From the Sacramento Bee:

Gov. Arnold Schwarzenegger said Thursday the state budget deficit will be “probably more than $10 billion” in the next fiscal year as the state takes in lower than expected revenues in a flagging economy.

The Republican governor, addressing a district attorneys’ conference in Sacramento, blamed budget formulas that lock in spending increases and a downturn in the economy related to problems in the housing market.

“So every time we look at our revenues, they’re short,” Schwarzenegger said. “And so this fiscal year, our revenues are short by $7 billion. This is this fiscal year, 2007-2008. Next fiscal year, probably more than $10 billion short. So this just shows you this is why we have such an extraordinary budget deficit. This is why we have to make all kinds of cuts across the board, if it is in education, law enforcement, health care, all those different things, because we cannot spend what we don’t have.”

Schwarzenegger later told reporters he opposes tax increases to solve the deficit but renewed his call for legislators to get “creative” to find revenues. He once again expressed interest in leasing the California Lottery.

The governor is scheduled to release his revised budget proposal May 14 that accounts for updated tax revenue numbers. His January plan assumed the deficit would be $14.5 billion. Legislative Analyst Elizabeth Hill later upped the number to $16 billion. Lawmakers then authorized more borrowing, delayed some debt payments and made other fixes to close the gap to about $9 billion for the fiscal year that begins July 1. The governor said that number has grown by at least $1 billion.