Budget Impasse Seems Certain to Set Record : Finances: Wilson and lawmakers meet but reach no accord. Stalemate is expected to last through the weekend, making it the longest in state’s history.

Gov. Pete Wilson met with the top four legislative leaders Thursday for the first time in five weeks but said afterward that the state’s budget stalemate will last at least through the weekend, breaking the record for the longest period California’s government has gone into a new fiscal year without a spending plan.

“We are making good progress,” Wilson said after a two-hour session with the Democratic and Republican leaders of the Assembly and Senate. “There are some things that remain for us to do.”

The Republican governor and the legislative leaders said they had yet to agree on two major issues: how much money to take from local governments and how much to give to the public schools. With Wilson scheduled to campaign with President Bush in Southern California today, the next leadership meeting is not scheduled until Saturday.

In the meantime, both houses of the Legislature were expected to meet today in an attempt to move two measures that are expected to be minor pieces of the broader budget package.

One bill would allow the Franchise Tax Board to settle disputed cases for less than 100% of the amount at issue without going to court. The bill, which would give the state board powers similar to the federal Internal Revenue Service, is expected to produce between $300 million and $500 million in the fiscal year that began July 1.

The other bill would give the California State University system authority to implement an early retirement program. The program would not save money directly but would allow the 20-campus system to survive a $100-million budget cut without laying off tenured faculty and would reduce the number of class sections that are to be eliminated.

The early retirement bill fell short of the 54 votes needed for passage in the Assembly on Thursday. Another vote is expected.

“These are pieces of the budget package that will have to be passed,” Assembly Speaker Willie Brown (D-San Francisco) said. “They should have been passed a long time ago. Anything that’s agreed upon and people all say they’re for, ought to be done. It puts at least that part of the budget to bed.”

The Legislature would have to pass a budget today--and the governor would have to sign it--to avoid breaking the state’s 31-day record for fiscal futility. That mark was set in 1990 under Gov. George Deukmejian.

The effect of the stalemate has been muted so far because the state is using IOUs to pay bills left over from last year or ordered to be paid by the courts. But many state claims for the fiscal year are not being paid because the controller has no authority to issue checks without a budget, and the impact of those unpaid bills is beginning to ripple through the state.

On Thursday, officials representing nonprofit social service organizations held a news conference to announce that thousands of poor children would soon have to be dislodged from child development programs because there is no money to pay for their care.

Dan Galpern, legislative advocate for the California Children’s Lobby, said the community-based programs provide early education, health services, meals and supervision for children from poor working families or those at risk of abuse or neglect.

For the past month, he said, the programs have operated by obtaining short-term loans from banks, postponing payments to employees and putting off paying bills. But as the weeks without a budget drag on, he said, these stopgap measures are no longer viable.

Many programs will shut down, he said, and poor parents who cannot afford private child care will have to resort to leaving children untended, seeking help or quitting their jobs.

Times staff writer Virginia Ellis contributed to this report.