CHICAGO – Gov. Rod Blagojevich is rejecting warnings that Illinois must have a budget in place by Wednesday to avoid financial harm to state employees and schools waiting for government checks.

The Democratic governor said Monday that Aug. 8 is “an arbitrary date. … It’s no different from today, it’s no different from yesterday and it’s no different from August the 9th.”

Comptroller Dan Hynes, however, says his office can’t begin processing checks for employees if a budget isn’t in place Wednesday. That means 4,900 employees might not get paid on time, and more would be affected if the budget stalemate drags on.

“Each and every day it gets worse and worse,” said Hynes, a Chicago Democrat.

The same applies to $170 million in school aid that is supposed to go out Friday, although Blagojevich announced Monday that the state will help schools by offering interest-free loans.

Legislative leaders are responding to the deadline by trying to pass a budget this week that would increase education spending but provide little new money to other programs.

Whether it would include construction money for roads, bridges and schools still is up in the air. Blagojevich’s health care plan probably would be handled separately, to fail or succeed on its own.

The four leaders talked throughout the day and met for about two hours Monday evening but emerged without an agreement on how to proceed.

House Minority Leader Tom Cross, R-Oswego, said he has “no idea” when a budget might be approved, largely because officials can’t agree on how to handle construction money and the gambling expansion that would pay for it.

“The unknown remains capital and how we do that,” Cross said.

Blagojevich is sticking by his threat to reject a budget unless it meets his standards on education, health care and construction spending.

“I’m prepared to keep working … for the next several days, weeks and months if necessary to make sure we get a budget that’s right,” he said at a ceremony to sign a bill sought by labor unions.

Blagojevich was obviously relieved to be surrounded by a friendly crowd. The governor said he was jogging in Springfield recently and passed a man who shouted, “‘Hey, governor, you … ‘ and I better not say the next word but it rhymes with luck. So it’s nice to be here with all of you.”

The state budget was supposed to be passed by May 31, but was delayed by bitter disputes among the Democrats who control the Legislature and the governor’s office. A budget extension expired July 31 at midnight, leaving the state with limited authority to spend money since then.