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California budget talks: on-again, off-again

By Jim Christie

SACRAMENTO, California (Reuters) - California's Democratic Governor Jerry Brown and five Republicans he needs to reach a balanced budget deal couldn't even agree on Monday about whether or not they were still negotiating.

Republican state Senator Tom Harman said talks had stalled.

"Basically the ball is in his court," Harman told Reuters. "He knows where we are."

State Senate President Pro Tem Darrell Steinberg, a top Democratic lawmaker, said work on California's budget would continue and Brown spokesman Gil Duran disputed that talks had broken down.

"They're going to keep talking," Duran said.

Harman said his group had been pressing hard in negotiations for a spending cap, easing regulations and an overhaul of the state's pension system.

"He had problems with each of those major areas," Harman said.

Brown needs a handful of Republican votes in the Democrat-led state Senate and Assembly to advance the cornerstone of his budget plan. Its key component involves putting a ballot measure to voters in June asking them to extend tax increases that expire this year to raise revenue.

That money, along with some $12 billion in spending cuts and other moves, would help plug California's budget deficit, the biggest of any U.S. state, and help bolster its finances beyond its next fiscal year that starts in July.

California's budget gap may near $27 billion through mid-2012, up from an initial forecast of more than $25 billion.

Most of California's Republican lawmakers oppose tax increases so the five who had been holding talks with Brown are seen as critical to his planned tax measure. If they were to vote to put a tax measure on the ballot, Brown would be able to tell voters it has bipartisan support.

The five Republicans also declared an impasse a week ago, yet talks resumed.

(Editing by Doina Chiacu)

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