Capitol Alert

Updated at 4:40 p.m.

Cancel those Sunday plans: The Assembly and the Senate have tentatively scheduled floor votes on a budget bill that day.

It does not mean a deal is imminent.

Lawmakers want a floor vote by this weekend to meet a deadline set by Secretary of State Debra Bowen for placing measures on the November ballot. Many see the deadline as a moving target, however, and believe the vote Sunday may be the first in several floor exercises before a final deal is struck.

Assembly Speaker Karen Bass, D-Los Angeles, said lawmakers plan to vote Sunday on a modified version of the Democratic conference committee plan, which relied on tax increases on the wealthy. Senate President Pro Tem Don Perata also said his house would hold a vote "probably Sunday."

"It will be on a compromise version from the conference committee to where we are now, and reflect a variety of areas where we've compromised," Bass said. "And it is critical that we take action before Monday because the Democrats have taken budget reform very seriously."

Perata, D-Oakland, said Thursday that lawmakers remain divided over whether to use taxes or borrowing to balance the state's $15.2 billion budget shortfall. But he maintained that he is on the same page with Gov. Arnold Schwarzenegger on long-term budget reform, which establishes a stronger reserve fund but does not tie spending to population growth and inflation, as Republican legislators want.

"That's not an issue anymore," Perata said. "We've worked that out. I think it's to his satisfaction. It's to our satisfaction. I don't know how the Republicans feel about that. Most of them wanted a very hard cap."

Schwarzenegger this morning remained in Los Angeles for the Border Governors' Conference, a fact to which lawmakers were quick to allude, suggesting that talks were on hiatus with the governor out of town for the last 24 hours. He is due back in Sacramento this afternoon.

To resolve the dispute, the governor has proposed a temporary 1-cent sales tax increase for three to four years, followed by a sales tax decrease as much as a half-cent below the current 6.25 percent rate. The decrease is considered a sweetener to entice Republican lawmakers to vote for the plan.

But disagreements have cropped up over how that sales tax would be implemented. Sen. Roy Ashburn, R-Bakersfield, has characterized the move as a tax cut because he believes it would result in a permanent sales tax decrease in the long term. Democrats are opposed to making the decrease permanent and believe it should be phased out.

Perata said Thursday he isn't focused on a sales tax and wants to pursue the Democratic proposal to tax the rich.

"We're talking about a permanent tax on the high-income earners of this state," Perata said. "The governor's (tax) proposal has changed repeatedly, constantly, and I don't know what the latest proposal is."

Assemblyman Roger Niello, R-Fair Oaks, vice-chairman of the Assembly Budget Committee, said the governor's budget reform plan would be unacceptable to his Republican colleagues, at least six of which are necessary to pass a budget in the Assembly.

"The proposal of the governor kind of backs into a spending cap by virtue of their details of setting up a reserve," Niello said. "That is not a reliable reserve. Our caucus believes the only way to have a reliable reserve, a real rainy-day fund, is to limit the growth of spending when revenue growth is strong. Our spending cap is population growth plus inflation. That is a hard number."

Niello said Republicans remain opposed to the sales tax plan because they do not trust that the temporary increase will ever phase out. He said lawmakers could simply vote to make it permanent in future years. Some Republicans have said they would rather use internal borrowing to raise funds, paying back that money with an expanded lottery in future years.

"We have been open to (closing) some of the loopholes, some of which can raise significant funds," Niello said. "We would be open to other maneuvers. Without being specific to what those are, we become very flexible if they want to talk about a real spending cap."

UPDATE: Though Perata told reporters he plans to hold a vote this weekend, he has not called a floor vote Sunday, making it uncertain the upper house will actually consider the budget this weekend. The Senate is officially dark Friday and Saturday and on-call for Sunday. At the close of session Thursday afternoon, Perata joked that senators should check with their local weather forecasters about whether they need to return Sunday.

-- Kevin Yamamura and Jim Sanders