California's controller told lawmakers Thursday that he won't pay them if a budget deal isn't reached by midmonth, while Gov. Jerry Brown said talks are at a critical point.

Brown's negotiations with Republican lawmakers, though sputtering for months, appear to have picked up in recent weeks, with the rarely met constitutional deadline looming June 15.

"We are at a critical moment in the next 10 days," Brown told about 1,000 people Thursday morning at the California Chamber of Commerce's annual Host Breakfast in Sacramento. "There's compromises and discussion going on."

State Controller John Chiang added pressure in a written statement by announcing that lawmakers will forfeit salaries and per diem payments if they fail to approve a balanced budget by the deadline.

Frustrated by chronically late budgets, Californians voted last year to strip lawmakers of their pay when the budget is overdue.

Chiang's announcement quieted speculation – and at least one legal opinion – that a budget bill passed in March could be sufficient for lawmakers to keep collecting pay. That bill closed only part of California's yawning budget deficit. Chiang, a Democrat, said in a written statement that voters "clearly stated they expect their representatives to make the difficult decisions needed to resolve any budget shortfalls by the mandatory deadline, or be penalized."

He said, "I will enforce the voters' demand."

Chiang's move was the latest in the evolving budget row between Brown and legislative Republicans.

"If nothing else," said Larry Gerston, a political science professor at San Jose State University, "it will smoke out anyone who is opposed" to forfeiting their checks.

But leaders of both parties said they support Chiang's position, and rank-and-file members largely fell in line.

"It's what the people said they wanted when they voted for Prop. 25," said Sen. Anthony Cannella, the Ceres Republican who was part of the "GOP 5" who negotiated with Brown earlier this year. "Sure, it's not easy on someone up here trying to take care of a family. But we have jobs to do, and passing the budget is the most important one. We shouldn't be compensated if we can't do that."

Lawyers for the Legislature had said the March budget bill was sufficient to satisfy Proposition 25, said Greg Schmidt, secretary of the Senate.

Lawmakers are paid $95,291 per year, plus $142 per day for living expenses while in Sacramento.

Brown, seeking to close the state's remaining $9.6 billion budget deficit, is negotiating for two Republican votes in each house to put extensions of higher taxes on a ballot. Republicans have demanded a spending cap, and pension and regulatory changes.

The prospect of lost pay could factor in those talks, as some lawmakers expect, though to what extent is unclear.

"It puts us in a difficult position because it holds the sword of Damocles over legislators' heads," said Sen. Noreen Evans, D-Santa Rosa. "It creates a perverse incentive to adopt a budget whether or not it is the best one for the people of California."

Assembly Speaker John A. Pérez, D-Los Angeles, said in a prepared statement that lawmakers will reach agreement by June 15. The most optimistic of lawmakers said they are so sure of a budget deal that their paychecks aren't on their minds.

"I'm absolutely, 100 percent confident, so I'm not thinking about it," said Assemblyman Gil Cedillo, D-Los Angeles.

Brown declined again Thursday to identify the Republican lawmakers with whom he is meeting. He told his chamber audience, "There is a zone of potential agreement."

Though supportive of Brown's budget plan, the California Chamber ran advertisements attacking Brown in last year's gubernatorial campaign, and he told the crowd he suspected he was speaking mostly to an audience of Republicans.

Yet the chamber afforded him a glowing introduction, and he said, "I am a little unused to all this 'We're getting behind Gov. Brown.' "

The crowd applauded when the 73-year-old, third-term governor said, "I'm glad that I've come here in my declining years to give it the college try."

As the Legislature takes up his budget proposal, Brown suggested, he may veto any effort by Democratic lawmakers to reduce spending cuts in his proposed budget.

Brown said the Legislature is starting to "backtrack a bit" on spending reductions he proposed.

"We may have to correct that with the blue pencil further down the road," he said.

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