California legislature approves budget bills

California Governor Arnold Schwarzenegger speaks during a news conference in San Francisco, California July 3, 2009.

SACRAMENTO, California (Reuters) - California's state legislature on Friday approved a $24 billion package of bills to close a gaping deficit, and Governor Arnold Schwarzenegger said he hoped to sign a budget within three days.

The state Assembly passed a package with some omissions from a Senate version. The Senate bills reflected an agreement by legislative leaders and Schwarzenegger earlier in the week.

"This budget is an acceptable budget to me," Schwarzenegger told reporters after the votes, adding that he would build a "responsible reserve" through line-item budget cuts.

"I think the financial community is going to look at this budget in a positive way," he said.

The governor added that state leaders may need to return to Sacramento to make additional spending cuts in coming months because of the weak economy. "We're still in troubled waters," he said.

The Assembly package did not include a more than $900 million reserve, $100 million in offshore-drilling revenue and a transfer to state coffers of more than $1 billion in local fuel taxes that were part of the Senate plan.

On Monday, the Republican governor and top lawmakers in the Democrat-led legislature agreed to the budget fix, setting the stage to end months of wrangling over how to plug the massive shortfall.

Critics immediately weighed in. The League of California Cities said in a press release that the budget contains a "clearly unconstitutional diversion" of local redevelopment funds.

(Reporting by Jim Christie; Editing by Richard Chang)