Staring down the $24.3 billion budget hole, the state’s facing cataclysmic cuts – slashing school funding, the wholesale elimination of welfare payments and medical coverage to kids, closing 80 percent of state parks and laying off some 5,000 state workers, among other proposals.

“California’s day of reckoning is here,” Schwarzenegger told a join session of the Legislature on June 2 before the Budget Conference Committee met later in the day.

“I know the consequences of these cuts are not just dollars,” the governor continued. “I see the faces behind those dollars. I see the children whose teacher will be laid-off. I see the Alzheimer’s’ patients losing some of their In-Home Support Services. I see the firefighters and police officers who will lose their jobs… It’s an awful feeling. But we have no choice. Our wallet is empty.”

This is why, according to some, it’s time for wholesale change.

The day after Californians voted down a series of budget-related ballot measures, a group of business leaders and political reformers formally launched a campaign to call a constitutional convention – the state’s first in more than 130 years.

“California’s government suffers from drastic dysfunction – our prisons overflow, our water system teeters on collapse, our once proud schools are criminally poor, our financing system is bankrupt, our democracy produces ideologically extreme legislators who can pass neither budget nor reforms, and we have no recourse in the system to right these wrongs,” wrote Jim Wunderman, in an editorial. Wunderman is the president and CEO of the Bay Area Council, a business group leading the charge to call a convention. “It is our duty to declare that our California government is not only broken, it has become destructive to our future. Therefore, are we not obligated to nullify our government and institute a new one?”

If lawmakers don’t act, the Bay Area Council says it will collect signatures to put two initiatives on the November 2010 ballot. One would authorize voters to call a convention directly (without a two-thirds vote of the Legislature), and the second would choose 400 residents to serve as “citizen delegates” at the convention, which, presumably would deal with issues including the structure of government, campaign finance, term limits, the budget process and two-thirds legislative vote requirement to pass a budget, and the revenue relationship between local and state government.

Recommended changes coming out of a convention would need to be ratified by voters – probably on the 2012 ballot.

State Sen. Mark DeSaulnier (D-Concord) introduced legislation, currently in committee, calling for a constitutional convention. “The initiative process in California – while important to government for the people and by the people – has created a Winchester House of budget constraints that don’t connect,” he says on his website. “Meanwhile we’ve allowed the legislative minority to wield a position of power over the budget process that is unequal to their elected numbers or their popular support. A careful, targeted constitutional convention might provide the tools we need.”

It would also cost the state money. A 2008 constitutional convention in Illinois cost $23 million.

“Who’s going to pay for it?” asks Democratic Central Coast Assemblyman Bill Monning. “I think it would fall on its face with the $24 billion deficit right now. There are virtually no bills that are going to pass the assembly or the senate that cost the state money.”

A less-costly, more time-efficient way to fix the state’s budget process, Monning says, may be to put specific issues – changing the two-thirds budget vote requirement to a simple majority, or overturning Proposition 13, the property tax limit enacted by voters in 1978, for example – to a vote of the people in 2010.

“It’s a more precise way to put a California constitutional amendment before voters,” he says. “A convention takes more time, it’s less certain as far as scope, and it has to go to voters twice – once to convene it and then its proposed constitutional amendments have to go back to voters.”