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Talks Resume On California’s Record-Long Budget Impasse

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California State Capitol in Sacramento (Justin Sullivan/Getty Images)

California State Capitol in Sacramento (Justin Sullivan/Getty Images)

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SACRAMENTO (AP) — Gov. Arnold Schwarzenegger and legislative leaders met after a two-day hiatus Thursday in an attempt to break the state’s budget impasse but failed to reach agreement on closing the $19 billion deficit.

Schwarzenegger press secretary Aaron McLear said the governor and the top lawmakers planned to meet again Friday.

Pension reform is among the key issues blocking a deal between the Republican governor and the leaders of both parties in the Assembly and Senate. The Republican governor is insisting on a legislative rollback of public employee benefits, while Democrats want the administration to work with unions through collective bargaining.

Legislative aides said the leaders put that issue aside for much of the day as they tried to reach agreement on less contentious portions of an agreement to close the state’s $19 billion deficit. The leaders had announced a week ago that they had a “framework” for a deal, but have been unable to come to a final accord to put before rank-and-file lawmakers.

“Every day they meet they get a little closer, and we hope that’s the case again tomorrow,” McLear said.

Senate President Pro Tem Darrell Steinberg, D-Sacramento, said the leaders made “a lot of progress” in five hours of talks. He spoke for the four legislative leaders, who left together and would not elaborate.

They have released no details about how they plan to close the state’s funding shortfall or whether the philosophical divide between Democrats and Republicans has been resolved. Republicans have refused to make concessions on tax or fee increases, while Democrats want to delay corporate tax breaks given last year.

Other sticking points are Schwarzenegger’s demands for tax reforms and budget reforms, including creating a rainy day fund.

The leaders met for two hours in the afternoon and returned for three hours of negotiations Thursday evening after two days without face-to-face talks. They said the delay was to let aides work through the details of proposals from the opposing sides, including corporate tax incentives.

This is the longest the state has ever gone beyond the July 1 start of its fiscal year without an approved spending plan.

The renewed talks came as the Public Policy Institute of California released a poll finding that 75 percent of voters disapprove of the job legislators are doing. Earlier, the Field Poll said legislators’ approval ratings have hit a record low, winning the approval of just 10 percent of registered voters.

Those surveyed blamed both lawmakers and the governor for the failing to pass a budget on time.

The delay prompted warnings this week from the state controller and treasurer.

Controller John Chiang may have to issue IOUs if next week passes without an agreement. He has been unable to pay thousands of state contractors nearly $3 billion since the fiscal year began July 1.

Treasurer Bill Lockyer’s office said a deal needs to be reached soon to avoid endangering $7 billion in public works projects that could support thousands of jobs.

(© 2010 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)

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