SACRAMENTO -- California lawmakers have little to celebrate this Fourth of July as talks continue on the state's ballooning deficit.

Little progress was reported Saturday and lawmakers aren't expected to meet until Monday.

Gov. Arnold Schwarzenegger and lawmakers are trying to bridge a $26 billion shortfall to prevent a fiscal meltdown from getting worse. Earlier this week, the state began issuing IOUs and state employees received additional furlough notices.

In his weekly radio address, the governor pressed for a streamlined government, saying the state can no longer offer services that it can't afford.

Democrats have dropped their push for oil and tobacco taxes, but they remain firm on protecting children's health insurance and welfare programs.