The state's rusty budget can is already in next year's alley.

Gov. Arnold Schwarzenegger demanded that the state solve its structural budget problems for good this summer, in Arnold-speak repeating he no longer wanted to "kick that can down the alley."

Yet lawmakers sent him a final budget deal Friday that shoved numerous problems into the future. Though they agreed to cut some spending, they relied on a handful of one-time accounting maneuvers to paper over the state's fundamental problem of spending more money than it takes in.

The Senate voted 22-14 and the Assembly 41-30 to approve the final fix of the long-overdue package. Republican leaders supported the budget deal reached Thursday, but no GOP members voted for the bill. Because Friday's votes involved legislation to implement the budget and not the budget itself, the deal required only majority support and not the two-thirds majorities needed for budget passage.

Schwarzenegger will sign the budget early next week.

"There certainly have been get-out-of-town budgets before, but I have never seen a budget as awful as this one," said Republican adviser Steve Merksamer, former chief of staff to Gov. George Deukmeijian. "Legislators are here to make tough decisions, provide leadership, and one of the reasons why their ratings are so low is because they play these kinds of games."

Legislators and the Republican governor took little pleasure in discussing the budget package. On the 81st day of a record budget stalemate, they highlighted the fact that nursing homes, community colleges and state vendors will again receive payment from the state. Schwarzenegger claimed a victory on long-term changes in the state's rainy-day fund but acknowledged it was a dismal budget year.

"I don't see much of a signing ceremony," he said, "because there's nothing to celebrate."

Legislators on Friday rescinded a plan to increase income tax withholding by 10 percent, an idea that was criticized as a deceptive tactic to take extra money from taxpayers now and repay them in 2010.

Yet they kept maneuvers based on the same concept that raise $2.3 billion by forcing wealthy earners and corporations to pay more taxes up front. The move also requires quarterly taxpayers – including self-employed individuals regardless of income – to pay 60 percent, not 50 percent, of their tax burden in the first half of next year.

"It's a mind game," Merksamer said. "It's like they're children at play. It's not real."

In a separate move to raise $1.9 billion, lawmakers and the governor switched to an "accrual" accounting method, essentially counting some tax revenues from the next fiscal year toward this one.

Lawmakers also approved a $1.9 billion change that benefits the state for two years but will allow corporations to use business losses to pay lower taxes thereafter.

"By not allowing them to (deduct) losses now, the state gave businesses something in the future," said Mac Taylor, a budget analyst for the nonpartisan Legislative Analyst's Office. "That helps you for a couple years and then turns around and costs you money."

That change riled Democratic state Treasurer Bill Lockyer, who issued a statement calling the deal "the most irresponsible budget of the past half-century."

Lawmakers replaced the withholding plan by doubling penalties on corporations that underreport taxes. Jean Ross of the California Budget Project, an advocacy group for the working poor, said it was unreliable because it is unclear how corporations would react.

But Department of Finance spokesman H.D. Palmer said it is expected to raise $1.5 billion, not from penalties but from forcing businesses to fully pay taxes owed since 2003.

He said the revenue model is based on how businesses responded to the state's 2005 amnesty program. The change is another one-time bonus, as the state expects it to generate modest new revenues in later years.

No one in the Capitol wanted to claim the various accounting tricks that resolved the final pieces of the budget. Lawmakers and the governor acknowledged the fiscal maneuvers were ugly, but they blamed everyone else.

Democrats said Republicans were at fault for not raising taxes, which Democrats proposed and felt was a more honest solution. Senate President Pro Tem Don Perata suggested Schwarzenegger should have been "embarrassed that he couldn't get at least one Republican vote" for a sales tax increase.

Republicans said Democrats have overspent for too long and should have agreed to a long-term cap on spending. Senate Republican leader Dave Cogdill said his caucus once again will oppose new taxes next year.

Schwarzenegger blamed both sides for "getting stuck in your ideological corners."

All hope the state can expand the California Lottery and persuade a battered Wall Street to pay the state $5 billion upfront next year in exchange for future revenues. They see it as a way to get through another bad economic year.

But both the lottery plan and the rainy-day fund proposal require voter approval.

Labor unions and education groups remain upset that lawmakers agreed to the rainy-day fund, especially without an accompanying tax increase, and they could spend millions of dollars to fight the measure.

Call Kevin Yamamura, Bee Capitol Bureau, (916) 326-5548. Aurelio Rojas and Jim Sanders of the Bee Capitol Bureau contributed to this report.