making its way through the Capitol this week is that the debate over health care reform, now down to the final days on the legislative calendar, has parallels to another last-minute deal struck in Sacramento.

The question is... which one?

Some say just look at last year's global warming law, AB 32, and you'll see how good things can happen as a result of last-minute negotiations. Others, though, say look at 1996's energy deregulation fiasco, and you'll see how bad things can happen in the final hours.

Anthony notes that there is a lot of similarities between the two sides.

In the world of policy, I see two plans that are more similar than different. They both include:
* a major expansion of coverage for more than two-thirds of the state's uninsured
* a minimum employer contribution toward health care
* a requirement on most individuals to take up health coverage from employers
* major eligibility expansion of public insurance programs for children and parents
* significant streamlining of public insurance programs to maximize enrollment
* significant draw-down of federal Medicaid funds
* new use of federal and state tax breaks, though Section 125 plans, for health coverage
* limits on insurers denying people because of pre-existing conditions
* a minimum requirement on insurers to spend 85% of premium dollars on patient care
* various cost containment efforts, such as on information technology and disease management

In some cases, the proposals are very similar, if not the same. There are differences on some key details. And they matter, a lot. But looking at the policy, it's hard to come away with the notion that a deal isn't just possible, it's likely.

He contends that since health care has been a major policy discussion for five years, the issues are well known and thus the politics take a primary role. He is correct. Everyone is very well versed on the issue. This is the crunch time to see if they can find a way to a common path.

Considering the fact that these guys have not met lately, this should be a pretty important meeting to determine the likelihood of coming to an agreement on health care reform legislation. Sen. Don Perata was sounding overly pessimistic, and his comments were pretty unproductive to the overall reform efforts. Nunez and Arnold were much more upbeat. SacBee:

In a prepared statement, Núñez said he remains "an eternal optimist," and added, "I will fight 'til the end for health care reform."

The speaker has said he plans to introduce the governor's health care plan himself and ask lawmakers to consider it this week.

The governor remains committed to achieving health care reform this year, said Sabrina Lockhart, a spokeswoman for Schwarzenegger.

"He looks forward to working with leaders on both sides of the aisle to get it done," Lockhart said.

Weintraub has an interesting column today, suggesting that the fee on hospitals aspect of the governor's proposal may not be dead in the water. He points out that a similar fee was passed on the nursing home industry, after they requested it.

The state's nursing home industry supported a 6 percent charge as a way to draw more federal money to California for Medi-Cal, the health care program for the poor. The federal government matches the state's spending on Medi-Cal. So for every dollar California collected in fees from the homes and then spent on Medi-Cal, the nursing homes, as a group, got an extra dollar back from Washington.

Republicans are opposing many other elements of the governor's plan. However, it looks like the negotiations with the hospitals have moved it towards a more common fee structure that may not require a 2/3rds vote. Arnold is continuing to work on it, despite some resistance from the Democrats.

Gov. Arnold Schwarzenegger and Assembly Speaker Fabian Nunez have been sparring in the press over the relative merits of AB8 (the Democratic plan) and Arnold's plan, which has never made it into bill form. Heck, it hasn't even been fully fleshed out to actually be real legislation, rather than a policy paper. Since, Arnold never took the steps to find a legislator to carry it as actual legislation, Nunez announced today that he was going to do it for him. And he is going to put it up to a vote by midweek. SacBee:

"The governor has threatened to veto the Democratic bill and insists there's support for his concepts and we'd like to see if there is," said Steve Maviglio, a spokesman for Núñez. Maviglio said the Assembly would aim for a Thursday or Friday vote next week, with the speaker as a possible author of the legislation.

It should go without saying that there is not a whole lot of support for the governor's plan. First of all, it is incomplete. Secondly, the Democrats rather like their plan and the Republicans don't particularly want to reform health care.

Assemblyman Roger Niello, R-Fair Oaks, said there would be few, if any, GOP votes for Schwarzenegger's plan. "There is not a great deal of affection in our caucus for the total package of the governor's proposals," Niello said.

Neither Arnold nor the Democrats want to see this followed to it's logical conclusion: Arnold's bill fails in the legislature and then he vetoes AB8. There will be more negotiations. I am intrigued to see who all votes for Arnold's plan.

The negotiations over health care reform have begun in earnest again. Arnold stated yesterday that he would not support the Democratic plan AB8 for two reasons. He will not sign legislation that does not require Californians to have insurance (individual mandate) and relies on just a payroll fee for financing coverage. Arnold favors his proposal, which would require hospitals and doctors to bear part of the fiscal responsibility for expanding access to health care.

Here is the thing, his plan just isn't politically viable in the legislature. By most indications, requiring doctors and hospitals to pay would necessitate a tax. Passing a tax increase requires a 2/3rds support in the legislature. There is absolutely no way that you could get even a single Republican to vote for it, especially in the wake of the budget impasse (not that anyone thought it was possible before). The only way for it actually make it into law would be a ballot initiative. LAT:

"The governor -- with all due respect, and I love him because he's a good friend of mine -- he has to start operating in the same world that I'm operating in, which is the real world," said Assembly Speaker Fabian Nuñez (D-Los Angeles).

"In the real world that I live in, I can control and manage a simple majority bill," Nuñez said -- one that does not require GOP support as a tax would.

Schwarzenegger, however, continued to assert that Republicans could be swayed. He said that although budget negotiations were "a tedious process that drove a lot of people up the wall and anger and everything, in the end, that's not the definition of accomplishment or failure."

"The definition of accomplishment or failure is, can we get the reform done or not?" he said.

It's not that Nunez does not want Republican support for major health care reform, it is that he recognizes that it is next to impossible. Much of what the Republicans support simply tinkers around the edges and sticks to their free market philosophy. That is what we have right now and it isn't working. Unfortunately, Arnold's relationship with them is so soured that it is next to impossible to imagine him being able to convince them for the need to significant reform.

Meanwhile, while Arnold stopped by the AARP rally yesterday outside the Capitol, he has not been meeting with the Democratic leadership to try and hammer out an agreement. Instead, he has been seeking to influence the debate by speaking to the press. SacBee:

It's been just about two weeks since the Senate collapsed. Sad to say, that we might even be further away from a solution. Let's look at this mess in a bit of a random order. Lot's of things going on, even if there has been absolutely no progress.

14 Senators are holding up the budget until a majority of their far right cohort agrees to the deal, even though we only need one more vote. Essentially they are requiring that 74% of the legislature approves of the final budget. The two-thirds budget requirement is arcane as it is, but to require near unanimous consent is just absurd.

It is now clear that the Republican calls to change CEQA (see yesterday's post) are central to their demands. That is absolutely a non-starter for the Democrats and the Governor. In the wake of the dustup over the CARB, Arnold is not exactly in a position to start weakening environmental laws without a huge backlash. I am not sure where the Republicans think they are going to get a lot of support for their pro-business, anti-green argument in both the Capitol and the public. California has a lot of Republicans, but a large percentage of them are environmentally friendly. The same cannot be said for the Republican Senators who are holding out. They are very much out of the mainstream, arguably even within their own party.

Senator Perata has declared that he will not take up any more legislation until the budget is passed, something Nunez quite rightly disagrees with. The Republicans would love it if the progressive legislation that the Democrats have on tap, like AB8 (health care reform) get scuttled. It would allow the Republicans to further undermine our system of government.

Arnold really looks impotent here. Nothing he has done has worked. His strategy of disengagement on the budget until the last minute has proven to be a bad one. He seriously miscalculated the intentions of his fellow Republicans. This stalemate has the ability to seriously undermine a lot of the work he has done in the last year to try and prove that he can unite both parties and pass landmark legislation. If this keeps up, it will damage his chances at the 2010 Senate race, if he was even thinking of running in the first place.

Nunez and Perata are now looking for any possible leverage points they can find on the hold-out Republicans. Nunez is declaring Republican legislative priorities DOA. Perata is stripping folks from committee assignments. Unfortunately, there is not much power they hold over them. Each day that passes is a victory for the ultra right-wing conservative Senators.

This week momentum has emerged to repeal the 2/3rds vote requirement for the budget's passage. Speaker Nunez has declared that it will be a major priority for him. Doing that in conjunction with a re-examination of our tax system would make sense, however that tact did not work in 2004. Logically, it does make sense to address our revenue problems, as part of a larger budget discussion. Today Mark Leno has an op-ed in the Chronicle worth reading about reforming the budget process and historical look at the 2/3rds requirement.

The idea that a single legislator of the minority party can cause such suffering to millions of Californians is appalling. Maybe if the deadlock continues for another month or two, recognizing the risk that would present thousands of social-service providers, voters will more quickly understand that it is time to change the way we do business and enter the 21st century.

Obviously, the attempt in 2004 to address this very rule did not go well. The Republicans managed to scare the public about the potential for increased taxes. Nunez and Leno seem to be arguing for a ballot initiative to change it to a simple majority vote for the budget. That would fix the short term problems of the mechanisms for passing the budget, but looking at the tax vote requirement and Prop. 13 would address the supply problem. These are very thorny issues to say the least.

Right now there is not a clear or heck even a murky path to a resolution on the budget. Who knows when that will change or what will cause it to happen.

Speaker Fabian Nunez laid out a case today in a conference call with a group of bloggers that the Republicans are deliberately using Newt Gingrich styled tactics in an attempt to prove the government doesn't work. He contends that the ultra-conservative Republican Senators are holding the budget hostage to accomplish broader goals for their party. Nunez's tone was sharp and it seems like he is quite perturbed to return to this debacle.

He is threatening not to discuss any of the Republican's proposals on water storage, one of their main priorities for the cycle. The three conditions he laid out yesterday for coming back to the table were revisited, though I did notice that he said all of the transportation funds would have to back in. Yesterday, it was just a substantial or the full amount.

It seems clear that Nunez is looking for any and every leverage point to force them to come out of the wilderness. The longer they push this forward, the more resolved we will likely see the Democratic leadership to pursue significant changes to how the legislature operates, from getting rid of the 2/3rds requirement, to dealing with the tax structure (Prop. 13 included). It is crucial that we find ways to communicate with the public about the nasty impact of the arcane 2/3rd rule to pass the budget. Drawing the links between the checks that are not going out and the kids going without meals, to the extreme views of the conservative Republican holdouts to a constitutional rule is important, if a significant effort to amend the constitution emerges.

Here are a few other tidbits from the conference call. A question was asked about the potential for this dispute to doom the prospects of health care reform. First, Nunez took the time to say that the bill is "not fully cooked". They are working to bring more partners in and increase the number of uninsured covered by the bill. He reminded everyone that it only needs a majority vote to pass and he is still very much dedicated to getting it on Schwarzenegger's desk. To that end, he voiced his dismay that Senator Perata's comments that no other legislature would be taken up until the budget passed. That would certainly be an additional victory for the Republicans and may indeed be part of their plan.

The Speaker's staff video taped him answering our questions. I will put that up when it is available.