Governorr, lawmakers work on budget

Gov. Arnold Schwarzenegger and legislative leaders emerged from a meeting Wednesday saying they're confident California will be able to repay up to $7 billion in short-term loans, even as the state treasurer estimated the state's revenues are likely to drop another $3 billion below projections. AP in the Daily News.

But they offered no explanation - and reached no agreement - on how they plan to solve the state's mounting fiscal problems, other than to say they will hold weekly meetings to discuss the crisis.

"We want to just assure everybody that we'll be able to pay our bills at the end of the month, and we go step by step after that," Senate President Pro Tem Don Perata, D-Oakland, said.

State officials have worried that the ongoing national credit crisis may make it hard for the state to sell $7 billion in short-term bonds, starting with a $4 million offering next week. The state needs the money to tide it over until it gets a surge in tax revenue next spring.