“When I am in California, I am not in the West. I am west of the West,” Teddy Roosevelt famously observed. The latest edition of the state budget meltdown – call it Dysfunctionality 2.0 – is a neat illustration of the contradictions inherent in the dream of the Golden State.

Most people in the state would loosely describe themselves as progressive on issues like protecting the environment, but holler like hell when anyone suggests they should support badly needed programs and basic services with their tax dollars.

PROGRESSIVE VALUES AND SOUND FINANCIAL STEWARDSHIP ARE NOT INCOMPATIBLE.

We have a Democratic-dominated Legislature held captive by a Republican minority. While various commissions come up with smart-sounding proposals, the economy continues lurching downward, furloughs are dispatched as casually as Internet spam, and the futile finger-pointing continues.

It’s a mark of just how bad the current crisis has become that progressive Democrats like John Laird, quoted by Weekly News Editor Jessica Lyons in this week’s cover story, yearn for the good old days of compromise epitomized by the likes of Pete Wilson and George Deukmejian.

The late, great California Assembly speaker Jesse “Big Daddy’’ Unruh, once said: “If you can’t drink a lobbyist’s whiskey, take his money, sleep with his women and still vote against him in the morning, you don’t belong in politics.’’

Willie Brown was famous for being able to sit down with friends and foes alike and cut a deal – sometimes on a cocktail napkin at Frank Fat’s restaurant in Sacramento – to keep the show on the road.

We need that kind of dealmaking ability now.

It’s an understatement to say that Gov. Schwarzenegger’s performance in the latest series of fiascos has been underwhelming, but he alone is not to blame.

As President Obama is fond of saying, the perfect is the enemy of the good. The Republicans who adamantly opposed any budget with any tax increase whatsoever are living in a Neverland that makes the late Michael Jackson’s former abode seem like a California cottage. Democrats who insisted on presenting a plan that they knew Schwarzenegger wouldn’t sign were delaying vital solutions to a problem that needs resolution now. And the voters who helped put the legislators in this fix by rejecting the last ballot measures that would have fixed – or at least put a Band-Aid – on the state’s drooping economy are living in denial.

It’s revealing that the measures were rejected by a narrower measure in Monterey County than in the rest of the state. Although this area has more than its share of problems, including a soaring unemployment rate, folks here seem to have a more realistic approach about what needs to be done than other areas of the state. The city of Monterey was even able to reinstate library services on Sunday, demonstrating that progressive values and sound financial stewardship are not incompatible.

It’s ironic that California should be in this particular fix when the rest of the country is in a mood to move past partisanship and toward problem solving: the approach Schwarzenegger promised originally.

The current dilemma is a direct reflection of the lousy economy, of course. But it’s also a reflection of the long-term costs of denial.

Proposition 13 may be the third rail of California politics – a subject way too hot to touch.

But whether or not it’s ever overturned, or even revised, the people in this state are going to have to come to terms with the fact that they have to pay the bill for the services they want – and manage our finances carefully – if we’re going to have anything resembling a sustainable future.

This business about closing state parks and shoving teachers, nurses and other needed workers under the bus amidst rhetoric about “bloated government bureaucracy’’ hearkens back to Reagan-era stereotypes of welfare Cadillacs and has got to end.

It insults the intelligence and legitimate aspirations of the people who live in, and love, this beautiful state.

Sooner or later, the economy will turn around. It always has, and there’s no evidence that recessions, anymore than false booms, are immune from the usual cycles.

But allowing the state’s revenue stream, and the fortunes of its employees and citizenry, to be dependent on the vagaries of the bond market is Gold Rush stuff. That worked out fine for John Sutter and a few of his friends, as well as for modern-day success stories like Steve Jobs and Steve Wozniak.

But it’s a model for dreams, not for governance.