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SACRAMENTO - Not that Gov. Schwarzenegger and state legislators needed any more bad news, but the nonpartisan Legislative Analyst's Office Thursday said the state's budget deficit looks to be more than $24 billion. The governor's Department of Finance just last week had pegged the shortfall at $21.3 billion if a package of budget-related ballot measures went down in Tuesday's election, which they did. The analyst said it calculations indicate the number may be $3 billion higher. In unusually frank language, the analyst also sounded an alarm over a major element of the governor's plan to rebalance the state's budget. A...

SAN FRANCISCO (Reuters) – California lawmakers should reject Gov. Arnold Schwarzenegger's plan to sell $6 billion in revenue anticipation warrants to raise cash for the state government as it faces a $21.3 billion budget gap, the state's budget watchdog office said on Thursday. The California Legislative Analyst's office said in a report that Schwarzenegger's plan for the short-term debt would be a "terrible precedent and a poor fiscal policy," and "presents serious legal concerns."

California voters overwhelmingly rejected five of six budget referendums yesterday which would have approved higher taxes as a means to patch budget woes in the Golden State. Had the measures passed, the state would still have faced a $15.4 billion deficit. With the failure of the measures, the state now grapples with $21.3 billion in red ink. Out of control spending and high taxes driving business out of state are at the core of California’s budget problems. Now voters in a tax revolt have overwhelmingly rejected more of the same from California lawmakers, choosing instead a path that could force...

WASHINGTON – California's cash crunch appears ready to land on the steps of the U.S. Capitol. In coming weeks, Congress is expected to debate whether to take the unprecedented step of guaranteeing the state's emergency borrowing on a short-term basis. "California faces a tremendous budget deficit and cash flow crisis, which requires immediate attention," said Democratic Rep. Doris Matsui of Sacramento. "There is no panacea for addressing California's budget issues at the federal level. However, it's time for the federal government to step in and temporarily guarantee bonds until the economy improves." Matsui is working on a bill with Democratic...

California could face a staggering shortage of cash unless voters and legislators both address the issue before the start of the new fiscal year July 1, the Legislative Analyst's Office said today. In a report called "California's Cash Flow Crisis," the nonpartisan and independent analyst said state government could be faced with having to borrow a record $20 billion at the start of the fiscal year in order to pay its day-to-day bills. The report said failure of budget-balancing measures before voters at the May 19 special election "would increase the state's cash flow pressures substantially - potentially increasing the...

The 'Plan B' scenarios if the special election measures are defeated continue to trickle out of the administration of Governor Arnold Schwarzenegger. This afternoon, a new one: the governor is prepared to propose a $2 billion suspension of the 2004 constitutional initiative protecting city and county revenues. Talk of suspending 2004's Proposition 1A comes on the heels of a meeting yesterday where Schwarzenegger aides told the firefighting community that voters rejecting the measures on the ballot in two weeks time would result in as many as 1,700 firefighting positions. One local government official on this afternoon's call said the plan...

California has joined the lengthening queue of supplicants seeking help from Uncle Sam. State Treasurer Bill Lockyer is lobbying some in Congress to secure a federal backstop or guarantee on $12 billion to $16 billion of short-term revenue anticipation notes, or RANs, that the state may need to sell as early as July. Lockyer thinks it may not be possible to sell this debt without federal help, and is seeking to have the Troubled Assets Relief Program, or TARP, expanded to allow banks to sell municipal debt to the federal government, according to a state treasury spokesman. Barring that, he...

SAN FRANCISCO (MarketWatch) -- California's "liquidity problems" may force the state to seek federal backstops for sales of its short-term notes this summer, even though it received heavy demand from retail buyers in a recent bond sale, its state treasurer said Tuesday. California Treasurer Bill Lockyer said in an interview that the state is talking with Treasury Department staff, including Secretary Timothy Geithner, about getting federally issued letters of credit to back upcoming issues of short-term securities known as revenue anticipation notes. California Treasurer Bill Lockyer says the state will offer a "nice yield" on its upcoming bond sale, expected...

State Treasurer Bill Lockyer announced Tuesday that he stopped taking orders for the state's general obligation bond sale Tuesday after investors purchased $6.54 billion -- $2.54 billion more than the original $4 billion target. The additional money should go toward construction projects around the state that slowed or stopped after officials froze California's Pooled Money Investment Account in December. A board that oversees the account last week authorized $500 million in payments toward construction projects contingent on Lockyer selling at least $4 billion in bonds this week. The state benefited from heavy demand from individual retail investors, who purchased nearly...

Fitch Ratings downgraded California's general obligation bond rating Thursday due to concerns about the state's economy and ongoing budget problems, likely raising costs for taxpayers and dampening demand for $4 billion in bonds the state intends to sell next week. California's bond rating now ranks lowest among the 50 states, according to Fitch. The announcement came days before State Treasurer Bill Lockyer plans a bond sale starting next Wednesday to replenish the state's Pooled Money Investment Account and enable the state to begin paying out $500 million to projects that desperately need public funding to continue. Lockyer spokesman Tom Dresslar...

It's kind of hard to be surprised by bad economic and budget news in California these days. After all, there's virtual unanimty that we're in deep you-know-what. And yet, today's full analysis by the Legislature's nonpartisan budget watchers is still shocking... probably for its opinion that the problems stretch across almost every single aspect of state revenues and expenditures. The annual fiscal outlook, the first under newly minted Legislative Analyst Mac Taylor, adds some details to the gloomy projections the LAO released just nine days ago. That projection focused on a $28 billion gap by July 2010. Ready for some...

With credit markets in New York in crisis last week, California Gov. Arnold Schwarzenegger sent an extraordinary letter to Treasury Secretary Henry Paulson asking for $7 billion. Although the governor has since withdrawn that request, it testifies to the dire state of his budget. Yet days before penning his note, the governor told an audience at the Commonwealth Club of California not to worry about the state's budget crunch and to approve $9.95 billion in new debt on the November ballot to build a bullet train to connect Los Angeles to San Francisco: "Just because we have a problem with...

<p>The state has been on a spending spree for decades. Our last governor was recalled in large part because we felt something drastic had to be done to bring our fiscal house in order. Desperate for change, we went to Hollywood for our casting call and brought in the Terminator.</p>

The Golden State had a recall almost five years ago. California had a huge budget deficit at the time and soon-to-be-governor Arnold Schwarzenegger was promising to “cut up the credit card.” By the March 2004 primary, Schwarzenegger, by then governor, was promoting the passage of ballot Propositions 57 and 58. Prop. 57 was a $15 billion deficit bond designed to refinance the short-term debt California incurred under Democratic Gov. Gray Davis (with a few billion left over for future needs, the last $3 billion of which was borrowed a few months ago). Prop. 58 was a supposed spending cap of...

Sacramento -- Gov. Arnold Schwarzenegger, who promised not to sign any bills until lawmakers reach a budget deal, reversed his position today and signed a bill for a statewide bullet train system that he strongly supports. The governor also wants to make exceptions for three other proposals that he has been promoting: budget reform; changing the state lottery to allow California to borrow against future ticket sales; and a bond proposal for water infrastructure. The high-speed rail legislation will replace a $10 billion bond measure on the November ballot with a revised version of the proposal that makes the bullet...

Sacramento, CA (AP) -- Backing off his pledge to sign no bills before lawmakers adopt a state budget, Gov. Arnold Schwarzenegger on Tuesday approved legislation designed to strengthen wording of the high-speed rail bond measure on the Nov. 4 ballot.

The wildfires that have burned more than 1 million acres are the most visible symptom of another long, hot, dry summer in California. Less visible, though no less devastating, are the effects that the prolonged drought has on the state's water supply and environment. Although no one disagrees on the urgent need to fight the fires, there has long been sharp disagreement about how to address California's chronic water shortage. The time has come to break the stalemate. So, in the spirit of bipartisan cooperation, earlier this month we offered a compromise water bond package for the Legislature's consideration. We...

California: What has changed since Golden State voters ousted Gray Davis and cast their lot with Arnold Schwarzenegger's star power? Not much — except for $41 billion in new spending.What's big, blue and red all over? The great, Democrat-dominated and profligate state government of California. At a point when most state lawmakers and chief executives have put their budgets to bed, neatly balanced, and taken off for some R&R, the Legislature and governor of California are still wrangling over a budget that is roughly $15 billion out of balance. This is nothing new. We've been hearing about these budget gaps,...

SACRAMENTO – With scattered rationing punishing cities and farms statewide, Gov. Arnold Schwarzenegger and U.S. Sen. Dianne Feinstein Thursday jointly unveiled a $9.3 billion water bond proposal, convinced that fears over prolonged shortages and environmental collapse in the vital Sacramento delta will be enough to overcome resistance to building dams and a north-to-south delivery canal. Schwarzenegger, a Republican, and Feinstein, a Democrat, plan to aggressively push lawmakers to approve taking the bond measure to voters in November. The plan still faces tough odds. The ballot is already crowded with controversial initiatives addressing same-sex marriage, abortions for minors and caged farm...

SACRAMENTO, Calif. -- Gov. Arnold Schwarzenegger has placed his support behind a costly high-speed rail system in California. Schwarzenegger told NBC11 he wants California to lead the way in transporting commuters across the state at near-record speeds while reducing global warming at the same time. Critics have said the state's proposed high-speed rail system is too costly and too good to be true, NBC11's Mike Luery reported. On the very spot where the Transcontinental Railroad was established nearly 140 years ago, Schwarzenegger told Luery that a less-than-three-hour trip from San Francisco to Los Angeles represents the type of progress that...