California Gov. Arnold Schwarzenegger proposed a revised spending plan Friday that pegged the state’s budget shortfall at $19.1 billion and called for deep cuts to welfare and health programs–but no tax increases–to close the gap.
The new shortfall estimate is higher than the previous projection of $18.6 billion partly because the state collected less tax revenue than expected in April for the 2009 tax year. Court decisions challenging some of Mr. Schwarzenegger’s cuts also added to the budget gap.
This will be the third straight year that Mr. Schwarzenegger has proposed deep spending cuts. Tax revenue in California has plunged because of the collapse of the real-estate and financial markets. Legislators closed a $60 billion budget gap last year, but not before state officials had to issue IOUs to creditors to keep the state solvent.