More than a quarter-century later, California's politicians are still struggling with the fiscal effects of Proposition 13, the landmark property tax measure enacted by voters in 1978.

The so-called "tax revolt" that anti-tax crusaders Howard Jarvis and Paul Gann ignited may be, however, historically less significant than another impact of their drive to slash and limit property taxes. Unwittingly, perhaps, they established the initiative petition as California's most powerful political policy tool - one that Gov. Arnold Schwarzenegger is using to telling effect.

Although the initiative - which allows voters to make law directly without going through the Legislature - had been in the state constitution for more than 60 years, it had been used only sporadically before Jarvis and Gann employed it to push Proposition 13 onto the 1978 ballot.

As it happened, Jarvis and Gann also demonstrated the potential power of the initiative at the precise moment in the state's political history when internal and external factors were creating what became a fairly permanent gridlock in the legislative process. Sweeping economic and social changes and population growth were creating myriad political policy issues, but the Legislature was imploding, preoccupying itself with internal power games and largely ignoring external reality.

The increasingly obvious disconnect between real California and political California led to popular frustration that was fertile ground for initiatives promoted by various economic and social interest groups, each of which purported to solve a particular problem. By the late 1980s, voters were routinely dealing with a dozen or more measures at each election, and the phenomenon continued into the 1990s. School finance, insurance regulation, legislative term limits, public services for illegal immigrants, bilingual education, prison terms, affirmative action and Indian reservation gambling are just a few of the hot-button issues that confronted voters during the period.

Eventually, the Legislature found itself playing second fiddle, in terms of setting the political agenda, to what became a highly professional and technology-driven industry of initiative promoters, signature gatherers and campaign consultants. And at some point, initiatives and legislation became intertwined - the threat of the former driving the latter, and the latter sometimes used to blunt the impact of the former.

A case in point occurred in 2000, when then-Gov. Gray Davis agreed to give the schools another $1.8 billion a year in aid - which the state treasury could not truly afford - after the California Teachers Association had collected signatures on an initiative that would have boosted state school spending by about $6 billion a year. It was pure extortion, and the CTA dropped its measure after Davis offered the $1.8 billion. That's just one of many examples.

During the first months of his governorship, Schwarzenegger has played both ends of the initiative game in seeking deals with legislators and outside interest groups. He brilliantly used the threat of an initiative, bankrolled by employers, to cajole the Legislature into enacting a significant overhaul of the workers' compensation system, even though the chances of actually enacting such a ballot measure were not particularly high. Local government leaders, meanwhile, qualified an initiative for the November ballot to protect their revenue sources from state raids, which got Schwarzenegger's attention. Implicitly, he would strenuously oppose the measure if he could not forge a compromise agreement with city and county officials, and such a deal is in the works. Schwarzenegger also wants casino-owning Indian tribes to contribute substantially to the state treasury and, implicitly, might endorse a pending initiative that would end the Indians' monopoly on slot machines if tribes refuse to cooperate.

Overhauling the initiative process is a popular topic of academic forums - increasing the signature threshold and/or requiring measures to be first submitted to the Legislature are two oft-discussed changes - but that's unlikely to happen.

Rather, it will continue to be California's most powerful political tool, for better or worse.