From Governor, Mixed Signals on Deadlock

SACRAMENTO —  Frustrated by the refusal of Democrats to accede to his demands in budget talks, Gov. Arnold Schwarzenegger will hit the road today to pressure them and is urging local leaders to do the same at rallies in Los Angeles and three other cities.

The decision puzzled Democrats. It came hours after the governor canceled four scheduled appearances on conservative talk radio Tuesday -- where he presumably would have criticized them -- opting instead to meet with legislative leaders to try to find common ground.

Assembly Speaker Fabian Nunez (D-Los Angeles), standing outside the governor’s office late Tuesday afternoon, said he was “surprised to see the letter” urging local leaders to attend rallies.

“This is where the negotiations happen,” Nunez said. “They don’t happen out in the street at coffee shops or restaurants. Those are dog-and-pony shows.”

The public posturing appeared to mask what was going on behind the scenes. John Burton, the often irritable Senate leader who has been known to storm out of budget negotiations with past governors, left a more than two-hour meeting in Schwarzenegger’s office sounding optimistic.

“I’m somewhat encouraged,” he said.

“As we know, there is many a slip between the cup and the lip,” Burton said. “[But] I’m saying it was a fruitful discussion, and I feel enthused and feel that issues that were formally contentious can be worked out.”

And Rob Stutzman, the governor’s communications director, said: “We’re on track to drive this thing toward a solution.”

Yet there was still no deal that would lift the impasse over the governor’s $103-billion budget as the state ends its second week of the new fiscal year without a spending plan.

So, the posturing continued.

“The time for delay is over,” Schwarzenegger wrote in the e-mail letter calling on recipients to rally against the Legislature at news conferences in Los Angeles, San Diego, San Jose and Sacramento “The time for action is now!”

The governor is calling on local officials to stand firm behind an agreement he worked out with them weeks ago to protect cities and counties from future budget cuts if they would give up $2.6 billion over the next two years. Democrats want more flexibility to borrow from cities and counties during a fiscal emergency and warn that the governor’s proposal would give payments to local governments more protection than even schools get.

In the e-mail, Schwarzenegger wrote that lawmakers “are not satisfied with a deal that will rob them of the power to keep raiding local treasuries.”

The governor announced that he would do his part by appearing at a Sacramento County sheriff’s substation, where he would talk about the need to protect state payments that help local governments provide police and fire services.

Stutzman said he has every right to do that.

“What’s baffling to me is any question at all that it’s somehow odd that a governor who represents 35 million people has to explain why he wants to go out and talk to people and be out in public and talk about issues he’s fighting for,” Stutzman said.

Democrats, meanwhile, prepared to move forward with their own partisan blitz.

They said they would go ahead with committee votes on their plan to protect local government. The move is intended to show that they are not trying to get in the way of passing a budget. It also would force Republicans to either accept or vote against a plan Democrats believe the public will see as perfectly reasonable.

The plan Democrats are considering putting up for a vote also would include prohibitions against the state taking money from local government in the future. But the state would be able to borrow from cities and counties just twice every 10 years, and would be required to repay the money in a reasonable time.

The Democratic plan would allow such borrowing with a two-thirds vote of the Legislature, whereas the governor and local leaders want the threshold to be a four-fifths vote.

Burton said the Democratic plan “would protect local government to the greatest extent ... in the history of the state.”

Los Angeles Mayor James K. Hahn, who participated in negotiations in Sacramento on Tuesday, said that although the deal the Democrats were offering did not provide enough protection, he was confident that a resolution could be reached.

“Everything takes a little time,” he said. “We are just going to keep working at it.”

Hahn said that if a budget agreement was not reached soon, he and other city leaders were prepared to campaign for an initiative already on the November ballot that would protect their funding. That measure would prohibit the state from taking money from local government under any circumstances -- and would force the state to give back $1.3 billion that lawmakers and the governor plan to take to balance this year’s budget.

But legislators of both parties say public opinion polling suggests the measure will fail.

In the meantime, the governor continues pressuring lawmakers to agree to his proposal.

And legislative leaders are shrugging off his campaigning.

“That is part of the governor’s gestalt,” Burton said. “He likes the crowd and he likes to go out. And that is fine with me. Gestalt. You can look it up. It’s a German word meaning gestalt.”

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Times staff writers Jordan Rau and Robert Salladay contributed to this report.