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Sacramento Bee: “State Budget Gap Now $14 Billion”

Some ominous news from Sacramento:

Gov. Arnold Schwarzenegger’s finance officials are projecting a California budget deficit of roughly $14 billion, significantly larger than the $9.8 billion gap previously forecast by a state budget analyst, according to two sources who spoke to the governor.

The growing estimate increases pressure on Schwarzenegger and lawmakers to cut state spending and consider tax increases to close the budget hole. Schwarzenegger last month ordered all departments to prepare spending plans 10 percent below than what they had anticipated, and GOP lawmakers are calling for immediate midyear cuts in spending.

Schwarzenegger is meeting with legislative leaders to brief them on the budget problem after Department of Finance officials revised their estimates Monday. They based their calculations on new economic and revenue indicators that took into account the sluggish housing market, drops in property tax revenues and increased expenditures from Southern California wildfires, among other factors, said spokesman H.D. Palmer.

Legislative Analyst Elizabeth Hill last month estimated the budget gap at $9.8 billion, larger than the $6 billion Schwarzenegger’s office originally projected. But the governor’s Department of Finance now believes the deficit is beyond $10 billion.

Of course, the Los Angeles Times includes an additional detail that’s on everyone’s minds:

A $14-billion budget gap would translate to more than 12% of the state’s budget if spending continues to rise as projected. Legislative Analyst Elizabeth Hill last month urged legislators to consider getting rid of state programs created in recent years, abolishing tax breaks, raising taxes and reducing benefits for the recipients of government programs.

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