SACRAMENTO - The state Senate failed to pass a new spending plan Tuesday, splitting along party lines in a vote that underscores the stark polarization in the Legislature over California's $38 billion budget shortfall.

The plan by Senate Democrats -- a half-cent increase in the state sales tax and nearly $11 billion in cuts -- was all but dead even before lawmakers took their seats Tuesday morning, a week before the start of the new fiscal year.

But with the constitutional June 30 deadline for approving a budget around the corner, Democratic legislators wanted to show constituents that ``we haven't been sitting here doing nothing for four months,'' explained Sen. John Vasconcellos, D-San Jose.

So they voted anyway.

Senate Republicans reaffirmed Tuesday that they are standing strong against any tax or fee increases to plug the budget shortfall, and holding out for deeper spending cuts.

``You will test our mettle today, and you will find it is very strong. You will find that Republicans are not in the business of rolling over this year,'' said Sen. Jim Battin, R-Palm Desert, moments before the budget bill failed 24-14. The bill needed 27 votes, or two-thirds of the Senate, to pass.

Lawmakers have often missed the constitutional mark for budget passage. After Tuesday's vote, they appeared on course for a repeat of last summer's record-breaking two-month impasse which dragged on until Sept. 1.

But the stakes are higher this time. California will run out of cash at the end of August, according to the state controller, and the state has already maxed out its credit card for borrowing from Wall Street. The state's credit rating is so low that it had to rely on the good credit of seven banks just to borrow $11 billion to stay afloat through August. California's dismal credit rating threatens to fall further, making it more expensive to issue bonds in the future.

State may resort to IOUs

If there is no spending plan in place as of July 1, the state will begin issuing IOUs to legislative employees and vendors that provide the state with goods and services, such as office supplies for state agencies.

How Democrats, Republicans and the governor can reach a consensus before Tuesday is unclear. Gov. Gray Davis praised the Senate for taking a step toward passing an on-time budget, but expressed little confidence that both houses of the Legislature would agree on a budget by July 1.

``I again call on my colleagues upstairs to resist the siren song of some Republicans to divide and dig in,'' Davis said. ``Our job is just the opposite: to pull together, find common ground and do the work of the people we represent.''

Sending a spending plan to the governor requires approval by two-thirds of the Legislature. That means the Democratic majority needs the support of two Republicans in the Senate, and six in the Assembly.

In the past, Democrats have been able to pick up the necessary Republican votes. In the Assembly, only one Republican -- Keith Richman of Granada Hills -- has indicated that he would consider voting for a tax increase.

Senate Democrats proposed a budget Tuesday with just one tax increase: a temporary half-cent sales tax to pay back more than $10 billion in loans. The Democrats abandoned Davis' proposal for tax increases on cigarettes and high-income earners. They proposed cuts that would eliminate a tax credit for manufacturers; delay the opening of the new University of California campus in Merced; shut down the California Arts Council, which funds art programs in schools; and close the state's foreign trade offices.

On the spending side, Republicans criticized Democrats for spending $1 billion more than the governor proposed in May -- a move Republicans said would leave California with a $9.5 billion problem for the next budget year.

``Why should we raise taxes before we address waste, inefficiency and outright fraud in government?'' asked Sen. Ross Johnson, R-Irvine.

Across the hall in the Assembly, Democrats canceled committee hearings Tuesday and took their message on the road. They are trying to enlist city and county officials to prod Republican lawmakers into supporting some tax increases to deal with the budget shortfall.

But early reaction from Republicans, who called it a misguided public relations stunt and said time was better spent in Sacramento, signaled the move would have little impact on the impasse.

``As you head out on your dog and donkey shows,'' Assemblywoman Bonnie Garcia, R-Cathedral City, said dryly, ``be sure to let the people know how hard you are working to solve the crisis.''

Ball is in lawmakers' court

Davis called off a meeting Tuesday with the top four legislative leaders, and held budget discussions with firefighters, law enforcement officials and environmentalists.

When asked by reporters if he was doing enough to twist arms in the Legislature, Davis said he had done his job by proposing a fiscal plan and said it was now up to lawmakers to do theirs.

``I am doing everything I can to encourage, cajole, persuade, guilt-trip and all the things you do to try to make this happen,'' he said in a news conference. ``It's just like a tennis game: I serve in their court, and they serve it back in my court.''