Schwarzenegger proposes tax increase -- Gov. Arnold Schwarzenegger has proposed a temporary one-cent increase in the state sales tax for the next three years in exchange for long-term fixes he believes would solve the state's perennial budget woes, several sources familiar with the negotiations said Monday. The governor's proposal comes as he and lawmakers are 35 days into the fiscal year with no approved spending plan. Jim Sanders and Kevin Yamamura in the Sacramento Bee Evan Halper and Nancy Vogel in the Los Angeles Times -- 8/4/08

Republicans: Calif. budget deal still far off -- Democrats and Republicans painted starkly different pictures of the negotiations over how to solve California's $15.2 billion budget deficit on Monday, as the state entered the second month of its fiscal year without a spending plan. The four legislative leaders again failed to compromise on a spending plan after meeting Sunday evening with Gov. Arnold Schwarzenegger. JULIET WILLIAMS AP -- 8/4/08

Former state Sen. Martha Escutia fined by ethics agency -- Commission fines Escutia for failing to properly disclose payments made to her ex-husband's consulting firm. Former Gov. Gray Davis also fined for lapses in recall fund disclosures. Patrick McGreevy in the Los Angeles Times -- 8/4/08

Controller: State computer system not up to making pay cuts -- State Controller John Chiang said Monday an antiquated state computer system makes it impossible to adjust the state payroll quickly to issue minimum-wage checks to state workers. He said it would take at least six months to make the change. Kevin Yamamura in the Sacramento Bee -- 8/4/08

Gasoline prices fall again -- Crude oil futures drop, meaning more relief for consumers could be on the way. The Energy Department says the average gas price dipped to $3.88 a gallon nationally and $4.205 in California. Martin Zimmerman in the Los Angeles Times -- 8/4/08

Barack Obama shifts on tapping national oil reserves -- In a campaign speech in Michigan, the candidate suggested releasing oil from the emergency stockpile, a relief plan reminiscent of President Clinton's in 2000. Michael Muskal and Peter Nicholas in the Los Angeles Times -- 8/4/08

Robert Novak announces immediate retirement -- Conservative political commentator Robert Novak has announced his immediate retirement after being diagnosed with a brain tumor. The Chicago Sun-Times reported on its Web site Monday that Novak's prognosis is "dire." AP -- 8/4/08

Gavin on Working Honeymoon..with Garry South? -- Is Democratic San Francisco Mayor Gavin Newsom already putting together his team for that 2010 gubernatorial run? The newlywed mayor and his wife, Jennifer Siebel Newsom, were spotted in Malibu Saturday, honeymooning deep in lengthy conservation over frappucinos -- with Democratic uber-political consultant Garry South. Carla Marinucci Chronicle Politics Weblog -- 8/4/08

State legislators meet but make no progress on budget -- Gov. Arnold Schwarzenegger and legislative leaders convened Sunday night in hopes of ending a budget stalemate that is entering its sixth week, but they made no progress and dispersed after less than two hours, according to several participants. "We have some big, deep differences, but at least we were together and we'll just keep working through it," Assembly Republican leader Mike Villines of Clovis said after the meeting in the governor's Capitol office. The item is in the Los Angeles Times -- 8/4/08

Budget, slew of bills face California lawmakers -- California lawmakers return from their summer break today to deal with hundreds of bills in four hectic, final weeks of their 2008 session. There's also the matter of passing a state budget. For the 23rd time in the last 32 years, California has begun a new fiscal year without a budget, leaving it unable to pay its suppliers, fund some school programs and pay the salaries of elected officials and their staffs. It also has delayed payments to certain health-care providers that care for the poor. Steve Lawrence AP -- 8/4/08

Walters: Local officials also weigh new tax hikes -- As Gov. Arnold Schwarzenegger and legislators confront a projected $15.2 billion budget deficit and weigh whether to impose new taxes to close it, local governments throughout California are contemplating a wide array of new taxes to close their shortfalls or expand local services and facilities. Dan Walters in the Sacramento Bee -- 8/4/08

Skelton: 'Dance of Death' would revive budget process -- even weeks past their constitutional deadline for passing a state budget, legislators still are stumbling around. Why? Because they haven't yet done the "Dance of Death." That's the annual ritual in which one budget proposal after another is ceremoniously sacrificed on chamber floors until there's agreement on a single survivor. "Everybody dances around the fire. They throw stuff at us. We throw stuff at them. Everybody falls over dead, and we start all over again," is how a senior legislative staffer described it to me 15 years ago. George Skelton in the Los Angeles Times -- 8/4/08

California Budget Impasse Enters Eighth Week After Deadline -- California enters its eighth week after a budget deadline with no deal in sight between Republican and Democratic lawmakers on a spending plan, a delay that brings the nation's most populous state closer to having to slash services deeper and borrow at premium rates. JIM CARLTON in the Wall Street Journal -- 8/4/08

Horde lobbies as a big team -- There are days when Ellen Marie Corbett feels a bit like George Armstrong Custer. Custer, of course, was the 36-year-old U.S. Army lieutenant colonel who had the generally unpleasant experience, with his force of about 200 soldiers, of being overwhelmed and wiped out by about 2,000 Indians at the Battle of the Little Big Horn. Corbett is a 53-year-old Democratic state senator from a district that takes in parts of Alameda and Santa Clara counties. Instead of angry Cheyenne, Lakota and Arapaho, however, Corbett's nemeses are a small legion of lobbyists – "close to 20" by the senator's count – bent on derailing her unfortunately-numbered-if-you're-superstitious Senate Bill 1313. Steve Wiegand in the Sacramento Bee -- 8/4/08

Santa Cruz firebombs look familiar -- The devices used in two firebombings targeting UC Santa Cruz biologists are similar to some used in the past by animal rights activists, investigators said Sunday. The bombs were so powerful they were like "Molotov cocktails on steroids," said Santa Cruz police Capt. Steve Clark. Wyatt Buchanan and Demian Bulwa in the San Francisco Chronicle -- 8/4/08

Santa Cruz shaken after attacks on biomedical researchers -- A University of California-Santa Cruz biologist whose home was firebombed this weekend feared for his family's future on Sunday while a spokesman for a radical animal rights group said the attacks were the consequences for performing research on animals. Joshua Molina in the San Jose Mercury -- 8/4/08

Newcomer to Congress unafraid to rock boat -- On her first day in office, Rep. Jackie Speier criticized the Iraq war and John McCain, eliciting boos from Republicans. By her own count, three committee chairmen have chastised her for her questions during recent hearings. And her first bill won national attention with its effort to mandate lower speed limits to save gas. Frank Davies in the San Jose Mercury -- 8/4/08

Sacramento mayoral candidates expect to ride Obama's coattails -- Sen. Barack Obama has created a powerful wave of voter enthusiasm in Sacramento – one that both Mayor Heather Fargo and her rival, Kevin Johnson, hope to ride into office. The candidates each say Obama's presidential candidacy could help them more than their opponent. Johnson was an early supporter of Obama, while Fargo backed Hillary Clinton. But Fargo is the officially endorsed candidate of the local Democratic Party, which will be promoting her candidacy along with Obama's. Mary Lynne Vellinga in the Sacramento Bee -- 8/4/08

Housing Lenders Fear Bigger Wave of Loan Defaults -- The first wave of Americans to default on their home mortgages appears to be cresting, but a second, far larger one is quickly building. VIKAS BAJAJ in the New York Times -- 8/4/08

Companies Tap Pension Plans To Fund Executive Benefits -- At a time when scores of companies are freezing pensions for their workers, some are quietly converting their pension plans into resources to finance their executives' retirement benefits and pay. ELLEN E. SCHULTZ and THEO FRANCIS in the Wall Street Journal -- 8/4/08

Candidates' VP picks could decide the race -- This could be the presidential election when it really happens: No. 2 actually helps No. 1 get to be ... No. 1. Whether it's Democrat Barack Obama, who gets slammed by the GOP as untested, or Republican John McCain, who takes jabs that he's a George W. Bush third-term wannabe, both candidates need that special someone to fill out their resume. Carla Marinucci, Joe Garofoli in the San Francisco Chronicle -- 8/4/08

Who's in the running? -- Chronicle political writers Carla Marinucci and Joe Garofoli handicap possible nominees for vice president. The item is in the San Francisco Chronicle -- 8/4/08

Sacramento region making friends, becoming partners with a global giant -- Twice a week in Sacramento's Pocket area, a dozen preschoolers at Bergamo Montessori School make friends in Mandarin. "Zhao a zhao a zhao pengyou, zhao dao yi ge hao pengyou," they sing. "Looking, looking, looking for a friend, finally I find a good friend." Then they take a bow and shake hands. "Every little kid in China knows this song," said Heather Yu, a teacher in the preschool's Chinese immersion program. Stephen Magagnini in the Sacramento Bee -- 8/4/08

Farming's parched future -- In the Imperial Valley, wheat farmers such as Mark Osterkamp greatly increased the acreage they planted – and their water use – with an eye toward reaping big profits this year. Three hundred miles north, in the heart of California, nearly 50,000 acres of San Joaquin Valley cotton fields were left unplanted or abandoned by growers faced with severe water shortages, such as Fred Starrh. Michael Gardner and Mike Lee in the San Diego Union-Trib -- 8/4/08

Desalination plan going back to coastal panel -- The long-running tug of war between a developer and the California Coastal Commission staff over the state's first large-scale ocean-water desalination plant continues this week as the two sides wrangle over environmental issues. Michael Burge in the San Diego Union-Trib -- 8/4/08

Environmental groups undecided on high-speed rail plan -- California bullet-train enthusiasts risk losing support from key environmental groups because of a dispute over the train's route. Unless resolved soon, the conflict could pose problems for a high-speed rail bond measure on the November ballot. The Sierra Club and the Planning and Conservation League have not yet taken a position on Proposition 1, which would authorize $9.95 billion in state borrowing to jump-start the 800-mile rail. E.J. Schultz in the Sacramento Bee -- 8/4/08

Measure aims to fight traffic by curbing growth in Santa Monica -- Raising the specter of rampant development and a rising tide of street-choking traffic, a group of Santa Monica residents has begun pressuring friends and neighbors to vote in November for an initiative that would limit commercial construction for 15 years. Predictably, the Residents' Initiative to Fight Traffic, or RIFT, has created a schism in the city, where the desire to maintain the area's small-town scale and charms often conflicts with the need to create jobs and spur economic gains. Martha Groves in the Los Angeles Times -- 8/4/08

Though exempt, cops urged to go hands-free, too -- Milissa Santos spotted the San Jose cop in the next lane chatting on his cell phone as she drove down Meridian Avenue a couple of weeks ago. The sight made her curious and then a little peeved. The officer was holding the phone to his ear, gabbing away. Hey, she wondered, what about the hands-free law that went into effect July 1? Gary Richards in the San Jose Mercury -- 8/4/08

State considering laws modifying individual health insurance policies -- Seeking to salvage two years of efforts to completely remake California's health insurance system, Gov. Arnold Schwarzenegger and Democratic legislators are nearing deals intended to rein in costly, meager medical insurance policies sold directly to individuals. In the final weeks of the legislative session, they are negotiating measures that would limit insurer profits on individual plans, require plans to provide a minimum set of benefits and restrict insurers' ability to cancel policies retroactively. Jordan Rau in the Los Angeles Times -- 8/4/08

San Francisco pushes legislation to promote good health -- Last week, the San Francisco Board of Supervisors voted to make the city the first in the country to ban the sale of cigarettes in pharmacies such as Walgreens and Rite Aid. And that's only the city's latest effort to make us all healthier. Heather Knight in the San Francisco Chronicle -- 8/4/08

Startup uses video games to heal young people -- Like many health care startups, HopeLab of Redwood City thinks it has a compelling idea that can improve the health of millions of people. The nonprofit recommends parking patients in front of a video game. HopeLab, however, is trying to reinvent that sedentary pastime as a powerful means to improve the health habits of young people. Bernadette Tansey, Ryan Kim in the San Francisco Chronicle -- 8/4/08

Sheriff's deputy who was shot dead guarded highly dangerous inmates -- A Los Angeles County sheriff's deputy gunned down Saturday outside his boyhood home in Cypress Park had been assigned to guard the most dangerous inmates in the county, including members of the notorious Mexican Mafia gang, authorities said Sunday. Stuart Pfeifer and Tami Abdollah in the Los Angeles Times -- 8/4/08

Dream of a shrine dies with dreamer -- It's not uncommon in farm country to come across old-timers with a passion for preserving the implements of their trade. These are the folks who convert wooden wagon wheels into patio furniture and vintage tractors into mailbox stands or geranium planters. Frank Craig had that impulse, and authorities contend it cost him his life. Peter H. King in the Los Angeles Times -- 8/4/08

After father-son enlistment, faith helps mother stay strong -- As her son and his dad swore into the Army, Devie Olivas knew it would provide structure, direction and a chance for the men to catch up on lost time. But that didn't make letting go any easier. Jia-Rui Chong in the Los Angeles Times -- 8/4/08

Orange County sheriff collects volunteers' badges -- Retired postal worker John Reichardt was looking for a way to fill his free time when he joined the Orange County Sheriff's Department's volunteer program three years ago. The 68-year-old Santa Ana resident now works about 30 hours a week at John Wayne Airport, searching for unattended luggage, inspecting trucks carrying shipments into the airport and helping travelers negotiate their way through busy terminals. Stuart Pfeifer in the Los Angeles Times -- 8/4/08