With California's budget crisis worsening, Assembly Republican leader Mike Villines said Tuesday that his members would consider revenue increases only if Democrats capitulate to wide-ranging demands that they bitterly oppose.

Villines said agreement first must be reached on a strict spending cap, permanent budget cuts, and, to bolster business, an economic stimulus package that would make changes in environmental regulations and labor laws.

Even if a deal were struck on those issues, Republicans could not commit now to support a tax increase – only to discuss revenue-generating options in response to the projected two-year, $27.8 billion shortfall, Villines said.

"If you do all those things, then of course we have to talk about that piece of the puzzle," Villines said of revenue increases. "But we're a long way from going there – and the cart shouldn't go before the horse."

Villines' comments Tuesday to The Bee's Capitol Bureau show the two sides remain deeply split despite fiscal officials' warnings that the state is quickly running out of cash, endangering $5 billion in public works projects within two weeks.

Assembly and Senate Republicans expect to release their own budget plan Monday that identifies about $11 billion in program cuts.

Senate President Pro Tem Darrell Steinberg said through a spokesman Tuesday that solving the massive gap will require both cuts and new revenue.

"Put a specific, $17 billion, half-cuts, half-revenues deficit reduction plan on the table – and then we can begin productive negotiations," said Jim Evans, Steinberg's spokesman.

Aaron McLear, spokesman for Gov. Arnold Schwarzenegger, declined to comment Tuesday on Villines' strategy but stressed that time is of the essence.

"We need action, not rhetoric," McLear said. "Republicans and Democrats need to immediately negotiate a compromise solution the governor can sign."

Villines released a list of nearly two dozen labor, regulatory and environmental-law changes sought by the GOP.

The list includes proposals to increase flexibility in work schedules to reduce overtime payments, increase contracting for state services, simplify rules on workplace meal and rest breaks, loosen deadlines for greenhouse gas regulations, and provide various tax credits to stimulate business.

Villines said the GOP's plan to cut about $11 billion from the current budget would affect schools, prisons, Medi-Cal, welfare, in-home support services and other fast-growing programs.

"It's going to be across-the-board," he said.

The Republican plan would, among other things, eliminate the fifth year of eligibility for welfare recipients, he said.

Villines characterized the GOP strategy as fighting for taxpayers by cutting spending, boosting the economy, and ending the state's boom-and-bust budget cycles.

Democrats counter that a cuts-only budget would devastate the safety net for California's most vulnerable citizens, and that loosening environmental regulations and labor laws could have far-reaching negative impacts.

Sen. Denise Ducheny, a San Diego Democrat who chairs the Senate Budget Committee, said she applauds the notion of Republicans making their priorities clear – but that there are limits to what Democrats can accept and they won't allow extortion.

"To the extent they're saying, 'Undo all the labor laws and we're still not voting for taxes,' there's kind of nothing to talk about," Ducheny said.

Call Jim Sanders, Bee Capitol Bureau, (916) 326-5538.