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Schwarzenegger Announces Plan To Close Deficit

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May 14, 2008 1:56 pm US/Pacific

Schwarzenegger Announces Plan To Close Deficit

SACRAMENTO (AP) ― Gov. Arnold Schwarzenegger has released a $144.3 billion state budget that eliminates a massive deficit by selling lottery bonds and cutting billions in state programs.

The spending plan for the fiscal year that begins in July is austere, a byproduct of a slowing state economy. Tax revenue has been falling far short of what California needs to keep pace with spending, leading to a $15.2 billion shortfall.

The centerpiece of Schwarzenegger's budget, released Wednesday, relies on a plan to make the state lottery more lucrative and thus more attractive to potential investors.

The governor hopes to raise $15 billion over the next three years by selling bonds based on anticipated lottery revenue. He will use about $5.1 billion of that in the 2008-09 fiscal year to help erase the state's deficit.

The other $10 billion would remain in a reserve fund the governor wants to create to help the state get through rough financial times in the future.

(© 2009 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)

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