This sounds much like pendulum arbitration, which tends to force each side to be reasonable - if it's not reasonable, then the other side wins. Voters have enacted so many limits on legislative budgeting (and I'm guilty of voting for some of them) that we might as well force voters to take responsibility for this.
My one hesitation is that the passage of Proposition 25 means only a majority and not two-thirds of the legislature is needed to pass a budget. Maybe that will start fixing things. OTOH, this is a way to put taxes and budgets on the same level, instead of requiring a two-thirds vote.
More generally, I think progressives need to get over the fact that conservatives sometimes win voter initiatives, and just get out there and fight for good ones, like Proposition 25 and medical marijuana have proven to be.
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