California's Democrat-controlled Legislature coaxed Republicans into supporting a state budget two years ago with tax breaks for farmers.
Democrats, who again will have to troll for Republican votes to reach a budget compromise, recently peeled back the credits. In a move that left Republicans crying foul, they instead agreed to direct the money to health care for farm workers.

It was one of many signs that trust is eroding, tempers are flaring and partisan lines are hardening as lawmakers and the governor try to resolve the state's worst-ever budget crisis.

"We frankly believe that the Assembly Democrats reneged on a deal that they made relative to the budget," said Assembly Republican leader Dave Cox of Fair Oaks. "It just means we have to be more careful this year."

Today, the Legislature's June 15 constitutional deadline for approving a budget will sail by with lawmakers firmly split over spending in the nation's most populous state.

Now California is racing toward the July 1 start of a fiscal year with shaky credit, a looming cash shortage and a governor distracted by a snowballing effort to toss him out of office. Prospects are dimming for putting a spending plan in place anytime soon.

"We're heading for a train wreck," said Assemblyman Keith Richman, R-Northridge.

Missing budget deadlines is a near-yearly occurrence in Sacramento -- where partisan quarrels over tax dollars are a matter of course. But recent developments, including the maelstrom over the farm credits, demonstrate that this is anything but a usual year.

California is facing its worst budget crisis since the Depression. Since then, the state has only come close once -- when former Republican Gov. Pete Wilson filled in a $14 billion deficit with a blend of tax hikes and spending cuts.

This year, leaders have several blueprints to work with for filling a budget hole that Gov. Gray Davis predicts will reach $38 billion.

Davis outlined a plan in May that would combine $18 billion in cuts, $8 billion in tax increases and the sale of $10 billion in deficit bonds -- which would be paid back over five years with a new half-penny sales tax increase.

But the Democratic governor, who has drawn fire for his leadership on the budget, has made little progress winning support for his plan from either party.

Legislative Democrats reject some of Davis' health cuts and want to add back nearly $2 billion in spending and tack on some new fees.

Republicans, meanwhile, say they will refuse to accept any tax hikes whatsoever -- and instead want to back borrowing with existing sales taxes and make sweeping across-the-board cuts.

"The thing they are supposed to be doing now is working toward the end game," said Fred Silva, a Public Policy Institute of California senior adviser. "But ... the leaders and the budget committee are back to where they were in April."

Davis' first two years in office brought happy financial news from the high-tech stock market boom. But in the past few years, the market bust and a generally slumping economy have driven down revenues and sent the state deep into the red.

Despite increasingly tense budget debates, Davis and Democratic leaders lured GOP votes they needed for the past two years to achieve the two-thirds margin needed to pass a budget. Six GOP votes are needed in the Assembly; two in the Senate.

This year, however, party leaders seem more determined than ever to stick to their political convictions. Meanwhile, Davis also is facing a recall effort that has energized Republicans to reject his demands and pressured the governor to keep his base supporters happy.

"There is no middle ground," said Assemblyman Darrell Steinberg, D-Sacramento.

Senate Republican leader Jim Brulte recently issued a stern ultimatum, promising to campaign against Republicans who support tax hikes. And Assembly GOP leaders have quietly reminded members of the ouster of former Assemblyman Mike Briggs and others who had voted in favor of a Davis-driven budget.

"I think any Republican who votes for a tax increase just might as well put a big bull's-eye right on their back," said Jon Coupal, Howard Jarvis Taxpayers Association president.

Experts say the state's legislative map -- coupled with other external political forces -- are amplifying this year's political battles.

First, legislative term limits have reduced the experience level at the Capitol. Even in a fiscally good year, drawing up a multibillion-dollar budget for one of the world's largest economies can bewilder the uninitiated. Legislators also have less allegiance to their leaders and less leverage with one another.

"People can't get comfortable in their current positions; they have to be thinking about running for their next office," said Bruce Cain, director of the Institute of Governmental Studies at the University of California, Berkeley. "They are focused on the short term, they have to be sensitive to potential (contributors) and they don't have enough time to learn all the details and minutia of the budget."

Another factor is the redrawing of the state's legislative lines two years ago, when lawmakers provided safe districts for incumbent political parties. That meant the election of fewer moderate lawmakers, reinforcing the political threat to maverick legislators who fail to reflect the partisan leanings of their districts.

Now Democrats in a polarized Legislature are compelled to satisfy the liberal-leaning wants of voters at home, while Republicans risk losing to a more conservative candidate in a primary race if they vote for tax hikes.

"That makes them less likely to buck the party line, so when someone like Brulte threatens them, they have to take it seriously," Cain said.

Finance officials have said the state could function until late August without a spending plan.

But then California could literally run out of cash and lose its ability to borrow more, officials warn. At that point, with California's massive budget deficit and bruised fiscal credibility, it is questionable whether banks would even accept "IOUs" from the state to pay workers and vendors, as in the past.

"Everybody is hoping that California will be able to reach a budget agreement that will start them on the path to fiscal recovery," said Claire Cohen, vice chairwoman of Fitch Investors Services. "The longer they wait to do anything, the bigger the problem gets."