SACRAMENTO -- Karen Bass has drawn up a short agenda for her two-year reign as Assembly speaker that begins next week.

There are only three items:

* Balance a state budget that Gov. Arnold Schwarzenegger has declared is "$20 billion out of whack."

* Create a ballot initiative that would produce $300 million to $500 million annually for foster care programs.

* Restructure California's tax system to make it conform to the modern world. Actually, she wants to create a blue-ribbon commission of "the best and the brightest" to tackle taxes.

That's all.

Rather ambitious for someone who has held elective office for less than 3 1/2 years. But why not? The fiscal stuff -- an honestly balanced budget and creation of a more stable tax system -- are absolute musts if Sacramento is to once again provide the leadership required by a perpetually growing state. And foster care is Bass' passion.

By every indication, the 54-year-old Los Angeles Democrat is up to it.

A tenacious local activist, Bass founded the Community Coalition in 1990 to help South Los Angeles battle crime and addiction created by crack cocaine trafficking. After the 1992 riots, she fought to replace liquor stores with more wholesome enterprises.

In the Assembly, Speaker Fabian Nuñez (D-Los Angeles) selected Bass as majority floor leader and supported her candidacy for speaker. She'll be the nation's first African American woman to lead a legislative house.

"She'll be a very different speaker," predicts Raphael Sonenshein, a Cal State Fullerton political science professor who has followed her career. "She comes from a community organizing background. . . . She's a very pragmatic problem solver and doesn't look for ways to polarize issues. That bodes well for crossing party lines in Sacramento. Republicans will be pleasantly surprised. . . .

"She's calm, friendly, determined, humorous. People like to be around her."

The professor adds: "It's going to be interesting to have a woman. It'll be a slightly different style than a male speaker. She's going to be business-like, but a very nice person. 'Nice' often is mistaken for not being strong, but no one would mistake Karen for being weak. She's strong-minded."

On Bass' agenda, revamping the outmoded tax system is the most intriguing, the most needed and doubtless the most difficult because there'd likely be more tax losers than winners.

"I want to put together a bipartisan group of California's best and brightest to look at how to bring our tax structure up to date with the 21st century," the speaker-elect said in an interview. "We need to think outside the box.

"I know it might sound pie in the sky, but I often do things I'm told are 'pie in the sky.' That doesn't stop me from trying."

The goal is to make the state's revenue roller coaster less erratic in times of boom and bust.

Least stable is an income tax system that depends too heavily on the wealthy. Their incomes rise and fall steeply with the economy -- and therefore so do state budget deficits. In 2005, million-dollar earners comprised only one-third of 1% of all taxpayers but paid 36.5% of the income tax.

The sales tax was designed for the mid-20th century and ignores the fact that our economy increasingly relies on tax-exempt services. Even Schwarzenegger now is thinking about expanding the sales tax to some services, The Times reported Friday.

Judy Chu, chairman of the state Board of Equalization, says that if California expands the sales tax to services "frequently" taxed by other states, it could generate about $2.7 billion annually for the state. By taxing all services assessed by other states, it could haul in $8.8 billion.