According to Assoicated Press, Democrats have walked out on a meeting with Gov. Arnold Schwarzenegger and Republicans in a dispute over eduction funding, adding another wrench into hopes for approval of a new budget.

California is currently facing a $26.3 billion dollar shortfall.

After hours of talks with the Republicans and the governor, Democrats said late Wednesday that talks were stalled over how to repay California schools $11 billion once the economy bounces back.

"When times get better, we want to guarantee that education and kids get paid back the money that they are owed," said state Senate President Pro Tem Darrell Steinberg, D-Sacramento.

The governor is also concerned about the future. Schwarzenegger said he wants to avoid a budget-balancing plan that addresses only the state's current fiscal problems. He instead wants to begin streamlining government and weeding out waste and abuse.