The Legislature swings back into action today with a lineup of issues that promises to be just as divisive as the budget battle that tied up the Assembly and state Senate for weeks before last month’s summer recess.

Back then, the fight was all about the budget. This time, it’s about water, prison reform, energy, jobs, political reform and taxes. And, yeah, the state budget.

With the clock ticking on his time in office, Gov. Arnold Schwarzenegger is desperate to put the budget in the rear-view mirror and move on to something else. But Republicans and Democrats already are scuffling over the agreement that purportedly solved – or at least papered over – the problems in California’s financial plan.

While Darrell Steinberg, the Democratic leader in the state Senate, has called for the Legislature to get to work on the non-budget problem of California, he stepped on that message last week by suing to overturn Schwarzenegger’s veto of $489 million in health and welfare funding the Legislature approved in the new budget.

The cuts came out of programs that Democrats have spent years building up, things like money for AIDS programs, health care for children and support for battered women, so it’s no surprise Steinberg and his party are pushing hard to restore the money.

But there’s plenty of politics involved. Since February, the Democrat-controlled Legislature has approved more than $30 billion in budget cuts, raising howls from the party’s progressive wing. By focusing their attack on Schwarzenegger’s vetoes – and ignoring the cuts they voted for — Democrats can cling to the moral high ground and tag the governor and Republicans as insensitive to the needs of the state’s most vulnerable residents, a certain theme for the 2010 elections.

At a news conference/political rally in front of a San Francisco health clinic last week, Steinberg also vowed to push for new taxes on things like tobacco and oil drilling, fund-raising plans guaranteed to spark a fight with Schwarzenegger and Republicans in the Legislature.

Then there’s the unfinished budget business of the Legislature. While both houses agreed last month to cut $1.2 billion from the prison system, there was no agreement about where exactly they would find that money. While Republicans argue that any plan that lets prisoners out early is an unacceptable threat to public safety, Schwarzenegger and Democrats want to make changes that would cut the prison population by some 27,000 inmates. With the federal courts already calling for a 43,000 reduction in the state prison population to relieve overcrowding, heated negotiations are guaranteed.

Even if the budget issues get settled, there will still be plenty of other topics where a middle ground is hard to find.

On the water issue, for example, the governor has a plan that calls for the return of the Peripheral Canal, which would reroute Sacramento River water around the Delta to provide more supply for Central Valley farmers and Southern California cities. California voters turned down a similar plan in 1982 and the canal idea is generally anathema to Northern California. Democrats have a bunch of bills dealing with water issues, but none of them include the new dam construction
environmentalists hate but that Schwarzenegger and Republicans say is absolutely needed to improve water storage.

As for energy, Democrats want to boost the use of renewable power sources such as solar, geothermal and wind, an effort supported by environmental groups but opposed by utilities, business groups and Republicans, who complain that the new requirements are unrealistic, too expensive and likely job killers.

Then there’s the question of political reform, which, as always, hinges on who’s defining reform. Democrats have called for an end to the two-thirds requirement to pass the state budget, but Republicans complain that’s just a way to allow the majority party to push through any budget they want.

The nastiest fight, however, could come after the Legislature’s regular session closes on Sept. 11. Schwarzenegger already plans to call a special session when his commission on the economy delivers its report on how to stabilize the state’s revenue stream, which is expected to come on Sept. 20.

The panel is looking at such hot-button issues as a flat-tax, carbon taxes on gasoline, diesel and jet fuel, a split-roll property tax, extending the sales tax to services, a value-added tax and various other suggestions that attempt to provide the best and most efficient way to keep the state solvent.

While there’s no way of telling what the final report or reports from the bipartisan commission will contain, it’s an easy bet that there will be something in it for everyone to hate. And fight about in the Legislature.

John Wildermuth is a longtime writer on California politics.