SACRAMENTO, Calif. — Gov. Arnold Schwarzenegger said Wednesday that he'll restart stalled budget talks with legislative leaders in hopes of getting a quick deficit-cutting agreement that would save the state from having to issue IOUs to vendors and taxpayers expecting refunds.

"Everyone makes New Year's resolutions," Schwarzenegger told reporters during a news conference. "So here's a chance to say, 'Let's start a new year here. We have a huge budget deficit. We have three weeks before we go off the cliff and before we have to hand out those IOUs. Let's do it.'"

The Republican governor said he would meet Thursday with the two top Democrats and two leading Republicans to try to reach an agreement before the state is forced to start issuing promissory notes and laying off some state workers in February.

He called the news conference a day after vetoing an $18 billion deficit-cutting package passed by Democrats. Schwarzenegger said the Democratic plan was short on spending cuts and failed to roll back environmental reviews to speed up job-creating public works projects.

The governor and Democrats want a combination of spending cuts and tax increases to deal with a deficit that is projected to reach $42 billion over the next 18 months, but Republicans have balked at any tax hikes.

Democrats need at least three Republican votes in each house to put together the two-thirds majorities required to pass tax increases. Democrats attempted to get around that requirement in their $18 billion package by raising some taxes, cutting others and imposing a new fee on gasoline sales.

Republican lawmakers and taxpayer groups filed a lawsuit this week against the Democratic plan, contending it violated the two-thirds vote requirement.

Schwarzenegger recently released his own budget fix to cover the next 1 1/2 years. He proposed $14.3 billion in tax increases and other new revenue, $17.4 billion in spending cuts and $10 billion in borrowing.