NO SIGN OF DEAL TO CLOSE CALIFORNIA BUDGET

By Juliet Williams | Associated Press |from MercuryNews.com

06/29/2009 06:45:49 PM PDT | Updated: 06/29/2009 09:14:53 PM PDT

SACRAMENTO — (AP)—The California Senate on Monday approved a Democratic budget-balancing plan that faced a certain veto from Republican Gov. Arnold Schwarzenegger as the state headed toward issuing IOUs for the first time since the 1990s.

The plan would use a combination of spending cuts and tax and fee increases to eliminate a $24.3 billion budget deficit, but Schwarzenegger repeated his vow to veto it.

"I think that they know I will never sign those kinds of things so why waste the time, why run out of time and then all of a sudden we have to hand out IOUs?" Schwarzenegger told reporters.

But Senate President Pro Tem Darrell Steinberg, D-Sacramento, said Democrats would not accept the deep cuts in college aid, health care and welfare programs sought by Schwarzenegger.

"We have made cuts in those areas, but we are not cutting deeper," he said. "Hear us loudly: It's not where we will go."

The Senate met after the Assembly approved many of the same bills Sunday night following hours of debate.

Hours after passing the Democratic plan on a series of largely party-line votes, the Senate reconvened to try to push through three stopgap measures that would save more than $4 billion and hold off the need for IOUs.

But Republicans balked. "The time has passed for doing just one part of the problem," said Sen. Bob Dutton, R-Rancho Cucamonga. "That's why you see we can't support this at this point in time."

The stopgap bills, unlike the measures in the full Democratic plan, needed two-thirds majorities, and some Republican votes, to pass.

All three fell short on initial roll calls, but Senate leaders delayed announcing the final votes in hopes of picking up some GOP support later in the evening.

The state controller has said he will have to start issuing the IOUs unless lawmakers balance the budget by the end of the fiscal year today.

Roughly $3 billion worth of IOUs will be issued in July unless a compromise on closing the deficit is reached quickly. They will be sent to state contractors, college students, welfare recipients, low-income seniors, the disabled and others who depend on or deliver social services.