Last week's failed ballot propositions in California set off Paul Krugman, who weighs in with a nice overview of the budget mess, sprinkled with his usual doomsday scenarios about political polarization (which somehow ends up always being the fault of the right).
Separately, Arnold Schwarzenegger laid out a few clear points about why the budget process seems to be hopelessly broken, then apparently closes with a reluctance to revisit Proposition 13 and the caps on property taxes. Krugman points out that Prop 13, which basically froze property tax assessments and thus keeps taxes low on established homeowners, makes the budget extremely sensitive to the income tax, which fluctuates a lot.
A stable revenue stream for investments like human capital and probably state infrastructure would seem to be much preferred to an unstable one. One wonders how much human capital flows into California from locations where it is presumably financed more steadily.