With 6 Days to Go, Budget Talks in Chaos

SACRAMENTO -- After a week in which California lawmakers seemed to pull away from rather than toward a compromise on the state budget, lawmakers now have six days to consider their fateful choice: whether to cut a deal that would allow the $38-billion budget shortfall to be resolved by the constitutional deadline or to stand by as deepening ideological gridlock lets government stumble toward insolvency.

At this critical time in budget negotiations, with the deadline for the Legislature to approve a spending plan arriving at midnight Sunday, Republicans have firmly locked themselves into an antitax position that has thrown talks into disarray. Democrats, meanwhile, say they refuse to cut more deeply into social programs.

Both parties agree that there probably is no turning back from Senate Republican leader Jim Brulte's threat last week -- a "read my lips" moment -- to end the political careers of any of his fellow party members who join Democrats in voting for a tax hike. A tax increase would require at least eight GOP votes to reach the needed two-thirds majority.

Now Democrats, who have a majority of both houses as well as the governorship, are desperately searching for a way to get out of the budget mess without new taxes. Their ideas include a legally questionable attempt to pass a "revenue-neutral" measure that would raise taxes for a few years and then cut them just as much a few years later. The point: Such a plan theoretically could be approved without Republican votes.

But the larger question in Sacramento is this: Are Republicans trying to force a government shutdown, do they believe Democrats will cave on spending or are they holding fast on taxes because they believe Democrats can find a way to sneak around them to raise an unpopular source of revenue?

Wall Street is searching for the answer, or at least a clear sign, that the state with the largest economy -- which nevertheless bears the worst credit rating -- will snap out of it, balancing revenue and spending in time to avoid running out of cash this summer.

Brulte's threats came just as a bipartisan deal to close the budget gap was beginning to look likely.

At least a few Republicans were saying privately that they would consider voting for a new half-cent sales tax proposed by Gov. Gray Davis in exchange for an easing of government regulations on business. Those same lawmakers now say they've lost their appetite for raising that issue.