If the May 19 special election scared Gov. Arnold Schwarzenegger and state lawmakers into action, they aren't showing it.

Fifty days after voters rejected a Capitol driven ballot package in a rebuke of Sacramento politics, California lacks a budget-balancing agreement and is paying bills with IOUs for the second time since the Great Depression.

Democrats and Republicans continue to squabble over how deep to cut state services and whether to use the crisis as an opportunity to enact permanent changes that shrink state government. They have shifted back to closed door meetings after reaching few deals in public.

In public, they blame each other.

Despite their postelection promises of a quick deal and a transparent process, budget dynamics remain the same as ever, driven by ideological loyalties that have long made it difficult to reach compromise.

"The gravitational pull of budget negotiations is against compromise," said Dan Schnur, director of the Jesse M. Unruh Institute of Politics at the University of Southern California.

"You have four legislative leaders, each of whom is encouraged every day by their members to stick to their guns. If every single legislator faithfully represented the voters and interests who put them into office, there will never, ever be a state budget."

Technically, lawmakers in February enacted a $92 billion state budget for the new fiscal year that started last week. But they have to find $26 billion in new solutions because voters rejected $6 billion of their original ideas and the economy grew worse than their outdated projections.

They face more time pressure this year because the state does not have enough cash to pay all of its bills and began issuing IOUs last week, with interest.

Fitch Ratings, a Wall Street agency, downgraded the state's credit rating Monday in response.

Aware of the cash situation, as well as voter disgust over their job performance, lawmakers and Schwarzenegger suggested in May they would strike a deal by June 30. But the threat of IOUs and further erosion of public support was not enough to overcome lawmakers' ties tot heir individual principles or outside influence from unions and anti-tax groups, some of whom have mounted television and Internet campaigns.

"They do have their constituencies, and their constituencies are spending money," said Rob Stutzman, a Republican consultant who was Schwarzenegger's first communications director.

The public repudiated February's secretive budget talks, and majority Democrats reacted by holding budget hearings in public, giving advocates an opportunity to debate proposed cuts in June. But the plan that emerged was largely a Democratic one, with few areas of agreement with Republicans whose votes are needed to achieve a two-thirds vote.

"Lawmakers essentially told us to let them go through their process," said Schwarzenegger spokesman Aaron McLear. "I'm not sure they went through their process as efficiently as they should have."

Assemblywoman Noreen Evans, DSanta Rosa, chairwoman of the budget conference committee, said Democrats took seriously the month long hearing process that resulted in a Democratic budget proposal with cuts, fund shifts and taxes.

She said Schwarzenegger should have bargained at that time, and blamed him for shifting the parameters at the last minute with new demands for permanent reductions in health and welfare on the final weekend of the fiscal year.

"This is his standard m.o.," she said. "He gets to the absolute deadline, submits what he calls reform proposals and we're supposed to give him what he wants because he has a gun pointed to our heads."

McLear said the governor's new proposals to tighten restrictions on Medi- Cal, In-Home Supportive Services and welfare-to-work are alternatives because Democrats wouldn't agree to Schwarzenegger's original idea to eliminate some services entirely.

Schwarzenegger wants lawmakers to consider changes that impose stricter eligibility requirements on IHSS, Medi-Cal and welfare recipients and providers, which the governor believes would save $1.7 billion this fiscal year, McLear said.

Call Kevin Yamamura, Bee Capitol Bureau, (916) 326-5548.