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WEST SACRAMENTO — Gov. Arnold Schwarzenegger and legislative leaders will continue to push ahead Friday on negotiations to eliminate California's $19 billion budget deficit.
The lawmakers were scheduled to meet in the early afternoon, after five hours of talks Thursday failed to break the record-long impasse on a budget that was supposed to take effect July 1.
Aides to the Republican governor and the leaders of both parties in the Assembly and Senate say the talks have been productive. But they have released no details since announcing last week that they had a "framework" for a deal.
Pension reform remains one of the biggest sticking points. Schwarzenegger wants the Legislature to roll back public employee benefits, while Democratic lawmakers say the administration should work to reach an agreement with unions through collective bargaining.
The leaders also have disagreed on how to raise money, with Republicans refusing to make concessions on taxes or increased fees, and Democrats calling for a delay of corporate tax breaks approved last year.
The state has so far been able to pay most of its bills, but officials warn that won't hold for long.
Controller John Chiang has said he may have to issue IOUs for just the third time since the Great Depression if next week passes without a budget. He said he already owes thousands of state contractors nearly $3 billion.
In addition, an estimated $7 billion in planned public works projects could be in danger if a deal is not reached soon, state Treasurer Bill Lockyer's office has said.
