Although Republicans certainly didn't expect their budget proposal to be approved by the Democratic-controlled Assembly, they did present a spending plan that was – and still is – worthy of serious consideration. Now it's the Democrats' move to counter with a credible compromise of their own.

GOP lawmakers had been saddled with a negative image for simply opposing the budget plans of Gov. Gray Davis and Democratic lawmakers. By accepting the challenge to put forward a specific proposal, Republicans have begun a constructive process that could lead, ultimately, to a budget deal.

Assembly Republican Leader Dave Cox of Fair Oaks suggested as much at a press conference, showing a small space between his thumb and index finger: "We're about this close." Punctuating his point, Cox said a deal could get done that day were the Democrats to drop their insistence on tax increases.

Political rhetoric aside, movement seems more likely as Democrats and Republicans ponder the disastrous consequences of a protracted budget stalemate which threatens to downgrade California's credit rating to junk-bond status.

The growing sense of fiscal urgency helps explain why both sides are poised to roll over $10.7 billion of the state's $38 billion debt. The sticking point is how to pay off the $10.7 billion in bonds. Davis and Democratic lawmakers contend it must be done with a half-cent sales tax increase dedicated to repaying the debt. GOP lawmakers insist it can be done through spending cuts.

Can both sides reconcile their differences? One possibility is through a sales-tax swap, which has gained some traction in the Senate. This could prompt a deal and – more important – produce some meaningful movement on structural reform of the budget process.

The so-called swap would enable local governments to lower their sales tax rates by one-quarter to one-half cent, while allowing a similar increase statewide. While this would be a wash for consumers, the state would have its dedicated fund to pay off the bond. Sacramento also would be obliged to make up the lost revenue to local governments and provide schools with the money due them under Proposition 98. The resultant fiscal realignment would ensure that local governments and schools have a stable revenue source, while requiring the state to cut spending to accommodate the fund shift.

Such a realignment is fundamental to any budget accord. The state must learn to live within its means.

Consensus building, which is tough enough under normal circumstances in Sacramento, is crucial if the state is to emerge intact from this unprecedented fiscal crisis. Assemblyman Cox, who likens budget negotiations to cooking, should remain in the kitchen no matter how heated the partisan rhetoric becomes. Despite Democratic hyperbole about the poor being left to die in the streets, the GOP plan to pare 4.2 percent from last year's budget merits a reasoned response. Let the bargaining begin in earnest.