"Over the past few days, we have made enough progress in our negotiations that I am calling a special session on water," Schwarzenegger said in a statement. "While we still have a few remaining issues to work out, I commend the legislative leaders for their focus and commitment to solving this crisis and I will weigh all the bills on their merits."
The Democrats gave the Republicans a proposed bill to fix the fragile Delta on Sunday, the details of which were not released.
Assembly Speaker Karen Bass, D-Los Angeles, said as she left the governor's office that she expected both parties would bring a proposed bill to their respective party caucuses within 24 to 48 hours.
Assembly Minority Leader Sam Blakeslee, R-San Luis Obispo, said Republicans will thoroughly analyze the document and described the day's developments as "cause for progress."
On the Senate side, Senate President Pro Tem Darrell Steinberg called the day's negotiations a "significant breakthrough in term of thinking of this an entire package ... and (finding) middle ground on each of the issues."
The leaders said talks would resume this Monday morning.
By early Sunday night, the governor had signed 168 and vetoed 183 bills, and his spokesman said he would make decisions on the remaining 350 bills based on their merits before the midnight Sunday deadline.
Many of the bills he signed earlier in the day were meant to secure federal stimulus dollars or otherwise save California money, and many of his vetoes were expected.
The governor and the leaders of each party in the state Senate and Assembly, called the Big Five, met throughout the day in Schwarzenegger's office.
As expected, the governor signed most of the bills that would have created financial hardships in the state if they had been vetoed, including Senate Bill 19 authored by state Sen. Joe Simitian, D-Palo Alto, which will establish links between student achievement data and teacher and principal data. It is a requirement of the federal program "The Race to the Top" on which stimulus dollars depend.
Schwarzenegger also signed a bill that implements a number of reforms in the state prison system designed to save about $280 million.
He had not acted as of 10 p.m. on legislation that would have made the Antioch and Dumbarton bridges eligible for seismic retrofit dollars nor had he issued a decision on a bill that would leverage more than $2.3 billion in federal funds to increase Medi-Cal hospital reimbursement rates. A decision had also not been made on a bill that would appropriate $113 million in federal dollars for energy efficiency and conservation programs.
Among East Bay legislators' bills that were signed into law were state Sen. Mark DeSaulnier's Senate Bill 147, which creates career technical courses at the California State University system and Senate Bill 702, which requires personnel in health clubs' child care centers to follow guidelines designed to shield children from pedophiles.
The governor also signed a bill by Assemblywoman Joan Buchanan, D-Alamo, that will place on the Web whether or not employers have workers' compensation insurance and a bill by Assemblyman Sandre Swanson, D-Alameda, that strengthens human-trafficking penalties.
On the water talks, the final sticking points appear to number about a half-dozen, including whether to monitor groundwater in California for the first time and give added authority to regulators to police illegal water diversions; the makeup of a new Delta council; details of new water conservation requirements; and the size and other details of a proposed water bond.
Meanwhile, two Bay Area water agencies have threatened Democrats' hope for a deal by balking at a provision that would require an evaluation of environmental needs for flows in the Delta. The East Bay Municipal Utility District and the San Francisco Public Utilities District object to that because they fear it will force them to release water from their dams on the Mokelumne and Tuolumne rivers.
They contend responsibility lies with other water users, especially San Joaquin Valley farmers and those in Southern California, a stance that has angered environmentalists and water agencies.
On Friday, environmental groups warned Democratic leaders not to give more ground on many of the key pieces in the plan.
"There's a lot of good and important stuff in this package," said Cynthia Koehler, a senior consulting attorney with the Environmental Defense Fund. "We have stretched and compromised and we are willing to work with other parties that will compromise."
The talks have settled on about $3 billion for water storage as part of a larger package, and the current deal would allow state officials to spend that money without legislative approval, a key concession to water agencies hoping to get new dams built but fearful lawmakers could hold up projects.
"We want very strong groundwater monitoring and conservation provisions since we gave that to them," said Alicia Trost, spokeswoman for Steinberg.
The money would have to be matched by water users.
Still, even if the leaders reach a deal, the road to final passage is rough. As long as the policy and finance pieces of the deal remain separate, lawmakers would have to give majority approval of the policy piece and two-thirds support for the finance package. Voters would then have to approve the bond measure.