In the latest round of Capitol brinksmanship, Gov. Arnold Schwarzenegger vetoed a bill honoring Vietnam veterans and threatened to kill 72 other proposals on his desk because he said lawmakers have ignored his priority issues.

The Senate withdrew all of its 43 bills from the Republican governor's desk for temporary safekeeping. But in an act of defiance, the Assembly left on his desk a bill that would designate March 30 as "Welcome Home Vietnam Veterans Day."

"I dare the governor to veto this bill," said Assembly Majority Leader Alberto Torrico, D-Newark, before the close of Tuesday's session.

Shortly afterward, Schwarzenegger accepted the dare and vetoed Assembly Bill 264.

"Our state is facing significant challenges, including the need for comprehensive changes in our policies on water, energy, and corrections and the need to take meaningful steps to stimulate the economy and rein in the rising levels of unemployment," Schwarzenegger wrote in his veto message. "This bill does nothing to address any of these issues. I look forward to considering this measure when these other major issues are addressed."

Assemblyman Paul Cook, R-Yucca Valley, a Vietnam veteran who co-authored AB 264 and wears a Marine Corps pin on his lapel, said he was "dismayed and angry."

"This is something that is long overdue and it's something I feel very, very strongly about," Cook said. "And (a veto) just shows no respect for all those veterans."

Schwarzenegger issued his threat earlier Tuesday against 43 bills in the Senate and 30 in the Assembly to gain leverage while his biggest priorities hang in the balance.

"The governor believes that we must act on the major issues facing our state – water, prison, renewable (energy) portfolio standard, appointments – before we consider other issues," Schwarzenegger communications director Matt David said in a statement. "These issues have been debated for up to five years; it's time for action so we can move California forward."

Kathryn Dresslar, chief of staff to Senate President Pro Tem Darrell Steinberg, D-Sacramento, told legislative aides in a memo that the Senate withdrew all of its bills "to protect your hard work." Doing so allows the Legislature to send the bills back to the governor at the close of session later this week, upon which he has a 30-day window to act.

The Assembly likewise began to withdraw all 30 of its bills before Torrico moved to keep AB 264 on the governor's desk, with Cook's blessing.

Prior to Schwarzenegger's veto, Torrico warned that both houses of the Legislature would move to override his veto of AB 264. The bill initially passed in the Assembly 79-0 and in the Senate 36-0.

Assembly Speaker Karen Bass, D-Los Angeles, called Schwarzenegger's actions "disappointing, especially since we have been working night and day ... I was just a little disappointed that he didn't have the faith in us to finish."

But Assembly Republican leader Sam Blakeslee, R-San Luis Obispo, didn't seem to have a problem with Schwarzenegger's actions.

"I believe the governor is working in good faith," he said. "And if he feels the extra time accorded through this motion allows him to get to the right place, to sign or veto bills, I'm going to take him at his word that this is an effort to do the right thing."

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