Senate President Pro Tem Don Perata told his Democratic caucus Friday that he and Gov. Arnold Schwarzenegger are willing to back off on demands for new taxes to end California's 75-day-long budget stalemate.

In an e-mail obtained by The Bee, Perata wrote that he told Schwarzenegger on Thursday, "Let's see if I can work on a deal with (Republicans) that is no tax, no borrowing. He agreed."

Perata said that he plans to work with Republicans through the weekend to try to reach a budget deal.

"We then bring in Assembly leaders to show them what we're sending them," Perata wrote in the e-mail. "And then we go to the floor the moment we have mocked-up language ready."

Alicia Trost, a spokeswoman for Perata, declined to discuss the e-mail, saying the Oakland senator's office does not publicly comment on internal communications. But Trost confirmed Perata plans to work through the weekend in an effort to resolve the impasse.

Steve Maviglio, a spokesman for Assembly Speaker Karen Bass, declined to comment specifically on the e-mail.

"Although we continue to make progress, what hasn't changed is that the governor continues to fail to be able to get a single vote from any member of his own party, and so we need to continue to find common ground ourselves," he said.

It remained unclear whether either Democratic caucus would support a no-tax budget that did not rely heavily on borrowing. Democrats had previously insisted on tax increases because they rejected the level of service cuts that would otherwise be required to close the state's $15.2 billion budget gap.

They had proposed higher taxes on high-income earners, while the Republican governor backed a three-year sales tax increase.

Republican legislators uniformly oppose any new taxes. Instead, they want deeper cuts to state programs, mostly to health and human services.

While Democrats and the governor have said they would oppose any additional borrowing, Republican lawmakers have signaled they would be receptive.

Schwarzenegger also has said he will not sign a budget that does not include "budget reforms," which could include a limit on future spending and bolster the state's "rainy day" cash reserve.

Schwarzenegger communications director Matt David said the governor was encouraged by the development.

"The governor has held the line on taxes since he's been in office," David said. "He hates taxes."

David said when Perata "offered that the Democrats would work with the Republicans on a compromise budget that did not include taxes, that did not include borrowing, and included budget reform, the governor agreed to it."

The e-mail, however, suggested the final product may not include changes to the budget process Schwarzenegger has demanded.

"The gov still insists on a budget reform amendment as a condition of his signature. We'll see," Perata wrote.

And while the governor has insisted on minimal borrowing, Perata wrote only that "we'll do our best to hold the line on borrowing."

He also made reference to a recall effort launched against Schwarzenegger this week by the state prison guards union, the California Correctional Peace Officers Association.

"The gov's recall gives him extra motivation to join us," the e-mail said. "Gray Davis wasn't dumped because he didn't have budget reform."

David reiterated the governor would not support a plan that doesn't include it.

"The governor has said time and again that he will not sign a budget that doesn't include budget reform," he said, adding, "Californians have been put on this budget roller-coaster ride enough."

The e-mail also includes insights into the lobbying efforts of interest groups associated with the Democratic Party.

Perata wrote that the Education Coalition, which includes teachers unions, school board members and administrators, is "unwilling to support taking up the gov's budget. …

"Too much risk for not enough gain," he wrote.

The California Teachers Association, Perata said, doesn't like "borrowing" because Proposition 98, the voter-approved measure that set minimum school spending, "doesn't benefit."

But Perata said the Service Employees International was "OK with borrowing."

Call Aurelio Rojas, Bee Capitol Bureau, (916) 326-5545.