Showdown in Sacramento

California has been operating without a budget for way too long as the legislators fight with each other and the governor. Democrats insist the budget shortfall must be fixed with higher taxes. The GOP says no way.

Last night a budget was passed, but that's as far as it's going to go:

California Gov. Arnold Schwarzenegger says he will veto a state budget passed after a 78-day stalemate, setting up a historic showdown with the Legislature.

As the San Francisco Chronicle explains, the proposed budget sought to close a $17 billion deficit for the fiscal year that began July 1 without new taxes, a demand by Republicans. It did so by requiring all taxpayers to make earlier and larger tax payments to the state government.

Schwarzenegger, a Republican, made the announcement this afternoon. The veto will mark the first time in modern history that a California governor has rejected a veto a state spending plan. The Democrat-controlled Legislature has said it is prepared to override a veto.

Yesterday, about 12 hours before the last vote was taken at 2 a.m. today, the governor sent Assembly and Senate leaders a letter threatening the veto

"I have been very clear this entire year that I would be unable to sign a budget without meaningful budget reform," the governor wrote, stressing that spending cuts were needed.

State Treasurer Bill Lockyer, a Democrat, also assailed the budget plan, saying this morning that it "gives gimmicks a bad name."

"It's banana republic financing," Lockyer said. The spending plan relies on "phony money and phony estimates."

Update at 7 p.m. ET: "When they send me the budget, I will veto it," Schwarzenegger said at a Capitol news conference, the Los Angeles Times reports. "If my veto is overriden," he said, " ... hundreds of bills will be vetoed."

A lot of agencies which rely on state funding (like the ROP where my wife works) are operating on reserves until a budget is passed, but that can only go on for so long. At some point something's gotta give.