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Schwarzenegger: Progress Made On Dems' $18B Plan

Written by Christina Heller

Story Created: Dec 22, 2008 at 4:26 PM PST

Story Updated: Dec 22, 2008 at 7:19 PM PST

SACRAMENTO (AP) - California's controller is warning that the state will run out of money in about two months, even as Gov. Arnold Schwarzenegger raised hopes of a budget deal this week.

The governor said Monday he wants to work with the Legislature's
Democratic leaders to close the $42 billion shortfall that is projected through June 30, 2010.

If lawmakers fail to pass an updated budget plan, state Controller John Chiang says his office will be forced to defer billions of dollars in payments or issue IOUs. He says the instability of the banking industry has made borrowing money to bridge the gap an uncertain possibility.

Schwarzenegger says he and lawmakers are making progress on an $18 billion proposal that was passed without Republican support.

(Copyright 2008 by The Associated Press. All Rights Reserved.)
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