California's budget mess got messier Thursday as Democratic legislators approved a package of tax increases and spending cuts, Republican legislators threatened to sue over the package's questionable constitutionality and Gov. Arnold Schwarzenegger made the issue moot by promising to veto it.

Democratic legislative leaders then announced lawmakers are going home for the holidays.

That announcement came at the end of a day filled with heated rhetoric, impromptu news conferences and a good deal of waiting around.

The $18 billion Democratic proposal – approved without Republican votes – calls for increases in personal income and sales taxes, the substitution of a 39-cents-per-gallon fee on gasoline in place of the current 26 cents in state taxes, and a new tax on oil production.

It also makes cuts in education, social services and other state programs and slices $657 million from the state's payroll.

The plan, unveiled Wednesday and the third to be voted on by legislators since just before Thanksgiving, is designed to close a bit less than half of a yawning $40 billion deficit in the state's budget over the next 18 months.

Republican legislators blocked both earlier plans by refusing en masse to vote for anything that contained a tax increase. GOP votes were needed because tax hikes require a two-thirds majority in each house.

By concocting a formula that eliminated the gas taxes and replaced them with other taxes and fees, Democrats contended the package could be approved without Republican support.

"Democrats passed a responsible plan that reduced the budget deficit by $18 billion," said Senate President Pro Tem Darrell Steinberg, D-Sacramento. "I'm damn proud of what the Legislature did today."

Even before the votes were taken, Republican legislators and several taxpayer and small-business groups threatened to take the plan to court if the governor signed it.

"This is one of the most brazen political moves in California history," said Jonathan Coupal, president of the Howard Jarvis Taxpayers Association. "It doesn't even pass the laugh test."

The governor, however, appeared to obviate the need for litigation.

"This package they are sending down does only one thing, and that is punish the people of California," Schwarzenegger told a hastily called news conference. "This fell short on every single level … so I cannot sign this."

Administration officials said they are now preparing for the possibility of unilateral cost-cutting moves, including issuing an emergency order that would begin the process of laying off some state workers and imposing furloughs on others.

Schwarzenegger said his objections were not so much to the Democrats' majority-vote approach as they were to what they left out.

Schwarzenegger said he wanted broader exemptions from state environmental regulations. He also wanted a streamlined permitting process and fewer requirements for state construction partnerships with private firms.

His office charged that the Legislature's plan provided little regulatory relief for construction projects and would not improve the economy substantially.

The governor also wanted lawmakers to institute state worker furloughs, but the legislative proposal would have required the state to negotiate $657 million in job cuts with labor unions.

"Absolutely I would have signed it if we would have gotten the cuts and the economic stimulus package," he said.

The governor urged legislators to stay in Sacramento and keep working.

"They should stay here, work some more on the budget," he said. "I am willing to stay here … and I think the Legislature owes it to the people of California to solve this problem before Christmas."

Chances of that, however, appeared nil. Assembly Speaker Karen Bass, D-Los Angeles, said her house would not come back until after Jan. 1.

"We'll take a step back, and keep on working," she said.

Legislators in both parties appeared much readier to unwrap presents than come up with another budget-balancing plan.

In the Assembly, the mood ranged from comic opera to melodrama as staff members scurried to produce copies of more than a dozen bills that made up the package.

While a choir sang Christmas carols in the first-floor Capitol Rotunda, sergeants-at-arms distributed copies of the bills just minutes before they were taken up, a fact that drew complaints from Republicans.

"This language is still hot from the press," complained Assembly GOP leader Mike Villines of Clovis. "We can't even read what's in half of this."

Freshman Assemblywoman Norma Torres, D-Pomona, grew teary-eyed as she explained how she deeply regretted having to vote for cuts in education and social service programs.

"It means that people will go hungry," she said. "This is not about Republicans and not about Democrats. It's about people … people have needs and goddamn it, we are here to answer those needs."

Waving a copy of the state constitution, Assemblyman Chuck DeVore, R-Irvine, thrice challenged the ruling by Assembly Speaker Pro Tem Lori Saldaña, D-San Diego, that the tax bills did not require a two-thirds vote.

"No amount of histrionics or verbal gymnastics can obscure the fact that what we are about to do is violate our oath of office," DeVore declaimed.

Democrats, who hold a 51-29 majority in the house, rejected his challenges.

Debate was more civil in the state Senate. Democrats portrayed their plan as an inventive solution in a desperate time. They said Republican alternatives to raise revenues, such as asking voters to raid other dedicated state funds, were insufficient.

"Ask yourself this: Is there any other credible, politically acceptable plan put forward by anyone to make an $18 billion-plus dent in California's budget deficit?" asked Steinberg. "I think the answer is no."

Republicans accused Democrats of subverting the will of voters and setting a historic precedent for raising taxes in California, calling the maneuver "stunningly cynical."

"This is a very historic day," said Senate Republican leader Dave Cogdill of Modesto. "Certainly we've been a long time coming to this point where we have reached such frustration with the laws of this state, with the people and their will as it relates to how taxes should be raised, that you've decided to take an unprecedented step."

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