LOS ANGELES, Jan. 7 (Xinhua) -- California's budget crisis has deepened as the latest round of budget negotiations between Governor Arnold Schwarzenegger and Democratic legislators collapsed, it was reported on Wednesday.
The latest development might prompt the state to delay tax refunds to millions of Californians, along with student grants and payments to vendors, the Los Angeles Times said.
The crisis has left the state with little more than a month's worth of cash in the treasury, the paper said.
California's budget gap was projected to reach 41.6 billion dollars by the middle of next year due to failure to resolve difference between the governor and lawmakers.
On Tuesday, Schwarzenegger vetoed the 18-billion-dollar fiscal package passed by the legislators after Democrats refused to agree to all of the spending cuts Schwarzenegger demanded, or to his requests that some environmental laws be relaxed and government construction projects be opened to private contractors, according to the paper.
The rejected package was intended to raise 9.3 billion dollars in new and increased taxes on gasoline, sales and personal income and cut schools, health and other state programs.
The state may begin issuing promissory notes as early as Feb. 1,if lawmakers have not resolved the budget crisis, the paper quoted State Controller John Chiang as saying.
"We have not made any decision about deferring payments or using IOUs, but they are possibilities if the governor and Legislature don't come to some agreement soon," Chiang's spokeswoman Hallye Jordan said in remarks published by the paper.