California: Birthplace of the tax revolt faced with shutting down all government offices.

California Senate Deadlocked; Republicans Oust Leader (Update1)

By William Selway and Michael B. Marois

Feb. 18 (Bloomberg) -- California’s Senate remained deadlocked over a plan to raise taxes to help close the state’s $42 billion budget shortfall as Republicans replaced their leader who sought to build support for the plan.

The Senate delayed completing its vote on $14 billion of tax increases early this morning when it appeared there was insufficient support. The measure is the cornerstone of a budget package worked out by Republican Governor Arnold Schwarzenegger and leaders of the Legislature’s Democratic majority. It is at least one Republican vote short of the two-thirds majority needed to pass.

“We are focused on getting one more vote for the plan that has been negotiated,” Senate President Darrell Steinberg, a Sacramento Democrat, said in an interview after entering the Senate this morning.

California’s politicians have been unable to agree for four months on how to cut spending or raise revenue to replace tax collections lost amid the economic recession. The stalemate forced California, the most-populous U.S. state, to cut off funding for thousands of construction projects, delay income-tax refunds and tell 20,000 government workers that they may be fired.