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Talks Resume In Addressing Calif.'s $26B Deficit

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Jul 11, 2009 7:40 am US/Pacific

Talks Resume In Addressing Calif.'s $26B Deficit

SACRAMENTO (AP) ― Gov. Arnold Schwarzenegger and legislative leaders were scheduled to resume talks aimed at closing California's $26 billion budget deficit.

Lawmakers from both parties were expressing optimism as they restarted negotiations late Friday after talks had stalled earlier in the week. They cautioned that a lot of work remains as they headed back to negotiations on Saturday.

At issue is how to close a $26.3 billion shortfall for the fiscal year that began July 1. It's not clear how the two sides will bridge the gap, which represents roughly a quarter of the general fund, the state's main account for paying its daily operating expenses.

Revenue is running so far behind spending obligations that sometime in September the state will run short cash to pay for most of its core functions.

(© 2009 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)

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