| SAN FRANCISCO
SAN FRANCISCO Jan 6 California Governor Arnold
Schwarzenegger presents his final state-of-the-state speech on
Wednesday and is certain to lay out a stark state budget to fix
a shortfall seen near $21 billion.
Schwarzenegger will follow the speech by unveiling on
Friday his plan for balancing the budget, which requires
plugging a $6.3 billion shortfall in the current fiscal year
and a $14.4 billion deficit in the fiscal year beginning in
July, according to the Legislative Analyst's Office,
California's budget watchdog agency.
California's battered economy played a major role in the
state's fiscal woes.
The following outlines possible budget-balancing scenarios
for Schwarzenegger, a Republican, and California's Democrat-led
legislature. The possibilities are not mutually exclusive.
* Focus on raising revenue. Though an income tax rise is
considered off the table, California's leaders could scrap or
modify tax credits and extend temporary tax increases set to
expire at the end of the next fiscal year. Sales taxes, oil
taxes and soon-to-start corporate tax breaks are prime
Higher fees for state services -- University of California
tuition already is rising by about a third -- selling state
properties, increasing gasoline taxes and tapping local
government coffers are also options.
* Get more from Washington. State leaders are already
asking for financial help from the federal government and say
the most populous U.S. state doesn't get back all it sends in
federal taxes. Schwarzenegger wants more federal aid for state
health care and relaxed rules that would let the state cut
benefits without running afoul of conditions on federal funds.
* Move around money. State officials may also consider
seeking voter approval to redirect revenues to the state's
general fund from programs shielded by voter-approved laws.
Accounting measures, such as moving payments due on the last
day of the fiscal year into the first day of the next, are
* Cut expenditures. California could cut or slash payments
for welfare programs, state parks, higher education and
prisons. Furloughs of state workers could be extended -- the
administration plans to appeal a ruling that would stop
furloughs -- and jobs could be cut. Capital projects also could
be put on hold.
Cuts to programs may be limited, though, by conditions on
federal aid intended to stop the state from shifting the
welfare burden onto the national government.
(Editing by Kenneth Barry)