Bonds News

California budget shortfall to top $21 billion

OAKLAND, Calif., Nov 17 (Reuters) - California faces a budget gap of nearly $21 billion over its current and next fiscal years, according to the state government’s budget watchdog agency, the Los Angeles Times reported on Tuesday.

The newspaper said California’s Legislative Analyst’s Office would issue an official report on Wednesday with its shortfall estimate.

The projection comes less than four months after Governor Arnold Schwarzenegger and lawmakers agreed to a budget plan that closed a deficit of more than $24 billion largely with deep spending cuts to respond to plunging revenues amid the worst economic crisis to hit the most populous U.S. state since the Great Depression.

Schwarzenegger said last week he expects a budget gap for the rest of the current fiscal year of between $5 billion to $7 billion. His finance advisors had previously said the state government would see a $7.4 billion gap in the next fiscal year beginning in July.

But next year’s budget shortfall will be much larger than initially forecast, the Los Angeles Times said. Citing sources briefed the upcoming report, it said the deficit will be $14.4 billion. (Reporting by Jim Christie; Editing by John O’Callaghan)