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LOS ANGELES, Feb 15 (Reuters) - California lawmakers narrowly failed to pass a $40 billion budget on Sunday, casting doubt on Gov. Arnold Schwarzenegger's ability to prevent the nation's most populous state from sinking into the abyss. Bleary-eyed senators in the state capital of Sacramento adjourned for the day after all-night horse-trading failed to generate the one Republican vote needed to ensure passage of the bitter mix of tax hikes and spending cuts. California, the world's eighth-biggest economy, is constitutionally barred from running a budget deficit, and has begun forcing state employees to take unpaid leave. State spending on infrastructure work has also largely wound down, adding to the drag on the broader U.S. economy, which appears to be facing a long and deep recession. Budget negotiations will resume on Monday, said senate leader Darrell Steinberg, after taking pity on lawmakers who had been confined to their offices by party leaders.