When Senate President Don Perata (D-Oakland) began his lunchtime remarks at the Sacramento Press Club, he indicated he wouldn’t be breaking any news about the status of state budget negotiations.

But in the Q&A after the speech, it sure sounded like he did: Senate Democrats are apparently willing to take their plans for expansion of state financed health care for children out of the budget for the new fiscal year. It’s that expansion of the program, which covers children regardless of their immigration status, that has drawn strong objections from legislative Republicans. As such, the first budget deadline was missed last week.

“We’ve taken that off the table,” said Perata of the health care proposal, “because we did not want the budget to get hung up on that particular point.”

In the budget approved by a joint conference committee, Democrats used their majority status to expand health care programs available for children of low-income families. The Democratic expansion would cost about $1.8 million in the fiscal year that begins July 1. But Governor Schwarzenegger is opposed to that proposal, and his fiscal advisors say the cost of the expansion would be close to $300 million in just two years time.

Their penchant for fiscal prudence aside, the proposal also irked many legislative Republicans on a philosophical level– because a portion of the health care money would be spent on children who are here without legal status. However, Schwarzenegger’s budget also has money earmarked for children’s health care programs; it, too, could cover kids that are illegal immigrants. His budget just includes less money for such needs.

And just last week, Schwarzenegger said that “every child should have the right to some health care.”

Perata told the luncheon crowd that taking the Democratic plan for Healthy Families expansion out of the budget does not mean Senate Democrats are giving up on the proposal. “We will run a bill [this year], we will get it on the governor’s desk,” he said.

Two questions now arise: is that concession enough for Republicans to support the budget, even though many of them also oppose the governor’s plan on the subject? And where does this leave Assembly Democrats, given the passionate defense of the Democratic plan late last week by Assembly Speaker Fabian Nunez (D-LA)?

UPDATE: Senate GOP Leader Dick Ackerman (R-Irvine) says the Democratic movement on the health care issue is “good news,” but that it only solves part of the problem. He says his caucus still has concerns over the governor’s plan that allows access to state-funded care for illegal immigrant children. “This is an important policy issue,” Ackerman said in a brief phone interview this afternoon.