California Governor Arnold Schwarzenegger vowed to veto a long-delayed state budget proposal Tuesday, setting the stage for a major showdown with legislators who said they will override his veto.

Schwarzenegger told a news conference that he objected to the failure of the budget to include his demand for spending limits in times of surplus, so that the state could invest in a "rainy day fund."

Legislators passed the 110-billion-dollar budget Tuesday after a record 78-day impasse over how to close a 15-billion-dollar shortfall in state finances. The Democratic majority in the legislature wanted to raise taxes and avoid drastic cuts but were stymied by Schwarzenegger's Republicans

"When they send me the budget, I will veto it," Schwarzenegger said. "If my veto is overridden, hundreds of bills will be vetoed."

A budget veto would be a first for California, but legislative leaders in both parties said they had the two-thirds supermajority to override a governor's veto for the first time since 1979. Schwarzenegger has vetoed hundreds of bills since being elected in 2003, but none have been overridden.

The budget passed by the state legislature increased spending for education and health care while borrowing huge sums against the state lottery, and relies heavily on manoeuvres that would push the California's financial problems into the future at a time when economists have little hope that revenue is on the rebound. The Democrats dropped their proposal for a 1-per-cent increase in the sales tax.

The lack of a state budget has wreaked havoc on providers of government services and those who rely on them. Billions of dollars in scheduled payments to medical clinics, day-care centers, group homes for the disabled and others have been withheld since July.

Schwarzenegger has been trying to cut the pay of most state employees to the federal minimum wage of 6.55 dollars per hour until a budget is passed. The governor, however, has been unsuccessful so far in getting the courts to force State Controller John Chiang, who runs the state payroll, to carry out his pay-cut order.