Schwarzenegger says Calif. water deal is near

SACRAMENTO, Calif. — Gov. Arnold Schwarzenegger says he is optimistic about striking a deal with lawmakers to overhaul the state's aging water system, potentially heading off his threatened veto of hundreds of bills.His comments came during a rally outside the Capitol with a coalition favoring a fix that would allow more water to flow to Central Valley farmers, who have had to fallow thousands of acres amid a three-year drought.Schwarzenegger said his ongoing talks with the Republican and Democratic leaders of the Assembly and Senate were going well. He described the sides Friday as being "on the verge of a historic breakthrough on water."Earlier in the week, he warned lawmakers that he would veto their bills if they failed to craft a comprehensive fix to the state's water troubles.THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.SACRAMENTO, Calif. (AP) — Gov. Arnold Schwarzenegger said Thursday he will veto hundreds of bills unless lawmakers agree on a comprehensive fix for the state's aging water system.Overhauling California's decades-old water system is a priority for Schwarzenegger, but Democrats and Republicans have not been able to find enough common ground to forge a long-term solution."I made it very clear to the legislators and to the leaders that if this does not get done, then I will veto a lot of their legislation, a lot of their bills, so that should inspire them to go and get the job done," Schwarzenegger said in a speech to community college officials in San Francisco.Legislative leaders have been meeting with Schwarzenegger this week to try to reconcile their differences by Friday. By statute, Schwarzenegger has until midnight Sunday to sign or veto bills.Democrats, who make up a majority in the Assembly and Senate and have sponsored almost all the bills sent to the governor, have characterized the veto threat as silly. They said they expect the governor to consider each bill on its merits.About 700 bills are awaiting action.Leade

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