Sacto 9-1-1

Police said the chaotic incident began about 9:40 p.m. when an argument erupted at in the bar at the corner of 2nd and K streets. The argument then grew into a fight and an employee of the establishment tried to intervene.

Police said that one of the combatants drew a weapon and fired several rounds toward those he was fighting. A 30-year-old woman, a 35-year-old man and an employee of the business in his 20s were hit by gunfire.

The woman, who was hit in her lower body, survived her injuries.

However, the 35-year-old man and the employee did not survive multiple gunshot wounds. They were pronounced dead on the scene.

A armed security guard nearby heard the gunshots and confronted the surviving shooter. The two exchanged gunfire inside the bar and both the security guard and the 22-year-old shooter suffered gunshot wounds.

The suspect, now wounded and still armed, ran from the bar into the crowds of families holding the hands of children and pushing baby carriages along the wooden sidewalks of old town in the chilly night air. He was immediately taken into custody by police.

The arrested man, who has not been identified, was taken to a hospital for treatment. The security guard was also treated at the hospital.

Homicide detectives and crime scene investigators responded to interview witnesses and gather evidence. Two guns were recovered at the scene.

Ray and Diane Correia of Roseville watched the debacle unfold from the second-floor La Terraza restaurant across the street from Sports Corner. First, they heard the sounds of gunfire. Then three policemen came riding down K Street on horses, guns drawn. Two police cars also arrived less than 30 seconds later. Then two men, both suffering from gunshot wounds, came running out of the bar onto K Street. Both eventually collapsed. Then a man the Correias' identified as the shooter came out of the bar, saw all the police, and surrendered. He was immediately taken into the patrol car.

"I've never seen anything quite as impressive as the way the police got there and took charge immediately," said Ray Correia. "Those officers on horses coming down the street with their guns drawn was awesome."

"Why people carry guns in a crowded area is beyond me," Correia added. "That's not who we are. It's too bad that that element can ruin it for everybody."

Sharon Witham and Bob Ginskey of Lakeport were also near the Sports Corner when the shooting broke out. They had just seen the 9 p.m. fireworks show when they found themselves crouching in a window well to protect themselves from gunfire.

The couple returned to Old Sacramento this morning out of curiousity. "What a horrible thing to happen after such a wonderful show," Witham said.

Anyone with information is asked to call Crime Alert at (916) 443-4357.

The fireworks that were supposed to be launched at midnight were instead set off this morning shortly after 8 a.m., sending a steady rumbling through the still-quiet city neighborhoods near downtown. Officials said it was too dangerous to store the fireworks, which were loaded and ready.

The fireworks show is one of the largest in the area. The midnight display was to follow the one at 9 p.m, capping a night of celebration in Old Sacramento to welcome the new year.

Officials had planned it not only as a family event, but one that would provide a boost both to the area's economy and to the city's reputation.

Old Sacramento cleared out after the shooting. Businesses that had stayed open late lost thousands of dollars in potential sales.

"There would have been 20,000 people here at midnight," said Mac McCulloch, owner of Fanny Ann's Saloon.

Earlier this year, the city had considered revisiting the Times Square-type party it held downtown on the K Street Mall in 2008. That year, the city expected 2,500 people but was overwhelmed by about 25,000. It rejected such a party this year, citing security concerns.

Read more: Future of fireworks show in Sacramento undecided.

PHOTO CAPTION: John Edmonds, 24, of Del Paso Heights turns his face away from the blood left on the sidewalk outside the Sports Corner Cafe in old Sacramento where two people died in a shooting Monday night. Randy Pench/Sacramento Bee