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California governor halts budget talks

SACRAMENTO, California (Reuters) - California Governor Jerry Brown said on Tuesday he has halted talks with Republican lawmakers over the key part of his state budget plan, a tax hike to help fill a deficit of nearly $27 billion.

The Democratic governor, who has been trying to convince Republicans to put a tax measure on the June ballot, gave no indication of what he would do next, although he could try to push his plan for a referendum without Republican support.

Brown is close to half way to closing the budget gap, the biggest of any U.S. state, and his effort to reach across the aisle is being watched closely by other governors short on funds and political harmony.

California Republicans have urged Brown to support a spending cap and changes to the state's pension system and regulations as a way to reach a possible compromise on a tax measure.

In a statement, Brown said that Republicans had included other demands in talks, complicating negotiations over a tax measure.

"Yesterday, I stopped the discussions that I had been conducting with various members of the Republican party regarding our state's massive deficit," Brown said.

"Much is at stake, and in the coming weeks I will focus my efforts on speaking directly to Californians and coming up with honest and real solutions to our budget crisis," Brown said.

The 72-year-old governor had aimed for voters to approve temporary tax extensions that expire this year to raise revenue to help close the state's budget gap. Last week, he signed bills for roughly $11 billion in spending cuts and other moves.

Brown had originally planned to advance a measure to a June ballot with a two-thirds vote of the legislature by March 10. That would have required two Republicans in both the state Senate and the Assembly to back a measure.

Even though a measure lacks Republican votes, Brown still would be able to push one through the legislature with a simple-majority vote, which Democrats could provide.

While doing so would require some legal maneuvering and would deprive a measure of any bipartisan support, many Democrats have said they may have no other choice with the window for a June special election closing fast.

Brown may also be looking to an initiative for a tax measure for November, the Sacramento Bee has reported.

The governor has also held out the possibility he may balance the state's budget exclusively with spending cuts, which would require paring spending on popular programs for education and public safety.

(Reporting by Marianne Russ in Sacramento; additional reporting by Jim Christie in San Francisco; editing by Carol Bishopric)

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