Sacramento -- Gov. Arnold Schwarzenegger, choosing charm over brawn, has been reaching out to key interest groups in the Capitol, trying to work out agreements that will smooth the way toward an on-time, balanced budget.

Whether sitting down for meetings with leaders of Indian gaming tribes or making a personal appeal to the heads of the state's league of cities, Schwarzenegger is working behind the scenes to cut deals before he unveils his revised budget plan early next month.

The negotiations hold advantages for both sides.

Groups that negotiate with the governor can get something in exchange for working out terms of the spending cuts rather than having cuts imposed on them. And Schwarzenegger, under pressure to keep a campaign pledge not to raise taxes, can get help with closing a $12 billion budget gap by dealing directly with those groups, heading off battles with their allies in the Legislature.

Schwarzenegger will need all the cooperation he can get. Tax collections are not likely to produce a spring windfall that will help the governor out of his fiscal jam. Even with about $1 billion in unexpected revenue from a successful tax-amnesty program, tax receipts tallied so far are about what the state anticipated.

Already, the governor is close to finalizing a deal in which Indian tribes would share a slice of casino profits with the state. And an outline of a deal has been reached that will have local governments shoulder significant spending cuts in return for Schwarzenegger's support for a constitutional amendment that will stabilize state financing for cities and counties in the future.

Schwarzenegger will present his revised budget in mid-May, the kick-off to serious negotiations that are supposed to give the state a budget by July 1. Lawmakers have missed the deadline for years, and the constant tardiness was something Schwarzenegger pledged to change during the campaign.

"The governor wants to get at the very least an on-time budget that is structurally balanced,'' said H.D. Palmer, a spokesman for the Department of Finance.

By working with interest groups ahead of time, he hopes to make the process smoother, Palmer said. In his January budget, Schwarzenegger proposed severe cuts to health and human service programs, large hikes in college tuition fees and a raid on the state's transportation accounts.

Palmer said the agreements being worked out won't alleviate the need for difficult cuts.

Knowing the difficult budget road ahead, many groups have chosen to work with the administration.

"Any interest group takes a risk if they don't make a deal, because at the end of the line, there may be no money left," said Sherry Bebitch Jeffe, a political analyst at the University of Southern California.

Local governments realized they had to work with the administration when the governor in January suggested taking $1.3 billion in property tax from them.

A decade ago, the state did the same thing. "The wounds are still open and oozing from the last take," said Pat Leary, legislative director for the California State Association of Counties.

Cities and counties put an initiative on the November ballot to prohibit the state from taking money from local governments without a vote of the people. But the proposition, if passed, would have nullified the governor's proposed budget by halting all fund transfers between state and local governments until there could be a statewide vote.

The two sides started talking, and the administration made its position clear: It needed the $1.3 billion for the next two years to make the budget balance. But local governments wanted a way to guarantee they would no longer be the state's ATM.

Under a tentative deal, the state will take $1.3 billion from local governments for the next two years in exchange for a new Schwarzenegger-backed constitutional amendment on the November ballot protecting the main sources of revenue for cities and counties -- property and sales taxes -- starting in 2006. The original measure will still appear on the November ballot, but it will become an "orphan'' initiative -- no one will campaign for it.

The deal also includes exchanging the amount of money local governments get from vehicle license fees with an equal amount of property tax. Cities and counties long have expressed a desire to depend more on property tax, which is more directly related to the services they provide, such as fire and police protection.

Steve Szalay, executive director of the California State Association of Counties, said those services will be hurt by two years of significant cuts but that long-term stability is worth it.

Schwarzenegger personally called the executive committee of the League of California Cities and met with county officials to talk about the need for an agreement.

Other groups also have expressed a desire for long-term stability when it comes to dealing with the state's budget. The University of California and California State University systems have been talking with the administration about a way to make college tuition fee increases more predictable.

Michael Reese, a spokesman for the University of California, said there have been a lot of discussions, and "everything remains on the table."

This year's budget includes a proposed 40 percent hike in graduate and professional fees, which lawmakers and university officials believe are too high.

One of the largest and most complex payouts may come from Indian tribes, some of which are negotiating to give the state upwards of $1 billion in exchange for unlimited expansion of gaming on their land.

The tribes would use their good credit to finance a bond that could give the state up to $1 billion, depending on how many tribes agree to the deal. The state would get the money immediately, and tribes would pay off the bond over time. The tribes would also pay the state up to $25,000 a year for each new slot machine installed.

Schwarzenegger's budget counted on $500 million from tribes.

While several large tribes are involved in the negotiations, some of the state's largest are not. One, the Agua Caliente Band of Cahuilla Indians, is sponsoring a November ballot initiative that allows for unlimited expansion of gaming if tribes agree to start paying the corporation tax.

Howard Dickstein, a lawyer representing some of the tribes in negotiation, said working with Schwarzenegger has been a welcome change from the days of former Gov. Gray Davis.

"He is less concerned with asserting the jurisdiction of the state at the expense of the tribe at every opportunity, which is a refreshing change," he said. "He is much more responsive."