John Laird’s 3pm meeting with a group of children’s health care advocates is off to a late start. His 2:20 appointment ran longer than its slotted 10 minutes, which pushed his 2:30 with the California Nurses Association to almost 3 o’clock. The nurses wanted to talk about health care reform, “which, as of yet,” Laird reminded them, “is not in the budget.”

So now, at about 3:30 on a Tuesday afternoon, Laird sits down with a group of people who want to see health care coverage extended to the 800,000 children in the state without medical insurance. It’s Gov. Arnold Schwarzenegger’s major unfulfilled promise of the 2003 recall election, and this year, Laird has said, he wants to “hold the governor’s feet to the fire.”

Also present for the meeting is Sen. Darrell Steinberg, a Democrat from Sacramento. Most of the people in the room already know each other—“but it wouldn’t hurt to do introductions,” Laird says, and then deadpans: “I’m Darrell Steinberg.”

“My you look good,” the real Darrell Steinberg quips.

“Being a senator, I’m just up from my nap,” Laird continues. It’s an ongoing joke between the two. Laird regularly greets the former-assemblyman-turned-senator with some variation on the nap joke.

“I’m Darrell Steinberg, former friend of John Laird,” Steinberg replies.

Laird sits at the head of a long, oak table in his Sacramento office. The children’s health care advocates and legislative staffers fill the seven chairs and spill out onto two couches behind the table. Steinberg sits next to Laird.

Laird chairs the powerful Assembly Budget Committee, which is responsible for formulating the state’s annual multi-billion-dollar spending plan. This year, the governor and lawmakers may include funding for health care reform in the budget, and no one really knows how this battle will play out. On one hand, almost everyone in Sacramento seems to agree that California’s health care system is in crisis. On the other hand, Republicans and Democrats remain deeply divided about who should pay.

Steinberg, who served three terms in the Assembly and chaired the budget committee in 2004, worked out of this same office. This year both lawmakers have introduced bills to guarantee medical coverage for all of California’s kids.

The lobbyists are in Laird’s office to talk strategy and money. The governor has declared 2007 as “the year of health care reform,” and Laird has long been a leading voice in the discussion. He introduced his own bill in December 2006, and he also co-authored Sen. Shelia Kuehl’s universal health care plan.

As chair of the Budget Committee—a post Laird has held for the past three budget cycles—he’s a member of the Assembly leadership team and an influential player in determining the state’s spending plan. He’s close to Assembly Speaker Fabian Núñez, and the governor also listens to Laird. He’s a good ally to have in Sacramento.

Although Laird is a power broker around the State House, he’s not a media darling. The spotlight usually falls on the likes of Núñez and Senate President Pro Tem Don Perata. Laird works behind the scenes and uses smarts and humor to move his agenda forward.

The talk turns serious and moves on to the big-picture politics of health care reform. The advocates and the lawmakers sound determined to make some sort of reform happen this year. “And obviously,” Laird says, “I have a budget to do in my spare time. But I’m totally up for this.”

~ • ~

“It’s quieter—there’s not a lot of buzz about the budget at this point, and that’s totally different than any other year I’ve been in the Legislature,” Laird says in a phone interview a week after his meeting with the health care advocates. He is in Washington, DC with a bipartisan Assembly delegation led by Núñez and Minority Leader Michael Villines, R-Clovis, to lobby the Bush Administration and Congress for more federal funds for California. He’s been in back-to-back meetings, and his body’s clock is still set to Pacific Time. Hopefully, if the Legislature passes an on-time budget, he’ll get a break in July.

Part of the reason for the quiet: There’s not a statewide election this November. “And there just aren’t as many moving parts,” Laird says. “There are just a few compared to other years, when there might be 30 or 40 moving parts. It’s quieter.”

The budget process began in early January, when Schwarzenegger released his proposed $143.4 billion spending plan for 2007-08. The governor’s proposal aims to shrink the state’s deficit through early repayment of debt, additional tax revenue, and cuts to social services and transportation.

The moving parts Laird refers to are these: The $1.1 billion the governor wants to permanently divert from public transportation; roughly $500 million in cuts to Cal-Works for programs that help poor kids; fee increases for UC and CSU students; the governor’s proposed $600 million advance repayment of debt; and proposals dealing with Proposition 98 funding. (Historically, Prop 98 has increased funding for classrooms, school counselors, efforts to reduce the dropout rate and the like; the governor wants to spend the money on, among other things, child care.)

“The debate over whether to take on debt—and make major cuts to do it—will be the central piece of the fight,” Laird says.

Also this year, there’s that added wrinkle in the process: health care.

The governor’s budget statement, announced on Jan. 10, followed a series of major policy announcements beginning with Schwarzenegger’s health care plan, introduced on Jan. 8, and his Jan. 9 State of the State address, in which he proposed an additional $43.3 billion in bonds to build prisons, classrooms, dams and courthouses.

But Schwarzenegger didn’t propose any funding for health care reform. And now lawmakers struggle to decide whether to fight for General Fund money to pay for medical coverage through the budget process, or to revamp the system through a series of separate bills.

“It might be that, if we come to an agreement on health care and prisons [during the budget negotiations], it makes the budget easier,” Laird says. “But at the same time, it might make it easier to come to an agreement on those after we do the budget. It’s really unclear at this point what will come first.”

Laird says he hopes to see some funding set aside for health care reform in the governor’s second draft of the spending plan, which will be released in May.

“If we’re going to do anything, even children’s health, we should have the first steps in the budget, or at least the first step. We’ll be looking to the governor’s May revise to see if he does that.”

~ • ~

In late February, the Legislature’s chief budget analyst—an independent, nonpartisan post—warned that an unexpected dip in tax revenues, and overly optimistic assumptions in Schwarzenegger’s January budget proposal, means a much larger fiscal problem.

This brings us to Sacramento, mid-March. Legislative budget subcommittees are holding hearings to hash out minute money details, and all sorts of special interest groups are lobbying the legislature’s leadership in an attempt to secure funding for their pet projects.

Laird’s budget staffers attend every Assembly hearing, as do staffers from the Legislative Analyst’s Office, and from the Department of Finance (the governor’s people). The lawmakers and government officials also listen to testimony from experts—for example, UCLA researchers studying California’s Proposition 36 drug treatment programs. They also hear from regular ol’ constituents—such as rural residents who want state monies to pay for some non-urban transportation projects.

In theory, the lawmakers and the governor’s representatives will use the public testimony to shape the next draft of the spending plan, and that will eventually be approved.

At a recent subcommittee meeting, the topic was taxes. On March 13, the Subcommittee on State Administration held a hearing to review some of the governor’s proposals for tax agency information and data exchange—very wonky stuff, and not the type of hearing that typically draws a big crowd.

Some back story: Earlier this year, the Legislature asked the Legislative Analyst’s Office to look into developing a single taxpayer identification number to help different agencies share information. In theory, this would benefit taxpayers, too, by simplifying the process and reducing needless duplication of forms.

Assemblyman Juan Arambula, a Democrat from Fresno, chairs the subcommittee. First, he asks representatives from the five agencies—the Franchise Tax Board, the State Board of Equalization, the Employment Development Department, the Department of Finance and the Legislative Analyst’s Office (all of which have handy acronyms) to come forward.

“There were concerns about a single-taxpayer identification number?” Arambula asks, looking down at the LAO’s report. “And there may be ways to get around those concerns by having a cross-referencing system?”

LAO staffer Crystal Taylor: “That is correct. A software overlay might help to achieve what we’re looking for.”

~ • ~

Assemblymember Gene Mullin, a Democrat from South San Francisco, asks a question. “Assuming I know what a software overlay is, and of course I don’t—the genesis is to ensure that everybody who owes money to the state pays?”

Taylor: “The other important side for you: You don’t want to go after and collect money from someone for whom the identity is wrong.”

“In this discussion about taxpayer identification numbers,” says committee member Chuck DeVore, R-Irvine, “it seems you’ve abandoned single taxpayer identification because of potential legal and privacy issues?”

Taylor: “Correct. Each of the tax agencies assign their own numbers for an individual.”

DeVore: “So what you’re looking at is a system to share the information with other agencies and not miss the low-hanging fruit—these individuals in the underground economy who are not paying taxes?”

Taylor: “Yes, we want to cross-reference individuals, by full names and addresses, and we want to find those individuals in the underground economy you are talking about.”

Then, Chair Arambula decides to pick (so to speak) the fruit metaphor and run with it. “You want to pick that low-lying fruit but not leave anything behind. Pick that low-lying fruit and be done with it.”

Huh?

More feeble attempts at humor ensue, amid more talk about the software overlay (which, for the record, isn’t a technical term; it’s an attempt by the LAO to “laymanize” the idea of sharing information between tax agencies). There are 10 similarly arcane items on the agenda.

The committees will continue to hold hearings until the governor releases his revised budget proposal on May 14, dubbed the May Revise. Then, they’ll hold more meetings on the new draft.

“The May Revise starts the Death March,” Laird says.

During the first week of June, the Conference Committee, also chaired by Laird, and made up of members from both the Assembly and the Senate, will meet for two weeks to reconcile the proposed spending bills from both houses.

Then the “Big Five” negotiations begin.

~ • ~

The Big Five meetings between Schwarzenegger and the two leaders from each house of the Legislature bring the budget negotiations to a close. Ideally, they’re finalized by midnight on June 30 in order to produce an on-time budget for the governor to sign.

“The subcommittees do the first 2,700 items, and the conference committee does about 300 items,” Laird says. “And the Big Five do the last 15 or 20.”

But sitting in on two budget subcommittee hearings on March 14, it seems like the Legislature and the governor have a long way to go to get to those final 15 or 20 items.

In one, a group of assemblymembers discusses the governor’s planned cuts to the California Coastal Commission’s budget. Last year’s state spending plan gave the Coastal Commission $100,000 to fund a pilot program to stream commission hearings via the Internet. The governor’s 2007-08 budget proposal does not include any future funding for the video streaming.

The Coastal Commission meets monthly, up and down the state from San Diego to Eureka. “Web streaming makes the commission meetings more accessible to the public,” says Sara Christie, the Commission’s legislative liaison. Without live streaming it’s likely that only the rich or retired will have access to meetings.

“Unless we get additional funding in this budget cycle, next February we will have to cancel the Web streaming and the service will end,” Christie says.

One of the assemblymembers makes a motion to approve the additional funding.

“We can’t support this proposal,” responds a staffer from the governor’s department of finance.

And so the motion is withdrawn. The budget item remains open, meaning that legislative Dems aren’t likely to let the governor cut the money.

“As you can see, there’s a sentiment of support from the committee,” says Chair Ira Ruskin, D-Los Altos. “But in the interest of good communication, we’ll wait.”

~ • ~

Down the hall, in another conference room, the Assembly Budget Subcommittee on Health and Human Service meets and debates funding for alcohol and drug programs.

The governor plans to cut millions of dollars intended for drug rehabilitation. Last year, state lawmakers approved $145 million for programs related to Proposition 36, which changed state sentencing laws to allow drug offenders to be sentenced to probation and drug treatment instead of prison.

In his 2007-08 spending plan, Schwarzenegger proposes to spend $120 million for Prop. 36 treatment, and recommends channeling all of it through a state program that requires counties to pay $1 of funds for every $9 of state funds.

The governor’s Department of Finance spokesperson tells the subcommitte that the proposal is intended to make Prop. 36 treatment better. Just about everyone else, however, disagrees.

Throngs of people who have traveled to Sacramento to speak on this topic—drug counselors, researchers, law enforcement officers and former drug users currently in Prop. 36 programs—tell the committee that cutting money for drug treatment is a very bad idea.

“We expect to see an increase in state prison costs if Prop. 36 funds are reduced,” says LAO staffer Mariama Grimes.

“About 35,000 individuals per year make it into treatment,” Nikos Leverenz, director of the Drug Policy Alliance, tells the subcommittee. “An estimated 72,000 people have completed treatment through Prop. 36 by the end of this year. It’s one-tenth the cost of incarceration, and half the cost of drug court.”

A drug court judge tells the panel that spending money on Prop. 36 programs will also save money on social services for women and kids. (Studies show that women of child-bearing age are more likely to use meth than men of the same age.) “Methamphetimine is our major drug,” he says. “If you work with this propulation, you are going to have cost savings on all of these other things, welfare and foster care.”

Based on a 2005 survey, counties need $209 million to fully fund Prop. 36 programs, so the governor’s planned reduction to drug treatment cuts deep. “Reject the governor’s proposal,” says a Los Angeles County Supervisor. “Augment the funding to $209 million.”

~ • ~

Schwarzenegger likes to say that California politics provide a model for “post-partisanship.” Sixty percent of voters voted for his reelection bid in 2006. Now he’s trying to use the post-partisanship idea to convince legislators in both parties to sign off on his plan to build more prisons and roads and provide health insurance for all Californians. The first step will be approving a state-spending plan.

“It’s the one place that could test the post-partisan theory,” Laird says. “Post-partisanship was majorly successful because legislative Democrats and the Republican governor came together on many agreements. But, it takes two-thirds in each house to pass the budget so it will have to be the legislative Republicans and the legislative Democrats—and the governor—coming to an agreement.”

That means dozens of budet committee meetings, plus closed-door negotiations. All three parties have to come to agreements about where to cut costs, how to make up for projected shortfalls in tax revenue, and when to repay the state’s debt—all by midnight, June 30. Laird’s going to have to keep on hustling. And he’s going to have to keep his sense of humor.