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SACRAMENTO (AP) ― Republican lawmakers on Saturday answered Democrats' challenge to produce their own plan to solve the overdue state budget, relying on deep cuts and borrowing.

The GOP plan, released by party leaders in the Senate and Assembly, does not include the temporary 1 cent sales tax increase supported by Gov. Arnold Schwarzenegger and Democrats.

The governor and Democrats seek $10 billion in cuts and would raise $4 billion in the current fiscal year through the sales tax increase. That would have closed most of the $15.2 billion deficit.

On Friday, Republicans in the Senate refused to support a Democratic plan that was similar to Schwarzenegger's proposal, continuing the Capitol deadlock.

"Our economy is suffering like it hasn't in decades," Senate Minority Leader Dave Cogdill, R-Modesto, said in presenting the GOP alternative. "Raising taxes at this time is something that will definitely damage and hinder this economy at this time."

Instead, Republicans proposed $1.6 billion in additional cuts and borrowing nearly $2 billion from state lottery proceeds.

Under the GOP plan, the lottery money would be repaid at a rate of $200 million a year. But Democrats and Schwarzenegger question whether such a borrowing plan would be legal without voter approval because the lottery was established through the initiative process.

Earlier this year, Schwarzenegger proposed his own plan to raise money through the lottery, but it was more far-reaching and would require voter approval. The governor wanted to boost sales of the lottery and sell bonds to investment firms based on its future value, a plan he said would bring in billions of dollars.

The Republican budget plan released Saturday also included the rainy day reserve and authority to make midyear cuts that Schwarzenegger desires, as well as a cap on spending.

Assembly Speaker Karen Bass, D-Los Angeles, called the GOP lottery plan a phony scheme and said the Republican budget would produce deficits "as far as the eye can see."

Democrats, who are in the majority in both houses of the Legislature, say the Republicans' numbers don't add up.

They criticized the spending cap, the call for a two-thirds vote to withdraw money from the rainy day fund and the proposal to change the state Constitution to let the governor cut spending unilaterally during lean times.

Even Schwarzenegger criticized the plan put forward by his fellow Republicans. He called it fiscally irresponsible, saying "it simply pushes our problems to next year."

But the governor came in for criticism of his own, with Howard Jarvis Taxpayers Association President Jon Coupal saying he should not be pushing for a sales tax increase. Coupal praised the alternative Republican plan as a way to "force the Legislature to stop their reckless overspending once and for all."

On Sunday, the Legislature will match its record for the longest it has gone without an approved spending plan. With no budget compromise in sight, lawmakers are certain to break that record.

The fiscal year started July 1.

Senate President Pro Tem Don Perata, D-Oakland, said senators will meet every day -- including the Labor Day holiday -- while waiting for Republicans to draft their budget plan into language that can be put to a vote. Republicans said that could take a week and conceded their plan is likely to fail, leaving the state no closer to a compromise.

(© 2009 CBS Broadcasting Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)