“Not only is California’s credit rating the lowest in the United States, but we are ranked behind Kazakhstan, Mexico and many others,” Lockyer told a Political Science Association audience on the UC Berkeley campus last night. “We’re rated low, and that adds to our borrowing costs.”

California’s legislative session ended on August 31, with members of the Assembly and Senate unable to close a $19 billion deficit in California’s proposed $90 billion 2010-2011 budget. With outgoing Governor Arnold Schwarzenegger threatening to veto any budget that misses his goals on taxes and spending, California may be without a budget until well after the Nov. 2 election. The state has missed its June 15 budget deadline in 23 of the last 24 years, but previous budget impasses have never lasted past mid-September.

Lockyer didn’t say when he expected the budget to pass, but explained that the delay is exacting a price on the state. “It’s in the neighborhood of $50 million to $55 million more money that is spent every day than would be spent if the budget were adopted,” he said.

California’s constitution requires both the Senate and the Assembly to pass a budget by a two-thirds vote, making the state one of only three that require a “supermajority” to approve a budget. Even though Democrats have a large majority in both California houses, two Senate Republicans and five Republican Assembly members would have to vote with the Democrats in this session for a budget to pass. That hasn’t come close to happening.

The November’s ballot contains one possible long-term solution to this nearly annual legislative logjam, Lockyer said. Proposition 25 would enable the legislature to pass a budget by a majority vote and would penalize legislators for not meeting a budget deadline.

“One of the things I like about it is that if legislators don’t adopt a budget on time, they don’t get paid,” Lockyer said. “They forfeit their salaries for every day that there’s a stalemate.”

The treasurer was less optimistic about potential budget-balancing revenue from Proposition 19, the November California ballot initiative that calls for the legalization and taxation of marijuana. While Lockyer supported the legalization of medicinal marijuana during his 1990s tenure as California’s attorney general, he has joined the majority of statewide officials and candidates for state office—including Diane Feinstein, Barbara Boxer, Meg Whitman and Jerry Brown—in opposing Proposition 19.

“I don’t think legalizing marijuana would produce economic results and tax results that are substantial,” Lockyer said. “There are some economists who think there could be substantial public health costs with marijuana legalization.”

In a year when California expects competitive statewide elections for governor, lieutenant governor and attorney general, Lockyer is expected to easily win his bid for a second term as treasurer. While he supports fellow Democrat Jerry Brown in the governor’s race, he doubts Brown or Meg Whitman will change California’s byzantine budget process.

“But the thing that make me chuckle about Meg is that she controlled a small Board of Directors at EBay,” Lockyer said. “As governor, she’d have 120 legislators that hate her guts and think they can do a better job. That promises some interesting things out of Sacramento.”

Earlier this month, Perata destroyed his car tire driving through this pothole next to his campaign headquarters. He talked to neighbors and found out he wasn’t the only one who’d had this problem.

So Perata—a Sacramento powerbroker who represented Oakland and other East Bay cities in the Capitol for twelve years, including four as the top Senate Democrat—started calling city officials. Before long, he and his staff were speaking with the Public Works Department. Perata learned that the city had paved over the pothole six times in the past year, but not addressed the root of the problem: overflowing water from the sewer system beneath the street.

“That’s a management problem,” an exasperated Perata told a campaign audience last week in East Oakland, a district he represented in both state and county government. “Don’t blame the workers—it’s not their fault for filling a work order dutifully. But who’s the clown that hasn’t figured it out after six times? That’s a management problem.”

With a booming voice that doesn’t require a microphone at campaign events, Perata frequently describes himself as a “results guy, not a process guy.” In a blue suit and black mock turtleneck, Perata, 65, shook hands among old friends and new acquaintances in a mostly African-American audience at Youth Uprising, an leadership and job training center for teens and young adults near Castlemont High School in East Oakland. He’s quick to remember a constituent who came to him with a problem in county government many years ago or church ministers he’s worked with on social programs.

On the campaign trail, the invocation of the pothole problem is a standard Perata theme: What might seem like minor issues on Oakland streets reflect more serious deficiencies at City Hall. He told campaign audiences at both Youth Uprising and West Oakland’s Acorn apartments that the city has “no excuse” for not addressing garbage on the streets of these neighborhoods.

While not mentioning incumbent mayor Ron Dellums by name, Perata is suggesting that the city needs a firmer hand in City Hall and that he’s the one to provide it. “Good mayors in active cities go around and manage by driving and walking around,” Perata said, citing Chicago Mayor Richard Daley as an example. “They see things, write stuff down, and call the department people. The next morning, the mayor goes back out to see if the people did their jobs.”

Part of Perata’s pitch to voters is the idea he would bring a Chicago-like discipline to City Hall. But could he turn Oakland city government, a hodgepodge of 40 boards and commissions, into a well-oiled political machine? Like Perata, Dellums and former mayor Jerry Brown returned to Oakland from political positions outside the city with visions of changing the culture of Oakland government. Both mayors struggled to bend the bureaucracy in their direction. Perata acknowledges it’s hard to shift from Washington D.C. or Sacramento to Bay Area government, but sees former San Francisco mayor Willie Brown, who had previously served as California Assembly speaker, as someone who made the transition. “Willie Brown has his detractors, but the city worked when he was mayor,” Perata said.

In addition to citing Willie Brown, Perata takes a page from the New York mayor Rudy Giuliani playbook—talking about clean streets and top-down accountability. He also has some positive things to say about how current New York City mayor Michael Bloomberg has managed New York City.

Dellums has not said whether he intends to seek re-election, while city councilmember Jean Quan has declared herself a candidate and city councilmember Rebecca Kaplan is exploring a run. Perata has the longest record in elected office among the declared candidates in Oakland mayor’s race, dating back to his days as a county supervisor in the 1980s. He can call in favors from business and labor leaders he’s helped during his days in Sacramento, and can also point to legislative accomplishments he brokered in Sacramento on gun control, environmental regulations and health care that have benefited Oakland residents. Perata says he always found a way to align the broader interests of the California Democratic Party with his constituents’ needs in the East Bay.

“For the last 20 years, I’ve been as involved and aggressive on the fundamental issues in Oakland as anybody,” Perata said last week during an interview in Rockridge. “Almost everything I wanted to do in Sacramento that was beneficial to the state—whether it was on gun control or infant mortality—was twice as beneficial to my district.”

In campaign appearances, Perata presents himself as an agent of active government and accountability. People supporting Perata—including U.S. Senator Dianne Feinstein and the Oakland police union—point to his record of surviving state budget negotiations with Governor Arnold Schwarzenegger and a carjacking on Piedmont Avenue as signs of a decisive leader who’s cool under pressure.

But while Perata’s long history in office comes with its share of accomplishments, it also comes with its share of controversies. In a Bay Area that prides itself on its progressive politics and a play-nice ethos, Perata is often the bête noire of the blogosphere. Commenters on the San Francisco Chronicle or East Bay Express bristle at what they perceive as Perata’s heavy-handed style and penchant for wheeling and dealing. One East Bay group has set up an “Anyone But Don Perata for Mayor” website.

One deal Perata helped broker has already come under scrutiny in this mayoral campaign. During his tenure on the county Board of Supervisors, Perata backed the agreement between the city, the county, local developer Ed De Silva and Raiders owner Al Davis to renovate the Oakland Coliseum to entice the football team to return to the city in 1998. The city and county voted to guarantee $197 million in loans for the stadium renovations, and both Oakland and Alameda County are still servicing those debts.

“We don’t need a mayor whose funding for the developers left this city with a Raiders deal that will leave us paying $24 million a year until 2025,” Perata opponent Jean Quan said at a March campaign event. “If it weren’t for the Raiders deal, we’d have twice as many people working in our parks and working with our kids.”

At the height of his power in Sacramento, Perata faced a five-year FBI investigation into charges that Oakland lobbyist Lilly Hu funneled money into his campaigns. The FBI raided Perata’s house in 2004 as part of its investigation, but he was not charged when the investigation ended last year. He characterizes this episode as a politically motivated vendetta by the Bush administration when he was the most powerful Democrat in California state politics. He says the bottom line now is that he’s now the most vetted candidate in the mayor’s race, and that he’s proud to run on his record. He also doesn’t seem to mind that he’s acquired a reputation as something of a political tough guy, and a small picture of “The Godfather” Don Corleone sits on a shelf in Perata’s campaign office, next to pictures from community centers and social welfare programs he’s helped to establish.

“[The FBI] couldn’t even find the slimmest of a nail to hang their coat on, and they went through everything,” Perata said. “If all the other stuff I have done in my career—including a very good job as president pro tem under that pressure—is not a sufficient counterweight to an allegation never proved, then a person is not going to vote first, second or third anyway.”

The reference to “first, second or third” reflects a new wrinkle in Oakland politics. This year, the city’s elections will take place under instant runoff voting, eliminating the traditional June primary and moving all voting for city offices to November. Under the new system, voters will rank their choices for mayor, meaning Perata won’t have the opportunity to go one-on-one with any opponent. In this environment, blocs of voters who might otherwise split their votes could coalesce around the “Anyone but Perata” campaign.

In early campaigning, Perata has returned to Oakland districts he represented in state and county government

“Don Perata is someone who has high positive ratings and high negative ratings with voters, so he’s not going to get lots of second-preference votes,” said UC Berkeley political science professor Bruce Cain. “If it turns out to be a close race, those subtleties could matter.”

Even though the votes will be tallied in a new way under IRV, Oakland’s 2010 mayoral contest hinges on the traditional urban politics triumvirate of crime, education and economic development. Crime often takes center stage in Oakland—a city of 400,000 that has averaged 120 annual homicides over the last three years—and Perata is quick to point out that he likes the direction new police chief Anthony Batts has taken the department.

“I’ve told Batts that if I’m elected mayor, I’m backing his hand for the entire time he has a contract [through 2012],” Perata said. “He’s gone out and been in the community—heard from you and decided what needs to be done. I will support this chief and won’t second guess him.”

On public education, Perata—who was a schoolteacher in Alameda for 15 years before entering politics—has said that Oakland public schools can no longer operate on the “old model.” He has said he thinks that Proposition 98—the 1988 California law that determines public school funding under a strict formula—has harmed public education in California. He says the federal and state budget shortfalls mean Oakland will not be able to look to Sacramento or Washington D.C. for more funds, even though the Oakland Unified School District is operating at an $80 million deficit in 2010 and facing teacher strikes. Perata says that OUSD needs to be “smaller and more diverse in its program offerings” as the number of students has declined from 55,000 to 37,000 in the last decade. Despite this exodus of students out of the system, Perata says OUSD superintendent Tony Smith has the right ideas about partnership between the city government and the school district.

“I think this new superintendent is the right man for the job at the right time,” Perata said. “The city and the school district should be partners. We should be sharing afterschool programs, facilities, libraries—all these things should be done in common.”

In making his play as the candidate best positioned to jumpstart Oakland’s economy, Perata has already started soliciting ideas from local business leaders. “For business to thrive in Oakland, the city needs political leadership that understands how to make the government machine work and breakdown barriers to economic growth,” says Carlos Plazola, president of the Oakland Builders’ Association, an organization that has not yet endorsed a mayoral candidate.

“I’m impressed with Don’s record of getting bureaucracies to move forward and his ability to deliver on commitments,” Plazola adds.

At many of these discussions with local business leaders, Perata has vowed to bring new energy and personnel into the City Economic Development Agency and says he sees great potential for economic development in health care.

“The one thing that Oakland has that no other city in the Bay Area has are four medical centers, with 15,000 people employed in those centers,” Perata said. “Those are major assets. As mayor, I would put together a hospital district. They’ve done in it Birmingham, they’ve done it in Cleveland, they’re doing it in Pittsburgh. Health care is going to be the big-ticket item in the future.”

On the campaign trail, Perata believes he can win votes across the city—including among Oakland’s African-Americans, who make up around 33 percent of the city’s population. “I’m the only announced candidate that can campaign everywhere equally and be held accountable for it,” Perata said. “I’ve represented the African-American community—which is the largest single constituency in Oakland—and I’ve always had very strong support there. I’ve run against black candidates in these districts and beaten them.”

Perata’s supporters among the city’s African-American leaders include Nate Miley, an Oakland representative on the County Board of Supervisors. Miley was on the City Council that supported Oakland’s “strong mayor” initiative in 1998, and he said that Perata was ideally suited to lead city government under this system.

“Don Perata will be the first person as mayor to exercise that office the way it should be exercised. He’ll roll up his sleeves and concentrate on the welfare and well-being of the city,” Miley said at a Perata campaign event. “Some good things have happened in the administrations of Jerry Brown and Ron Dellums, but I think Don will drive the ball home. He’ll bring the city forward.”

Without a major African-American candidate in the race at this point, Perata won’t be the only one vying for support among one of the city’s largest and most active political constituencies. Jean Quan has already received the endorsement of Oakland’s State Assemblyman Sandré Swanson, a former Dellums colleague who is now Quan’s campaign co-chair. And Geoffrey Pete, vice chairman of the Oakland Black Caucus that recruited Dellums to run for mayor, told the Oakland Tribune he’d be inclined to support Kaplan if Dellums doesn’t run. “I think Kaplan can be solid enough on the African-American issues to win a sizable portion of the African-American constituency,” Pete said. “I think she is the candidate for the future of the city of Oakland.”

Oakland’s transition to IRV could intersect with the city’s diverse electorate in unpredictable ways. Under instant runoff voting—where individuals don’t have to put all their electoral eggs in one basket—candidates may “microtarget” Oakland voters as never before. For instance, women voters make up more than 53 percent of Oakland’s electorate, and Oakland has never had a woman mayor. Jean Quan—and Rebecca Kaplan, if she runs—may make that appeal to voters.

Back in front of Perata headquarters on Oakland Avenue in mid-April, East Bay Municipal Utility District and Oakland Public Works trucks descended on the pothole. They’d removed manhole covers and tested sewage pipes. It’s not clear that the Oakland city government can come running every time Perata calls—even if he wins the mayor’s office next year—but he’s taking it as an encouraging first step.

“I believe my political skill set is ideally suited to solve problems—so much of this is about persuasion,” he said. “You sweat the small stuff and when it comes to the big stuff, you’ll get it right. People will follow you.”

The estimates come from a new economic study commissioned by Let’s Go Oakland as part of the effort to keep the A’s from decamping to San Jose. In addition to new jobs, the study projected property values around the new stadium would increase by $4.7 billion and $2.6 billion in total economic activity would be created in the next 30 years.

“The investment that the city ultimately is going to make — the report demonstrates that the city will receive a return on that investment,” said Doug Boxer, co-founder of the Let’s Go Oakland campaign.

Mayor Ron Dellums, who also spoke at the press conference where the study was released, voiced his support for the continued efforts to keep the A’s in Oakland. “Baseball is synonymous with Oakland,” Dellums said. “For that reason, we have reached out in a very diligent way to keep the Oakland A’s.”

Dellums spokesman Paul Rose said the city has been in constant contact with Major League Baseball about the three proposed stadium sites the city has come up with. The three sites are all waterfront locations in the Jack London Square area, which is an ideal area for a stadium said Claude Gruen, lead author of the study by Gruen, Gruen + Associates. “We’ve got BART in… we have the roads in, we have the freeway, we have access parking capacity on the waterfront,” Gruen said.

The study also examined the potential economic impact of the A’s leaving Oakland, projecting that Alameda County would lose 953 jobs and $32 million in total income. “I think (the A’s departing) leaves a void there that’s very difficult to measure,” Dellums said.

But according to Roger Noll, professor of economics at Stanford and author of the book Sports, Jobs and Taxes: The Economic Impact of Sports Teams and Stadiums, the economic impacts either way are greatly exaggerated. “Professional sports teams are not something that generate any business, particularly in the local area,” Noll said. “There’s virtually no spillover benefit to the rest of the community.”

Noll says losing the A’s wouldn’t have a significant impact on the finances of the local government or the local economy. “The reality is, the A’s have almost no financial impact one way or the other on Oakland, in the local area,” Noll said.

Supporters argue that a stadium would revitalize the Jack London Square area, and will stimulate the local economy in much the same way that ballparks in Denver, Baltimore and San Francisco did. Boxer cited a recent experience at a Colorado Rockies’ game as proof positive of what a new stadium could do for Oakland. “After the game, 31,000 people filled into lower downtown (Denver)… It’s just a tremendous atmosphere,” Boxer said. “This is what we can do for Oakland, if we can get baseball to agree that the A’s belong in Oakland.”

Despite Major League Baseball’s cooperation with Oakland, the A’s are not actively negotiating with the city. Owner Lew Wolff has said many times that the team exhausted every possibility with Oakland, and relocation is the best option for the A’s. Wolff favors building a new stadium in San Jose, where the A’s could solicit sponsorship deals from Silicon Valley companies.

San Jose’s local government has been favorable to a stadium, and Mayor Chuck Reed has met multiple times with Wolff. The city has purchased most of the 14 acres where the ballpark would be built, and John Weis, assistant executive director of the San Jose Redevelopment Agency, said the city is currently negotiating to buy the final two parcels of land needed.

However, one key roadblock remains in San Jose: Major League Baseball granted the San Francisco Giants territorial rights to Santa Clara County in the 1990s. Those rights would have to be rescinded in order for the A’s to move to San Jose, and the Giants have already stated they will not let them go easily.

But both San Jose and Oakland must bide their time until a special “blue ribbon” panel, set up by MLB Commissioner Bud Selig to investigate new ballpark locations for the A’s, issues its ruling. The three-person panel was formed more than a year ago, but no timetable has been set for its decision.

Dellums believes the stadium saga will be resolved soon. “We’re at a level of seriousness at this point, that makes me feel very good that over the next few months, we ought to be able to resolve this one way or another,” he said.

Although many signs point to the A’s departure from Oakland, including Wolff’s close relationship with Selig (the two were fraternity brothers at the University of Wisconsin), Dellums said he is cautiously optimistic that the city will keep its team. “I don’t think it’s too late at all… we’re still in the game,” Dellums said. “I believe these proposals are superior (to San Jose’s).”

Boxer agrees. “If the A’s were on their way to San Jose, if it was that done of a deal, then baseball would have said it a long time ago,” he said. “That’s why I’m optimistic.”

The Oakland A’s declined to comment on the report.