Gov. Arnold Schwarzenegger and Senate President Pro Tem Darrell Steinberg said separately Thursday that they are optimistic a budget deal can be struck within several days.
The tone of their comments marked a stark contrast to Capitol fighting over the last few weeks between Democrats and Republicans over bridging the state's $26.3 billion budget gap.
Steinberg also said Democrats had given up any attempt to increase taxes on tobacco or establish an oil severance tax.
In a Capitol news conference, Steinberg said significant progress is being made behind closed doors, adding, "It's time that we get this done."
Steinberg said he is encouraged by lengthy discussions Wednesday with Schwarzenegger and legislative leaders.
"I'm going to be here and I know that some of my colleagues are going to be here around-the-clock today, tomorrow and over the weekend with the hope and expectation that over the next several days we will complete this and complete it successfully."
The Senate president said that Democrats no longer are pushing for a 9.9 percent tax on oil extraction or for hiking the state's tobacco tax by $1.50 per pack.
"We would like to see an increase in the tobacco tax and the oil severance tax as a solution, but in this chapter that's not realistic and it's not what we're holding out for," Steinberg said.
Steinberg said a controversial proposal to borrow $2 billion from cities and counties remains under discussion.
"It's certainly an issue that remains in play as we add up the numbers and get to a package that represents a real solution to California's deficit problem," he said.
At a Los Angeles press conference, Schwarzenegger said he remained optimistic.
"Well, always I say I'm an optimistic man, right?" Schwarzenegger said at a Los Angeles press conference. "So I say that we actually have a chance to do it within the the next two or three days."
"It's just a matter of finding that common ground," added Schwarzenegger. "And I'm more than happy to compromise -- I always have been a man of compromise. But we've got to go and take care of the things so we don't have bigger budget problems in the out-years and kick that can down the alley."
Key issues remaining involve how best to preserve the state's safety net while altering government operations in a way that improves efficiency or reduces long-term costs, he said.
Schwarzenegger unveiled numerous proposals Saturday for changing government operations, including cutting pensions and health-care benefits for future state workers, reducing welfare grants by 6 percent, altering the application process for public assistance programs, and imposing additional anti-fraud measures on services that help frail adults live independently.
Steinberg did not identify specific areas of agreement or dispute, but he said Democrats are "willing to negotiate the reforms, certainly."
"Some of his ideas are fine, but it's never about all or nothing," Steinberg said. "It's always about the art of the possible."
In closed-door meetings with Schwarzenegger and legislative leaders, Steinberg said he expressed that "while both sides have taken hard stands...it's time that we get this done. It's time that we move to a close. It's time that we move to a close quickly. It's going to take compromise."
Audio of Senate President Pro tem Steinberg's media availability
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