As 2008 draws to a close, it looks increasingly likely that California will end the calendar year without a budget solution for the fiscal year.

This is incredible. California has seen epic failures of leadership before, but never over such an extended period and at such a perilous time.

Because elected leaders can't agree on a way to fix the state's finances, California can't sell bonds for public works projects that would provide paychecks for thousands of people. Schools and local governments are uncertain about state aid, creating a culture of paralysis and wishful thinking that will only make the pain worse later.

It would easier to comment on this crisis if a central figure were responsible. But as we've seen, the impasse has many masters,

Intransigence by Republicans has forced Democrats to come up with a legally risky budget that can pass on a majority vote. Gov. Arnold Schwarzenegger has signaled that he may sign such a package, but only if it includes several "economic stimulus" reforms that his buddies in the business lobby have long sought.

In an editorial last week, we criticized the governor for making unreasonable demands at a time of "Armageddon" – his words. But Democratic lawmakers deserve at least equal attention. In the face of a $42 billion two-year deficit, Democrats have yet to publicly acknowledge that a reduction in state payroll must be part of the solution.

In his November proposal, the governor proposed to close this year's $11.2 billion deficit with $4.4 million in higher revenues and $4.5 million in spending reductions. Included in these cuts was a proposal to furlough state employees one day a month. The furloughs were aimed at achieved $263 million in savings in the current fiscal year, and $451 million next year.

Had lawmakers acted on the governor's proposal in November, the state would have already saved $75 million. But as we know, lawmakers didn't act, largely because Democrats keep insisting that furloughs must be agreed upon through the collective bargaining process.

That's nonsense. In a fiscal emergency, the Legislature has the authority to institute furloughs. We suspect Democrats refuse to discuss the idea simply because of union objections.

Are furloughs a painless solution? Hardly. A 5 percent payroll cut (10 percent if the state were to order furloughs two days a month) would hurt many state workers, especially those on the lower rung of the pay scale.

Yet one-day furloughs are preferable to layoffs, which the governor is considering. Whereas furloughs would spread the sacrifice of payroll cuts across the workforce, and would actually help some employees who desire more time to spend with their family or side jobs, mass layoffs would inflict brutal hardship on a smaller number of employees. And they would add to the demands being placed on social services and the state's unemployment insurance fund.

Democrats and some union leaders we've contacted say furloughs are a ham-handed approach. Some claim they'd prefer a more surgical strategy of identifying programs that are outdated or of lesser priority, and cutting those.

Fine. If Democrats and their union handlers can agree on a way to achieve more than $700 million in state payroll savings without furloughs, we'd like to see it. But we doubt they'll produce such a plan. The opposition to furloughs is just a stalling tactic – another delay in California's slow, steady march to the edge of the cliff.