California budget deal announced

SACRAMENTO, July 20 (UPI) -- California Gov. Arnold Schwarzenegger and legislative leaders said Monday they have agreed on a compromise plan to close the state's $23.6 billion budget gap.

Schwarzenegger and top lawmakers said the agreement, which will permit the state to resume paying its bills without using IOU's, cuts spending without any broad-based tax increases, the Los Angeles Times reported.

Schwarzenegger, who stressed that the compromise contains no new taxes, said he hoped the Legislature will approve it Thursday.

The Times said lawmakers and staff who took part in negotiations that led to the deal suggested state services will be significantly reduced for years to come.

The compromise would result in a reduction of billions of dollars in state aid to local governments, the Times said. Welfare rolls would be cut and inmates in state prisons will be released early.

The deal calls for state employees to continue taking unpaid days off and for new oil drilling off the Santa Barbara, Calif., coast.

"There isn't a whole lot of good news in this budget," said Senate leader Darrell Steinberg.

Assembly Speaker Karen Bass said the deal preserves "the safety net for California."