The California Legislature has finally approved a state budget, thereby putting an end to the state’s record three-month deadlock without a spending plan, and a week of wrenching negotiations. The approval comes after the government relinquished to Governor Arnold Schwarzenegger’s demands for financial reform and won his consent for the plan.

The impasse dragged on because of an ideological feud - Legislative Republicans opposed any tax increase, while Democrats sought to combine budget cuts with higher taxes on corporations and the wealthiest Californians. Schwarzenegger proposed a temporary 1-cent increase in the state sales tax that would drop after three years.

Senate Minority Leader, Dave Cogdill said, “Everybody realized it’s not a pretty budget this year. Republicans met their goal, which was to try to find a way to get a budget that didn’t do further harm to an economy that’s already hurting.”

In the $143 billion budget plan, the legislators had to bridge a $15.2 billion budget deficit to allow the state to resume payments to schools, medical clinics, day care centers and state vendors that haven’t been paid since July 1, the start of the fiscal year.

The Senate and Assembly adopted two concessions that Schwarzenegger demanded - a rainy day reserve fund with strict controls on withdrawing money from it, and a substitute for a controversial proposal to boost state payroll withholdings for workers. Schwarzenegger said he was pleased that leaders of the Democratic-controlled Legislature agreed to stronger controls on the state’s rainy day fund and gave him the authority to make spending cuts during the year. At the same time, he added that he wanted more reforms to prevent the state from spending more than it takes in.

At a news conference before the votes, Schwarzenegger accepted that the plan does little to fix the state’s long-term fiscal imbalance. He said he had got the reserve he wanted to ease the impact of future fiscal emergencies, though it will have to be approved by voters. He added that he would sign the package, though without much fanfare.

At a news conference, the governor said: “We got a lot of things done here with this budget but we did not get the structural problem resolved.” He added: “There’s nothing to really celebrate. As I said, great things were accomplished, but there are certain things that were not accomplished.”