SACRAMENTO, Calif. -- Gov. Arnold Schwarzenegger and California's legislative leaders say they are making steady progress on the state's $26.3 billion budget mess.
Negotiators are scheduled to resume a third day of closed-door meetings Sunday at the Capitol.
Leaders say they're so optimistic that they are even raising the possibility of a deal in the coming week.
They are expected to continue discussing the governor's social service reform proposals.
They also need to sort out public education funding, which is the largest component of general fund spending.
The possibility of a breakthrough comes a week after the state began issuing IOUs to thousands of vendors as a cash-saving move.
State workers are also taking three days off a month without pay in a move that cuts their salaries by 14 percent.