The state Assembly, which recessed Dec. 9, is scheduled to reconvene next Wednesday with the question of who will lead the 80-person chamber unresolved.
Democrat Willie Brown Jr. of San Francisco and Assembly Republican leader Jim Brulte of Rancho Cucamonga are tied for the post of speaker with 40 votes each.
The tie vote has resulted in a political standoff that is not expected to be resolved soon and could force to the background any legislative work in the opening weeks of the new session.
The impasse stems from votes cast Nov. 8, when 41 Republicans and 39 Democrats were sent to the Assembly, providing the GOP with its first majority in 25 years.
But then the Republicans lost a single vote: Paul Horscher of Diamond Bar made the surprise announcement that he would become an independent -- and that he would vote for Brown.
The stalemate is widely regarded as a political triumph for Brown, who has been speaker for a record 14 years and is said to be angling for a power-sharing arrangement with Brulte.
The recent bankruptcy of Orange County could make California reach into its pocket to assist localities or school districts that have experienced significant financial losses, a report by the Legislative Analyst's Office said.
Overall, the report said, California is running slightly ahead of schedule in its two-year plan to eliminate the state budget deficit. But the report warned that certain developments could worsen the state's outlook and jeopardize achieving a balanced budget in fiscal 1996, which begins July 1.
Major budget risks include the assumption of $2.8 billion of federal funding for immigrant costs in fiscal 1996. Congress has committed less than $100 million thus far, and the state could face a shortfall of up to $2.7 billion, the report said.
Another major risk involves federal approval of county claims for Medicaid administrative and case-management funds. The budget plan counts on $400 million from the claims to offset state Medi-Cal costs over the two years. However, the federal government has deferred approval of the claims and has expressed extensive concerns about whether they are appropriate.
In addition, the report said, four recent trial court decisions pose potential risks totaling $4.2 billion unless they are overturned or modified.