President
California is considered the classic "blue state" when it comes to the presidential race and this year is no exception. Field Poll, rightly considered the most accurate pollster in California, gave Obama a 22 point lead last week, 55%-33%. There is a stark inland-coastal divide here in CA - the coastal counties, which hold 71% of likely voters, favor Obama 60-28. The inland counties - places like Fresno, Bakersfield, San Bernardino-Riverside, favor McCain 47-44, but only comprise 29% of the likely electorate.
It was not always thus. Until 1992 California was a reliably red state in presidential elections, comprising a key part of both Richard Nixon's and Ronald Reagan's base. (Nixon was a California native, and Reagan got his start in elective office as California's governor from 1966 to 1974.) There seems little possibility of a return to Republicanism in presidential elections anytime soon. But on the state level, Republicans retain important power.

Ronald Reagan's campaign for governor in 1966 was a key moment in the development of conservative politics nationally and in CA. See this Reagan for Governor TV ad from 1966, promising to cut government spending to lower taxes
Governor
Since 1914 California has held its elections for governor in the middle of a presidential term, in an effort to decouple state politics from national trends. To some degree it has worked - California has gone "blue" in presidential elections, but since 1982 has elected Republicans as governor, with the exception of Democrat Gray Davis' term from 1998 until his recall in 2003.
Arnold Schwarzenegger was reelected in 2006 by a wide margin, 55%-38%, over weak Democratic candidate and former developer Phil Angelides. Arnold might seem like a lame duck, especially if Obama wins the White House on Tuesday. But he will be in office until January 2011, and still has considerable power over the state budget in particular.
The 2010 race will be most intense on the Democratic side, with a number of heavyweights lining up to contest the nomination. They include former governor and current state Attorney General Jerry Brown (served from 1974 to 1982 and is exempt from term limts laws passed after he left office); Senator Dianne Feinstein, San Francisco Mayor Gavin Newsom, Los Angeles Mayor Antonio Villaraigosa, and Lieutenant Governor John Garamendi. Feinstein and Villraigosa have not officially declared their candidacy, and a lot of speculation is focused on Feinstein - a moderate, almost DLC Democrat who progressives despise but who would likely win the nomination and the election. She will be 77 in 2010, which may cause her to stay out of the race and retire from the Senate (we hope) in 2012.
Arnold has a reputation for being socially liberal and being something of an environmentalist, although that is the product of no small amount of greenwashing. On economic and government matters, however, Arnold drinks deeply from the well of Milton Friedman and his administration is a textbook example of what Naomi Klein called the shock doctrine, especially on the budget.
The state budget deficit currently dominates California politics. Since 1978 California has suffered a structural revenue shortfall - our tax rate is artificially set too low to maintain basic services. Conservatives have had great success in ensuring that taxes are low to ensure spending is cut - see that Reagan 1966 ad - and have written into the state constitution a series of rules, like the infamous Proposition 13 that limits property taxes, which have the effect of creating permanent budget crisis.
This was exacerbated in 1998 when Republican governor Pete Wilson and far-right Republicans rammed through nearly $12 billion in tax cuts, using a temporary budget surplus produced by the dot-com boom as an excuse. When the result was a whopping $35 billion deficit in 2003, Republicans blamed Gray Davis for the problem and Californians agreed, recalling him and replacing him with Arnold.
At the center of Arnold's administration, then, is his maintenance of the conservative low tax agenda. His first act as governor was to cancel a return to the pre-1998 vehicle license tax. Costing about $150 per year per driver, it now costs the state $6 billion a year to maintain this tax cut, as the state reimburses local governments for the lost revenue.
Arnold's popularity has declined somewhat as a result of the budget crisis, and Arnold has had to soften his anti-tax rhetoric...just a bit. He is proposing a 1 cent sales tax increase, but also a $2-$4 billion cut in public education. The state plays a major role in education, health care, and transportation spending and Arnold has been determined to cut all of them.
State Legislature
Because 2008 is not a gubernatorial election year, the action in California state politics is in the Legislature. Democrats currently hold a clear majority in both houses (our Legislature is bicameral, with an 80-seat Assembly as the lower house and a 40-seat Senate as the upper house). However, owing to Proposition 13, a 2/3 vote of the Legislature is required to pass either a budget or a tax increase. Democrats have controlled both houses since 1970, but have not reached the 2/3 mark. That has allowed the Republican minority, comprised of Grover Norquist and Milton Friedman acolytes, to hold the state budget hostage.
In 2008 they held out for three months, refusing to agree to any budget that increased any taxes. They have broken with Arnold over this, and over Arnold's support of environmental legislation like AB 32, which mandates carbon emissions be reduced to 1990 levels by 2020. Arnold has no sway over the Republicans in the legislature, who demand massive and crippling spending cuts in the midst of a recession (they want far larger cuts than even Arnold is willing to contemplate). The budget deal that ended the 3-month standoff basically punted the budget until after the election.
Happily, that election is shaping up to be very nasty for the Republicans. Democrats need 7 seats in the Assembly to reach 2/3, and are competitive in at least 7 races. Three of them are likely victories for Dems - AD-15 in the Oakland suburbs, AD-78 in the San Diego suburbs, and AD-80 in the deserts of Palm Springs and Imperial County (near Yuma, AZ). The other four lie in Central Valley suburbs, which are traditionally Republican but have trended toward Democrats in recent years.
One complicating factor is that California legislative and Congressional districts have been heavily gerrymandered to stabilize party control of districts - ensuring that the division of seats in 2001 remains relatively stable. All 7 of the competitive races are taking place in districts drawn to favor Republicans, a sign of the strength of the Democratic wave nationally and in California.
Republicans are trying to respond with a two-pronged approach - downplaying their party affiliation (their ads and fliers omit the word "Republican") while also trying to rally their right-wing base. An billboard against Manuel Perez, the Democratic candidate in AD-80, provides some visual evidence of the strategy:

In the State Senate Democrats are only two seats away from a 2/3 majority. However, we are not likely to achieve that, thanks to a shocking deal. The leader of the Senate Democratic caucus is Don Perata of Oakland. He is being term-limited out of office this year (the state legislature has been subject to term limits of 6 and 8 years for the Assembly and Senate since 1990, limits the legislature's effectiveness).
In 2007 he cut a deal with Republican Abel Maldonado, who represents a district here on the Central Coast (including Monterey, San Luis Obispo, and part of Santa Barbara County). Maldonado is a moderate Republican who voted for the Democratic budget in 2007 in exchange for a promise from Perata, who as leader of the caucus controls funding for Democratic senate candidates, to refuse to support a Democratic challenge to Maldonado in 2008. Perata kept his word, dissuading several high-profile candidates from running even though our district, the 15th, has a Democratic registration advantage.
That leaves the 19th district, comprising Santa Barbara and Ventura, as the only competitive Senate seat. Hannah-Beth Jackson, a progressive Democrat, is in a tight race with Republican Tony Strickland for the seat.
Democrats are likely to come just short of a 2/3 majority in the Legislature, but the augmented majority might make it easier to pick off Republicans in the upcoming budget fight. It also sets Dems up to actually get a 2/3 majority in 2010.
Congress
I would be remiss if I did not mention some important California congressional races, one of which should have great interest to EuroTribbers. In the 46th Congressional District, located in Orange County (LA suburbs, where I was born and raised) Debbie Cook is mounting a strong challenge to longtime, extremely wingnutty Republican Congressman Dana Rohrabacher. Cook is currently mayor of Huntington Beach, and on the board of ASPO-USA.

Debbie Cook, photographed under the Huntington Beach pier (not my photo)
I have had the pleasure to meet and have extended conversations with Debbie Cook, who shared a panel with our own Jerome at the Netroots Nation convention in Austin back in July. She is more than just a peak oil and energy activist. She is a deeply democratic, progressive person who understands the need to solve our energy and economic crisis through widespread public engagement. She is critical of calls for "a new Apollo Program" on energy, instead pointing out that we need to help Californians change their basic living habits in order to achieve energy independence. She questioned the bailout and the war in Iraq, and understands the link between oil dependence and economic weakness.
Rohrabacher is a contrast. He once claimed global warming was the result of "dinosaur flatulence." He visited Sirhan Sirhan, Robert F. Kennedy's convicted assassin, trying to convince the world that RFK was killed as part of an "Arab conspiracy." Rohrabacher went to the meeting dressed in drag. He was an early supporter of the Taliban, as shown in the picture below (he's at right):

When I met him in the mid 1990s, as a recent high school grad, he ranted at me for a half hour about "the Chinese menace" - how "Red China" was determined to take over the USA from within, using their contacts at the Clinton White House.
How is Debbie Cook's message playing in famously conservative, car-centric Orange County? Quite well. No public polls have been conducted, but private polls show a VERY close race. Rohrabacher himself predicts he will lose if there is a heavy Obama turnout and a Democratic wave this year. That strikes me as accurate. High gas prices earlier this year made many Orange County residents receptive to her campaign, as has weariness with Republican politicians, especially crazy conservatives like Rohrabacher. The suburbs are restless, and that provides progressives an opportunity. If we are to get America off of oil and cured of the Anglo Disease, we need to be winning districts like this.
Cook can win this but it will be a race to watch Tuesday night.
California Democrats are also poised to pick up seats here in Northern California, including three seats in the rural northern half of the state. Other races in Southern California are winnable but close. If the wave is strong in CA we could pick up six Congressional seats. But it is the 46th and Debbie Cook that I am watching the closest.
Ballot Propositions
These races are actually the most intense here in California, and where I have spent the bulk of my time and effort this cycle. California differs from the federal government in that voters can pass laws and even constitutional amendments at the ballot box, whether they are citizen-initiated or placed on the ballot by the legislature.
These initiatives have come to dominate California politics. Proposition 13 was at the center of the right-wing attack on progressive taxation and government services. This year we have several important initiative races that will help determine the state's future.
The first is Proposition 1A, which would authorize $10 billion to build a high speed rail system linking San Francisco to Los Angeles via the Central Valley. I provided an overview of the proposal at Daily Kos, and of course in-depth discussion can be found at my California High Speed Rail Blog.

The California High Speed Rail Route Map. The lines to Sacramento and San Diego are going to be built in a second phase.
This project would seem like a no-brainer. California desperately needs improved passenger rail. Currently passenger rail in California is slow but successful. Ridership on Amtrak California trains sets monthly records and routes like the Pacific Surfliner and the Capitol Corridor are packed, standing room only in some cases. The SF to LA corridor does not have a passenger rail connection at all, certainly nothing high speed. The energy savings are self-evident.
Prop 1A and HSR would also provide a considerable economic stimulus to California, with some studies suggesting as many as 160,000 jobs being created by the construction alone (in both construction work and jobs created as a downstream effect of those construction jobs - waitresses, loan officers, etc). Numerous economists have argued strongly for infrastructure spending right now as both economic stimulus and a way to ease the financial crisis - which after all is happening because of underlying insolvency here in the United States. These economists include Lawrence Summers, Nouriel Roubini, Duncan Black, Dean Baker and Brad DeLong, and Nobel Laureate Paul Krugman.
However, their message has been drowned out by right-wingers who claim that the state's budget deficit and the economic crisis more broadly make this a bad time to float bonds and create new government spending. These claims then get repeated uncritically by a compliant media. I have taken to calling these people the new Hoovers for their preference for austerity measures, and have reminded Californians that we used bonds to build lasting infrastructure during the Depression, including the Golden Gate Bridge.
Unfortunately Californians seem to be listening to the new Hoovers. In August Prop 1A had a 55%-40% lead in the Field Poll. That has been whittled down to 47-42 in favor, with 11% undecided. Obama voters, Democrats, and voters under 35 strongly support Prop 1A, so if they show up in large numbers Prop 1A is likely to pass. However, the slippage in support is a disturbing sign that neo-Hooverism is taking deep root within the California electorate.
The other proposition I am closely involved with is Proposition 8. This is a constitutional amendment that would ban same sex marriage in California, which has been legal since the California Supreme Court overturned the previous ban in May 2008.
That ban was the product of another ballot proposition, Proposition 22, enacted in 2000. Since that was a law and not an amendment, the court had the power to overturn it. It is highly unlikely the California Supreme Court would have either the grounds or the will to overturn a constitutional amendment. If Prop 8 passes, same sex marriage rights will suffer a major setback, to put it mildly.
The campaign over Prop 8 is bitter and high-profile. Enormous sums of money have been raised - nearly $30 million on both sides. The Yes on 8 campaign (anti-gay) has received most of its contributions from the Mormon Church and from the Knights of Columbus, an organization of Catholic laymen. The No on 8 campaign has matched this fundraising, primarily from "small donors" - those giving less than $200 at a time. Both sides have saturated California televisions with their ads, including this recent ad from actor Samuel L. Jackson placing Prop 8 in the context of historic discrimination.
The polls show a VERY close race. A recent Field Poll shows 49% no, 44% yes which is tighter than the polls showed in September and is corroborated by other polls. Turnout will decide this one.
Which is where the problems come in. The Yes on 8 campaign is based out of California's right-wing megachurches, and they have a readymade get out the vote rally today - Sunday church services. The No on 8 campaign has not demonstrated a strong field operation and is getting a lot of behind the scenes criticism on their failure to provide better on the ground outreach. As with so many other races, we can win this - meaning Prop 8 is defeated - if we get a big Obama and young voter turnout. But two days out, that is not certain.

400 volunteers flood the No on 8 headquarters in San Francisco yesterday afternoon.
Conclusions
The Obama campaign has dominated Democratic and progressive attention spans here in California even though he holds an unassailable advantage in the state. That focus has made it difficult to get volunteers and money for the "downticket" races, Prop 8 aside. Calitics and the California Democratic Party have launched a "Stay for Change" action to try and convince people to NOT travel to swing states for Obama, but to stay in California and help progressives candidates and causes win.
Still, most Democratic and progressive causes are relying on an big turnout of voters motivated to cast a ballot for Obama here in California, who will help boost fortunes in the downticket races.
Party organizations are relatively weak in California, with the California Democratic Party undergoing its own evolution and strengthening. This will not likely be realized until 2010, however. 2008 is a building block for California, not a realigning election.
More information:
Courage Campaign California Progressive Voter Guide
Calitics
No on Prop 8
California High Speed Rail Blog
2008 Election Results - from the California Secretary of State

Carmel River State Beach, taken by me in May 2008. The Monterey Peninsula is rockier and more wooded than the stereotypical wide sandy beaches of Southern California, but we have some stunning beaches here too. The hillside in the background is Palo Corona, the northern extreme of Big Sur.