SACRAMENTO -- Democratic lawmakers on Wednesday said they wanted to bring a budget package to a vote in the Legislature by week's end, even as legislative leaders and Gov. Arnold Schwarzenegger scrambled to reach a compromise on fixing California's $42 billion deficit.
It was unclear whether enough Republicans would support the latest language emerging from negotiations. That proposal calls for $12 billion to $14 billion in tax increases, $15 billion in spending cuts and more than $11 billion in borrowing to address the shortfall through June 2010.
The proposal also contains tax credits for businesses, and measures designed to lift the economy out of recession and speed up transportation projects.
All California drivers would be asked to share the pain with a higher gas tax. Residents who owe personal income taxes at the end of next year would face a 5 percent surcharge. And the sales tax would rise by 1 cent on the dollar.
In exchange, Republican lawmakers are seeking an annual spending cap.
"They're closing on a few key details. There is not an agreement at this point," said Schwarzenegger's spokesman, Aaron McLear.
The state Senate leader characterized the negotiations in much the same way.
"There is no deal, but there is a common framework," Senate President Pro Tem Darrell Steinberg, D-Sacramento, said Wednesday before a luncheon address to the Sacramento Press Club.
Legislative sessions had not been scheduled, but Steinberg said he wanted the Assembly and Senate to vote on the package Friday.
The increasing intensity of the budget negotiations come as California's fiscal condition grows more dire.
Friday will mark the 100th day since the governor called a special legislative session to deal with the state's fiscal crisis. California has halted thousands of infrastructure projects, put a hold on tax refund checks and delayed payments to state contractors.
The Schwarzenegger administration also has instituted twice-a-month furloughs for some 200,000 state employees and has said it will begin a layoff process for some 10,000 state workers if no deal is reached by the end of the week.
The state controller said January tax revenue was $2.2 billion behind last year.
The tentative plan being discussed Wednesday would ask voters for long-term budget reform in the form of a spending cap as well as borrowing from future state lottery earnings. The economic stimulus bill moving through Congress also contains federal money for states.
Lawmakers have been at odds over how to close the gap through next fiscal year and the remainder of the current one. Democrats want tax increases with minimal cuts to social services while Republicans want a spending cap and business-friendly provisions in exchange for tax increases.
"When all four leaders left last night, they said they're getting closer but there's still more work to do," Sabrina Lockhart, spokeswoman for the Republican caucus in the Senate, said Wednesday. "Nothing has changed this morning."
While few details were being made available, the tax measures under discussion are a temporary 1 cent increase in the state sales tax, a hike in the fee to license vehicles to 1.15 percent and a one-time 5 percent surcharge on personal income tax. Drivers also would face a 12-cent gas tax.
Those steps to boost revenue were expected to generate about $12 billion, more if voters extend the taxes.
In exchange, a Republican-sought spending cap would limit the amount the state can spend each year based on a predetermined formula. In good years, extra money would be skimmed off the budget and saved for later.
Such a change would require voter approval in a special election sometime this year.
Voters also will be asked to authorize the state to sell bonds based on the lottery's projected future revenue. That plan, approved as part of budget negotiations last year, assumes the lottery bonds would bring in $10 billion over the next two fiscal years.
The proposal also calls for $15 billion in spending cuts to everything from public schools to programs for the poor and disabled.
Most of the savings, $8.6 billion over the next 17 months, would come from education, but the cuts would hit nearly every aspect of state government.
State workers would continue taking two days off a month without pay under Schwarzenegger's furlough order, saving $1.3 billion. They also would lose two of 14 paid state holidays and face limits on some overtime pay, according to a spreadsheet provided by a source close to the negotiations.
The source did not want to be identified because public distribution of the negotiating points was not authorized.
According to the internal document, 10 percent would be cut from the prison system's medical budget at the same time the state is engaged in a legal battle with the court-appointed receiver overseeing health care reforms at the state's 33 adult prisons. The receiver, J. Clark Kelso, has proposed the state sell as much as $8 billion in bonds to build seven inmate medical facilities.
Meanwhile, the poor are likely to feel the brunt of the state's cuts.
California would not give cost-of-living increases to families on welfare, low-income seniors and disabled people. Unless California receives more federal money from President Barack Obama's economic stimulus package, the legislative leaders have agreed to make even deeper cuts to courts, health insurance for the poor, welfare-to-work, in-home support for seniors and other social services.
The University of California and California State University systems would see $427.6 million in cuts, starting with the fiscal year that begins in July.
Steinberg, the Senate leader, said Wednesday that much of the leaders' closed-door negotiations centered around labor and environmental rules, which Republicans want to relax.
Schwarzenegger and GOP lawmakers sought to reduce overtime pay for workers and weaken environmental rules, both opposed by Democrats. The governor also wants more private-sector involvement in infrastructure projects, a proposal opposed by labor groups.
While Democrats held the line on overtime pay in the latest plan, Republicans would get many regulations temporarily lifted as part of the state's effort to speed up transportation projects.
Steinberg and Assembly Speaker Karen Bass, have said they hope to bring a budget plan to a vote this week.
"While Speaker Bass is pleased that enormous strides have been made toward finalizing a budget agreement, the fact that staff continue to work out language and details on several different items means that from her perspective there is not yet a final deal," Bass' spokesman, Shannon Murphy, said in a statement.