California December revenues rise above estimate

SAN FRANCISCO (Reuters) - California on Thursday said its December revenues were $481 million, or 5.7 percent above the state budget estimate, providing some hope its weak income may be stabilizing.

The state controller issued the report a day before Governor Arnold Schwarzenegger unveils his budget plan for the remainder of the current fiscal year and next.

Schwarzenegger's plan must close a nearly $20 billion shortfall resulting from a struggling state economy, highlighted by an unemployment rate above 12 percent.

"December receipts showed signs of improvement, but the state continues to face tremendous fiscal challenges," State Controller John Chiang said in a statement. "At best, this is the beginning of a long and gradual recovery."

Chiang urged Schwarzenegger and lawmakers to balance the state's budget quickly to avoid the kind of cash crisis that forced the state government to issue IOUs over summer rather than pay many of its bills.

The state issued the IOUs to retain funds for its most pressing commitments, including payments to investors holding the state's bonds.

California's revenues from the start of its fiscal year in July were $353 million, or 0.9 percent, below budget estimate. State payments went out faster than expected near the end of the 2009 calendar year, the report by Chiang's office said.

The state government's overall cash position at the end of December was $202 million below its projected level, the report added.

(Reporting by Jim Christie; Editing by Andrew Hay)