Calif. lawmakers face tough choices in budget 

updated 7:09 p.m. ET July 12, 2009

SACRAMENTO, Calif. - California's top lawmakers on Sunday focused on cost-saving reforms to social welfare programs and how deeply to cut an array of state services as they dove into the complex task of closing the state's $26 billion deficit.

Lawmakers on both sides warned that severe cuts to many state programs were unavoidable. But they also seemed more optimistic than they have been in weeks that they could find a way out of California's fiscal morass.

"We're all going to get through this, and California is going to come through it just fine," Senate leader Darrell Steinberg, D-Sacramento, said before entering a closed-door meeting between Gov. Arnold Schwarzenegger and the three other legislative leaders.

Sunday's talks were expected to last into the evening.

That Republicans, Democrats and Schwarzenegger were back on speaking terms and making apparent headway was a welcome sign after two weeks of acrimony and partisan infighting that derailed budget negotiations. During a low point last week, the office of the Assembly speaker, a Democrat, accused the governor's office of disrespecting female lawmakers.

Over the weekend, lawmakers focused on reform proposals advanced by Schwarzenegger, who wants to weed out waste and abuse in welfare, in-home support and health care programs. His office says such reforms could save taxpayers an estimated $1.7 billion this fiscal year, money that could be used to make up for cuts in other programs.

The governor also has sought pension changes for new state government employees.

Funding for K-12 schools is a main sticking point. Senate Minority Leader Dennis Hollingsworth, R-Temecula, said closing the deficit would have to involve school spending because it accounts for at least half of California's annual budget.

"I think it's inevitable when we're talking about the budget situation that we're in, that we're going to have reduced spending on education," he said. "The question is just how we get there."

The lawmakers were debating whether to suspend Proposition 98, a constitutional amendment passed by voters in 1988 that guarantees a minimum level of funding for schools each year. The funding also is supposed to rise each year based on the previous budget.

Democrats are trying to preserve as much K-12 funding as possible.

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