Lawmakers work toward budget compromise

SACRAMENTO, Calif. The legislators need to bridge a $26 billion shortfall to keep the cash crunch from getting worse.

State officials say a key sticking point is how much funding the state should cut to education, health and welfare programs.

The new fiscal year began last Wednesday, so the state is now issuing IOUs.

Those state payments began going out last week to private contractors, state vendors, people getting tax refunds and local governments for social services.

However, the elderly, blind and disabled people will continue to receive assistance payments because the federal government is paying the state's share.

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