(This post comes courtesy of Steve Harmon, our man in Sacramento…)

The administration is knocking down rumors that Susan Kennedy, the all-powerful and influential chief of staff for Gov. Arnold Schwarzenegger, is preparing to leave the administration for a job with Mercury Public Affairs to shepherd the water bond campaign.

“No,” said Aaron McLear, spokesman for Schwarzenegger. “It’s not happening.”

But sources say it makes sense that she would head to a political firm with close ties to Schwarzenegger. With Schwarzenegger heading into his final year, many of his cabinet members and staffers are likely to bail on him seeking stable employment.

With Finance Director Mike Genest having announced his departure last week, Kennedy is likely to stay on at least until the administration assembles the budget in January, sources said. At that point, one source said, she would take her water expertise to Mercury, which is expected to be a prominent player in the bond campaign – if not the main campaign committee for it. Mercury most recently ran Schwarzenegger’s ballot measure campaign on redistricting.

“I was told by a good source – a very senior person from inside the horseshoe – six, seven weeks ago that once she got water done, she’d go to Mercury to make some money off the campaign,” one source said, asking not to be identified.

Credited as a central figure in ushering the water deal through the Legislature, Kennedy would be a perfect addition to Mercury. Steve Schmidt, who ran the governor’s re-election campaign in 2006 is a partner, as is Adam Mendelsohn, ex-Schwarzenegger communications director and deputy chief of staff under Kennedy.

Fabian Nunez, the former Democratic Assembly Speaker, is also a partner, and would welcome another Democrat in the Republican-leaning firm. Kennedy previously served as deputy chief of staff for Schwarzenegger’s predecessor, Gray Davis, and was a central player in water politics then, too.

One source familiar with the dynamics of the water bond pooh-poohed the speculation, saying it may have grown out of a lunch meeting that Kennedy had with stakeholders discussing a potential water bond campaign.

“Coming out of that, someone got the wrong idea,” said the source, who asked not to be identified because the source was not authorized to talk.

A national organization opposed to new restrictions on the citizen’s initiative process today gave Gov. Arnold Schwarzenegger kudos for vetoing four bills that would have, among other things, banned the use of paid signature-gatherers.

The Virginia-based Citizens in Charge Foundation awarded the governor with the November 2009 John Lilburne Award, so-named after a 17th Century pamphleteer and political activist.

Schwarzenegger helped coin the term post-partisanship. But Citizens in Charge describes itself as a transpartisan organization.

Uh, what’s a transpartisan?

I asked and the organization directed me to the Transpartisan Alliance’s Web site, where it says:

Transpartisanship acknowledges the validity of truths across a range of political perspectives and seeks to synthesize them into an inclusive, pragmatic whole beyond typical political dualities. In practice, transpartisan solutions emerge out of a new kind of public conversation that moves beyond polarization by applying proven methods of facilitated dialogue, deliberation and conflict resolution. In this way it is possible to achieve the ideal of a democratic republic by integrating the values of a democracy — freedom, equality, and a regard for the common good, with the values of a republic — order, responsibility and security.

Okay. That all sounds good, although I’m still trying to get my mind around the fact that there is such a thing as a Transpartisan Alliance.

Read on for the full press release.

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Gov. Arnold Schwarzenegger spoke at the Georgetown University McDonough School of Business Gala in celebration of a new building’s opening last night in Washington, D.C..

McDonough School Dean George Daly also presented Schwarzenegger with the school’s Dean’s Medal, “which is the highest honor bestowed by the dean,” according to news releases from the school and the governor. The school says former recipients have included Prince Philipp of Liechtenstein; former Secretary of Commerce Carlos Gutierrez; and Ann Misiaszek Sarnoff, chief operating officer of the Women’s National Basketball Association.

I contacted Teresa Mannix, the school’s media relations director, to inquire about whether there are any criteria for this honor, or whether it’s basically an honorary award bestowed upon notable people when they come to speak at the school. After all, it seems a little puzzling for a distinguished business school to bestow its highest honor upon a chief executive whose “business entity” — the State of California — is in such a severe state of fiscal disarray, and who seems to have lost the confidence of his “board of directors” — the people who elected him.

That would be like the National Park Trust giving an award to someone for leadership and innovation in protecting public lands, just one day after that same someone announced state park closures due to budget cuts. Oh, wait – that happened, too.

Mannix’s response is that the medal “recognizes those who have distinguished themselves in various fields. It is not bestowed on all of our notable speakers.”

There you have it – “distinguished.”

Assemblyman Tom Ammiano, D-San Francisco, seemed to accept Gov. Arnold Schwarzenegger’s encoded upbraiding – hidden in an Oct. 12 veto message, responding to Ammiano’s Oct. 7 invitation to “kiss my gay ass” – with bemused resignation this morning.

He called it “a very creative way of exercising veto power,” and said he’ll reintroduce his bill – dealing with financing mechanisms for the Port of San Francisco – next year despite being “very disapponted” by this veto.

“I guess the governor is feeling his oats,” Ammiano said, discounting any possibility that the message was coincidental. “I feel there was a point to the way it was designed, yes.”

Ammiano took questions about the matter during a news conference before an informational hearing about marijuana legalization, on which he introduced a bill earlier this year. Asked whether he believed Schwarzenegger would sign such a bill, he quipped, “It would be an interesting veto message, wouldn’t it? Rich in potential.”

Almost $18.3 million in American Recovery and Reinvestment Act economic stimulus money and state funds has been doled out to East Bay agencies for water quality improvement projects, Gov. Arnold Schwarzenegger touted today.

It’s part of $717 million in such funding for 160 projects statewide that the governor says will help stimulate the state’s economy by saving and creating jobs while protecting public health and the environment.

“My Administration awarded this funding in record time to boost our state’s economy and get Californians back to work. In fact, the State Water Board approved its first Recovery Act project the very same day it received funding from Washington,” he said in his news release.

The Delta Diablo Sanitation District gets $6,405,136 for its Antioch Recycled Water Project; Oakland gets $3.45 million for removal of stormwater pollutants at Lake Merritt and the Oakland Estuary, and $1.3 million more for a rainwater harvesting program; Piedmont gets $4,171,500 for a sewer rehabilitation project; and Alameda gets $750,000 for installation of mechanical trash racks at three stormwater pump stations.

And the Association of Bay Area Governments (ABAG) gets $1,801,010 to implement its “Taking Action for Clean Water” partnership to reduce sediment, PCBs and pesticides in local waterways, the Bay and the adjacent coastal ocean, as well as $392,000 for the El Cerrito Green Streets program.

Haven’t had enough of Gov. Arnold Schwarzenegger in the last few weeks? (Months? Years?) Well, if you’re part of the 27 percent of voters who still like him and you’ve got enough moolah to spring for premium cable, you can get your fill tomorrow, Saturday, Oct. 17, as Encore presents a daylong Arnold-a-thon:

What, no “Hercules in New York?” Forget it, I’m boycotting.

State Senate President pro Tem Darrell Steinberg is trying to land a one-two punch on Gov. Arnold Schwarzenegger’s three-day-a-month furloughs of state employees.

Steinberg, D-Sacramento, and Ken Jacobs, chairman of the University of California Berkeley Center for Labor Research and Education, will hold a news conference tomorrow at the State Capitol to release a study on “The High Cost of Furloughs,” which shows the governor’s three-day-a-month furlough program saves less than anticipated, offset by less revenue and higher costs in future years, while dragging down the Sacramento region’s already struggling economy.

Earlier today, Steinberg rolled out a different study from the nonpartisan state Senate Office of Oversight and Outcomes which found furlough savings aren’t being realized for at least a third of the roughly 100,000 state employees paid from the general fund with round-the-clock jobs; the furlough policy is just pushing labor costs to future years while adding more costs.

“This report is further confirmation that the administration’s furlough program was poorly thought out and will not deliver long-term savings for the general fund,” Steinberg said of this study. “In round-the-clock operations like prisons and state developmental centers, the furlough program is not reducing hours over the long-term, it is simply deferring paychecks.”

“Furloughs in Round-the-Clock Operations: Savings are Illusory,” analyzed payroll data from the State Controller’s Office and interviews with top prison, developmental services and mental health officials. Among the findings Steinberg is touting:

In round-the-clock institutions, employees in positions that must be filled day and night generally aren’t taking off three days per month; while absorbing the 14 percent reduction in pay, they’re working the “furlough” days and banking time to be taken off later on. In the prisons, which employ 70 percent of all state workers paid by the general fund, officials say the long-term cost of furloughs is greater than the savings; corrections officials say they were told by the administration that short-term payroll savings are more important than future liabilities. Correctional workers banked 1.5 million furlough hours between February and August this year; most are correctional officers, and at $34.91 an hour, that’s a future liability of at least $52 million.

When correctional officers do take time off, they generally use furlough days instead of vacation days, so from February through August, the number of unused vacation days accrued by correctional officers jumped 500 percent – a potential boondoggle for future prison staffing, and costlier because many workers will be at a higher pay rate when they finally do use their vacation time.

Furloughs fail to save the $108 million projected by the administration in the prison healthcare system, according to the court-appointed receivership now that system; the costs of paying overtime and hiring private workers to fill in for furloughed workers will exceed any savings. In fact, the court-appointed receiver says furloughs are projected to increase costs within the prison health care system by $37 million to $47 million this year.

Similar bankings of furlough and vacation time are happening in California’s dozen mental hospitals and developmental centers, creating the same kinds of future liabilities.

As the governor wielded his pen last night, state lawmakers from Alameda County saw victories on issues such as human trafficking, medical insurance recission and traffic congestion as well as defeats on issues such as ballot measure petition reform, trade agreements and electronic cigarettes.

Follow me after the jump for details on some of the winners and losers…
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Gov. Arnold Schwarzenegger today signed 89 bills despite a threat to veto 700 pending pieces of legislation hostage unless top leaders reach a water deal by midnight.

He did veto 94 bills but he nixed them on their merits rather than as part of a promised blanket rejection of most of the Legislature’s work of the past year.

The Big Five — the governor and the top leaders of the Republican and Democratic members of the legislature — were still meeting as of 4:15 p.m. in an effort to reach an accord. The governor has until midnight tonight to sign or veto the 704 bills that have been sent to his office.

As expected, the governor signed bills that would have created financial hardships in the state if they had been vetoed, including Senate Bill 19 authored by state Sen. Joe Simitian, D-Palo Alto, which will establish links between student achievement data and teacher and principal data. It is a requirement of federal stimulus dollars in the federal program called “The Race to the Top.”

Schwarzenegger also signed  bill that implements a number of reforms in the state prison system designed to save about $280 million.

Among East Bay legislators bills that were signed into law include state Sen. Mark DeSaulnier’s Senate Bill 147, which creates career technical courses at the Californa State University system and Senate Bill 702, which requires personnel in health clubs’ child care centers to follow guidelines designed to shield children from pedophiles.

He also signed a bill by Assemblywoman Joan Buchanan, D-Alamo, that will place on the Web employers’ workers compensation insurance status. It will allow workers to know whether or not a potential employer has insurance.

Read on to see the full legislative update from Schwarzenegger’s office:

Republican National Committee Chairman Michael Steele:

“The real question Americans are asking is, ‘What has President Obama actually accomplished?’ It is unfortunate that the president’s star power has outshined tireless advocates who have made real achievements working towards peace and human rights. One thing is certain – President Obama won’t be receiving any awards from Americans for job creation, fiscal responsibility, or backing up rhetoric with concrete action.”

Gov. Arnold Schwarzenegger:

“Maria and I applaud President Obama for winning the 2009 Nobel Peace Prize. The President has consistently shown that he is committed to reaching out to other nations and positioning America to once again be the global leader for peace and prosperity. This is a great honor for our country and reminds us all of the promise our nation holds. I look forward to working with him to address future challenges facing our nation. On behalf of all Californians, I congratulate President Obama for winning this inspiring award.”

Lt. Gov. and 10th Congressional District candidate John Garamendi:

“I want to congratulate President Obama for receiving the Nobel Peace Prize. He has changed the tone of the worldwide debate on international issues including reducing nuclear arms and building better international relations based on mutual desire to improve economic and social conditions in all countries. His policy is changing America’s relationship with the world, a change that will foster cooperation and peace.”

U.S. Sen. Barbara Boxer, D-Calif.:

“While this award was unexpected, I think it is a testament to President Obama’s extraordinary ability to inspire people from across the globe to come together and share a vision of a brighter, safer and more prosperous world. With the election of President Obama, we started America back on a path to regaining our status as a beacon of light for the world. Now it is crucial that we come together across party lines to make that promise a reality. The president was right in his humble response to describe this award as an affirmation of America’s leadership and a call to action to address the major challenges of our time.”

U.S. Sen. Dianne Feinstein, D-Calif.:

“Today at the White House I had the privilege of personally congratulating President Obama for receiving the Nobel Peace Prize. I believe the Nobel Committee’s decision reflects the fact that the United States has restored its credibility with the international community. It signifies that the goals articulated by President Obama have resounded with the rest of the world.”

UPDATE @ 2:22 P.M.: A few more…

Former Arkansas Governor and 2008 GOP primary presidential candidate Mike Huckabee:

“There will be an outcry from those on the right who will say that Obama’s nomination, made two weeks into his Presidency, is impossible to justify but I think such an outcry will sound like right-wing whining. The better response is simply to allow those on the left to explain what he did in his first two weeks as President that merited such recognition.”

Minnesota Gov. Tim Pawlenty, a Republican:

“I would say regardless of the circumstances, congratulations to President Obama for winning the Nobel Prize. I know there will be some people who are saying ‘Was it based on good intentions and thoughts or is it going to be based on good results?’ But I think the appropriate response is when anybody wins a Nobel Prize that is a very noteworthy development and designation and I think the appropriate response is to say ‘Congratulations.”