Schwarzenegger postpones budget talks

SACRAMENTO, Calif. (AP) - Lawmakers' optimism about finally reaching a deal to close the state's $26.3 billion budget deficit on Sunday turned out to be wishful thinking as Gov. Arnold Schwarzenegger abruptly postponed talks.

Legislative leaders said they had been on the verge of bridging remaining pitfalls that include how much money to borrow from local governments, whether to guarantee that schools will be repaid money they lose during poor economic times and how much money to save for future budget emergencies.

Instead, they spent Sunday blaming each other for a scheduling meltdown that pushed the state's massive budget problems off for at least another day. Schwarzenegger rescheduled Sunday's bargaining session with the Legislature's four top leaders for Monday.

The delay comes as the state pays its bills with IOUs for the first time in nearly 20 years and as major credit agencies threaten the state's already basement-level bond rating. The dismal economy sent legislative leaders and Schwarzenegger back to the bargaining table just 4 1/2 months after they closed a previous $42 billion deficit.

A meeting had been set for Sunday evening, but Assembly Speaker Karen Bass said she might be delayed flying to Sacramento from her home in Los Angeles, so the governor pushed the meeting to Monday. Bass then said she could make the Sunday meeting on time. But by then, the plan had already been changed.

"I think it's just a scheduling conflict. I'm not sure why the speaker's office was giving conflicting information on her schedule," said Aaron McLear, a spokesman for the Republican governor.

McLear acknowledged that Schwarzenegger hadn't made the trip to Sacramento from his Brentwood home.

"Everyone is here but the governor," Bass told reporters at the Capitol Sunday evening.

"I don't have a plane, so I can't just have wheels-up whenever I choose to," she said in a pointed reference to Schwarzenegger's private jet.

Bass said she still expects a budget vote by Thursday despite Sunday's delay. "There's no big, looming issues. I'm hearing everything is looking good," she said.

Republican leaders would not comment.

"We're still on track to get a bipartisan agreement to balance our budget," said Jim Evans, a spokesman for Senate President Pro Tem Darrell Steinberg, a Democrat from Sacramento.

Aides to the governor and Legislature spent their weekend rushing to work out legislative language that could resolve the remaining issues in time for Sunday's aborted meeting.

Those include Schwarzenegger's plan to permit oil drilling from an existing rig off the Santa Barbara coast. The proposal opposed by many conservation groups would be the state's first new offshore oil project in more than 40 years.

"It's worth a couple billion dollars and has the added benefit of tearing down those oil rigs at the end, so it's good for the environment," McLear said Sunday. He said terms of the lease are still being worked out, but the drilling would likely run for 20 to 30 years.

Most of California government would continue to shut down for three Fridays each month through June because of employee furloughs ordered by Schwarzenegger. The three furlough days effectively reduce most state workers' pay by about 14 percent.

Legislative leaders also had hoped to work out the final details of borrowing $4 billion from local governments.

Cities and counties already are laying off firefighters and police officers because of their own budget problems, and some are threatening to sue if the state takes their money for its needs. Legislative leaders said they have no choice, however, once Republicans led by Schwarzenegger refused to consider raising state taxes or fees.

The leaders have a tentative deal to repay schools $9.5 billion in installments in future years without amending the state Constitution. The money was cut from schools last year, and Democrats and Schwarzenegger had differed on the legal and fiscal means to reimburse them under the requirements of voter-approved Proposition 98, which sets minimum funding levels for schools.