The legislative leaders plan to meet with the governor again Monday for their seventh consecutive day of discussions.
"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 late Sunday as talks ended for the day.
He acknowledged that "we still have a few remaining issues to work out," while the leaders said substantial issues remain - including the amount of a water bond to pay for improving the state's inadequate and outdated water storage and conveyance system.
California lawmakers had already planned to return to Sacramento this week to complete unfinished business, making Schwarzenegger's call for a special water session largely symbolic.
Democratic leaders presented their proposal and answers to concerns that Republicans had been raising for weeks, said Assembly Minority Leader Sam Blakeslee, R-San Luis Obispo.
"I think there is evidence now that we are moving in the right direction," Blakeslee said as he left for the night.
Senate Minority Leader Dennis Hollingsworth, R-Temecula, said the same dozen or so issues have been dividing the four leaders and the governor for days: water conservation and balancing water rights with monitoring how property owners pump groundwater. They barely had time Sunday to discuss how to pay for water system improvements.
"We've got a proposal now that we're going to take back and take a look at. I think it moves both sides closer together," Hollingsworth said.
Democratic leaders said they hope to be able to present a water proposal to rank-and-file legislators this week, and perhaps hold public hearings on a water package before week's end. Passing a water deal that includes a bond needs a two-thirds vote in the Legislature, requiring at least some support from Republicans.
"I think we made great progress today," said Assembly Speaker Karen Bass, D-Los Angeles.
"I feel very good about it right now," added Senate President Pro Tem Darrell Steinberg, D-Sacramento.
Schwarzenegger had delayed acting on about 700 bills from this summer's legislative session to pressure lawmakers to improve California's deteriorating and inadequate water system. He faced a midnight Sunday deadline to sign or veto the bills. He said he was pleased enough with progress in the water talks to release all the bills.
He vetoed about half and signed about half the bills, acting on those measures as he would in any other year, said spokesman Aaron McLear.
(Left: The Sacramento-San Joaquin Delta, focus of battles over water rights, ecosystem restoration, and infrastructure improvements.)
"I'm fighting to rebuild our crumbling water system," Schwarzenegger said in his weekly radio address Saturday, repeating his upbeat speech from a water rally Friday. "Water is jobs for California, water is food, water is our future, water is our economy."
The governor periodically schmoozed the four legislative leaders in his smoking tent in a Capital courtyard outside his office, leaving most staff members behind in a neighboring conference room. The tent was set up so Schwarzenegger and his guests could smoke his favorite cigars without violating California's strict laws on smoking in public buildings.
"It's just a little break from being in a stuffy conference room," McLear said.
Also Sunday, U.S. Secretary of the Interior Ken Salazar and U.S. Bureau of Reclamation Commissioner Michael Connor were in California meeting with farmers along the massive federal Central Valley water project that sends Northern California water to farmers in dry areas of the state that supply much of the nation's fruits and vegetables.
The two federal leaders were also meeting with Latino farmworkers to discuss California's three-year drought and other water issues. The predicament will only worsen as the state's population grows.
For more info:
California Department of Water Resources
By Associated Press Writer Don Thompson