Lawmakers returned to work Monday after weeks of little progress on the spending plan and announced a tentative deal in the Senate that raised hopes the $103 billion budget could be resolved within hours.
Both houses scheduled 10 p.m. floor sessions, but adjourned before taking action. Another session was scheduled for today.
California remains the last state in the union without an enacted budget and is 17 days away from breaking the state's late budget-signing record of Sept. 5, 2002.
Without identifying specific concerns, Senate Republican leader Dick Ackerman said his caucus still had a number of "outstanding issues" that needed to be resolved.
"It's not done yet," Ackerman said.
Senate President Pro Tem Don Perata, D-Oakland, said Republicans wanted more than $100 million in supplemental funding for suburban school districts before the state covered its required payments under Proposition 98 for public school systems.
The two sides also remain at odds over a GOP demand to limit lawsuits against development projects based on the state's new greenhouse gas law -- an issue thought to have been resolved earlier in the day.
The prospects for resolving the state's protracted budget fight dimmed as much as they had brightened early Monday after Ackerman announced a tentative deal in the Senate.
The Assembly had approved that version of the budget July 20 and Schwarzenegger embraced it. It is one Republican vote short in the Senate, however.
Assembly Speaker Fabian Núñez said it was unclear why Ackerman balked at what he had earlier portrayed as an agreement when the four legislative leaders met with Schwarzenegger.
"(We) agreed to a budget deal," Núñez said. "And from the time that I left the Big Five meeting to the time I walked outside five minutes later, (and) Dick Ackerman walked outside, something happened. And maybe he had a metaphysical reaction that the rest of us somehow ... we are unable to communicate at that level."
While leaders tried to resolve differences between the two sides, some members and their staff practiced softball at a downtown park for their annual softball game, scheduled at Raley Field today. Others camped out across the street from the Capitol at Chops, smoking cigars.
In Monday's developments, Senate Republicans took issue with the timing of when suburban school districts with historically low property taxes would receive about $130 million in "equalization" money to bring their funding in line with districts of a similar size and profile.
The current budget approved by the Assembly proposes to give those districts the extra money in the 2008-09 budget after annual growth is paid out to all school districts. But Republicans want equalization in the current budget.
Kevin Gordon, a consultant on education budget issues, said education advocates fear that Republican demands for equalization could jeopardize a 4.5 percent cost-of-living increase for school districts that advocates fought to protect in the current proposed budget.
"Even a number of schools that benefit from equalization say it should come only after COLA gets fully funded," Gordon said.
Besides the education funding issue, the budget fight continues to center on Republicans' demand to protect infrastructure bonds from being entangled in greenhouse gas emissions lawsuits.
Ackerman, who leads 15 Republican senators, early in the day described the Senate's tentative deal as a way to protect transportation bond money from "spurious lawsuits," which became a major GOP concern as the stalemate dragged on past the July 1 beginning of the fiscal year.
Sen. Bob Dutton, R-Rancho Cucamonga, has been voicing concern over state Attorney General Jerry Brown's aggressive moves to force local planners to include climate change in their development projects. Using the California Environmental Quality Act, Brown has sued San Bernardino County for failing to consider greenhouse gas emissions in its general plan.
Dutton, who was ill and unable to be in Sacramento on Monday, has said he is worried that Brown and environmentalists would use the same tactic on billions of dollars the state is getting ready to spend on much-needed public works projects. He said he feared such a move would cause lengthy delays and prevent roads and bridges from being built or repaired.
To soothe GOP concerns, Democrats agreed to a compromise proposal that would place a moratorium on greenhouse gas-related actions against transportation bonds, approved by voters under Proposition 1B last fall. It would sunset at the end of 2009 after the state Air Resources Board adopts new regulations to comply with a state initiative to reduce greenhouse gas emissions by 25 percent by 2020.
But by late in the evening, Republicans were balking at that approach, and demanding that bonds for levees be protected from suits, too.
Brown scheduled a news conference this morning to discuss the San Bernardino County global warming case -- an hour after the county's Board of Supervisors has scheduled a vote on a possible deal to settle the lawsuit Brown filed.
San Bernardino County spokesman David Wert said the board will take up the issue at 9 a.m. in a closed session. Brown's news conference in downtown Los Angeles is set for 10:15 a.m. The attorney general's office did not return calls for comment Monday.
Wert said he didn't know how close the county and the attorney general were to an agreement, "but the attorney general has been talking with people from the county for several weeks on this subject, and the talks have been friendly and very productive."
By Judy Lin, The Sacramento Bee
August 21, 2007