Talks resume in addressing Calif.'s $26B deficit

SACRAMENTO, Calif. -- Gov. Arnold Schwarzenegger and legislative leaders were scheduled to resume work Saturday on bridging California's $26 billion budget shortfall following an unexpected resumption of negotiations the day before.

Late Friday, lawmakers from both parties expressed optimism about the direction of the talks but cautioned that a lot of work remains. That is particularly true in meeting the demands for government reform by Gov. Arnold Schwarzenegger and Republican lawmakers.

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