Josef Scaylea/Corbis

In the generation after World War II, California, always well-endowed in its climate and natural beauty, became an exemplar not only for its universities and its huge investment in schools, parks, roads, and water systems, but for the modern, professional government that the state established to oversee that investment. Those progressive social policies were enacted under both Republican and Democratic governors, and by legislators of both parties. Now, 40 years on, they seem almost quaint. Later, after things had descended into ugly and spiteful partisanship, some of those legislators, by then long retired, would get together and reminisce fondly about the good old days when they could comfortably work together, even when they disagreed.

During this time, along with the federal government, California created major new flood control and water delivery systems. It bought and developed thousands of acres of new parklands, and nurtured public institutions that were unmatched anywhere on earth. In the mid-1960s, the state ranked among the top ten in the nation in the amount it spent per pupil in its public schools; its per capita investment in its infrastructure was among the highest in the nation.

But perhaps the greatest symbol of the era was higher education. Nine new state college campuses opened between 1957 and 1966. Beginning as the chancellor at Berkeley in the 1950s, Clark Kerr stockpiled academic stars against the time when he predicted - correctly - that the rising tide of enrollment would require them. In 1964, for the first time ever, the American Council on Education rated Berkeley over Harvard as "the best balanced distinguished university in the country." By the end of his tenure in 1967, UC was not just serving students or knowledge; it was driving economic development of the highest order. Stanford and Berkeley were the root soil from which Silicon Valley grew. The universities, said Kerr, were "bait to be dangled in front of industry, with drawing power greater than low taxes or cheap labor."

Forty years on, the optimism of the 1950s and 1960s seems a sentimental echo, barely remembered, of a long-lost past. Early in 2005, as one indicator, the non-partisan Governing magazine gave California government a C-minus rating, tying the Golden State with Alabama as the state with the poorest performance in the nation in public management, infrastructure, and other major governing characteristics. By the 1990s, California had slipped below the national average and, in most major categories, far below average in virtually every measure of governance and public services, including the condition of its highways and its spending on elementary and secondary education, whose students' scores on national tests were among the lowest in the country.

Worse, the state's ability to govern itself was tied in knots by a succession of ballot initiatives: legislative term limits; tax and spending limitations combined with complex mandatory spending formulas for schools putting roughly 40 percent of the state budget beyond the discretion of the legislature, which in turn caused the legislature to seize local property tax money, leading to cuts in local services and, ultimately, another ballot measure pushed by cities and counties to prevent future legislative raids on their money.

How can a state that has locked itself into such constraints, but whose citizens nonetheless continue to demand high levels of public services, cope with the new California and the new world that's grown around it? Equally important, to what extent has the rise of that new California driven the decline in the public's willingness to tax itself and to trust its government? By the beginning of 2005, the legislature and two governors, trying to reconcile pressure for continued high levels of services with a generation of tax limits, five years of tax cuts and the economic blows inflicted by the recession of 2001- 2003, had run up huge deficits that they papered over with creative financing and a record $15 billion-plus in loans.

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