With dueling letters flying back and forth (here’s Sen. Steinberg’s), it is clear that there is a lot of work left to be done on the budget.  In fact, Steinberg is saying that they are at a “mini-impasse” now:

Senate President Pro Tem Darrell Steinberg, D-Sacramento, suggested Tuesday that Gov. Arnold Schwarzenegger bears blame for budget inaction after the governor rejected the most significant parts of a budget package Democrats have sent him in recent weeks.

The Republican governor on Monday told legislative leaders that he would veto a gas-tax swap that would have cut about $1 billion from the state’s $19.9 billion deficit through June 2011, saying that he wanted a bill that would have cut gas taxes by 5 cents per gallon.

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The Democratic Senate leader declared the situation a “mini impasse,” though he was confident that lawmakers and the governor would be able to resolve their budget disagreements. In particular, Steinberg said, lawmakers would seek to send Schwarzenegger another bill that helps “short sale” home sellers, perhaps without the corporate penalty provisions if need be. (SacBee)

I recommend you read the full Steinberg letter for additional context, but long story short, they’re trying to do a swap of gas taxes for fees.  Trouble is, that when other states tried doing a similar move, they ended up losing revenue and the oil companies ended up taking the additional money.

There are a few points of agreement that should be able to get some budget “solutions,” but there is still a long way to go to chisel down that $20B deficit.