They are already short 1.1 Billion because of a fall off in income tax revenue. That is because unemployment in the Central Valley farming communities is near 50%. Far Far greater than in the Great Depression! IT IS ALL COLLAPSING WHILE THE FED GOV LIES LIKE HELL ABOUT HOW BAD IT IS. (It is almost as if the Fed Gov wants you to believe that if you think it is not so bad then it will not be so bad. You know, that "Power of Positive Thinking CRAP.) California Budget Is Already in the Red 10 Weeks After Passage By William Selway and Michael B. Marois Oct. 10 (Bloomberg) -- California Governor Arnold Schwarzenegger will know within a month whether a $1.1 billion drop in revenue collections is part of a growing budget shortfall or an isolated event, his budget spokesman said. Revenue in the three months ended Sept. 30 was 5.3 percent less than assumed in the $85 billion annual budget, state controller John Chiang reported yesterday. Income tax receipts led the gap, as unemployment reached 12.2 percent in August. The culprit here appears to be estimated quarterly personal income tax statements, H.D. Palmer, the governors budget spokesman, said yesterday. The numbers are cause for concern, but the issue now for us is to determine if this is a one-time event or whether it has more long-term implications. The latest figures show that California is facing resurgent fiscal strains brought on by the U.S. recession. Since February, Schwarzenegger and lawmakers have cut $32 billion from spending, raised taxes by $12.5 billion and covered $6 billion more with accounting gimmicks and borrowing. Even with those actions, state budget officials predict an additional $38 billion in deficits in the next three fiscal years combined, including $7.4 billion in the year starting July 1. Schwarzenegger must present a budget for the coming fiscal year in January. The states Franchise Tax Board will deliver new data to the governor in November. Debt Sales The budget news comes as the most populous U.S. state prepares to sell as much as $15 billion of bonds in the next nine months to refinance debt and fund public-works projects, and as a surge in fixed-rate municipal issuance sent benchmark rates up by the most in almost four months. California, already the largest borrower in the municipal market, may offer $4 billion of debt during the week of Oct. 26 to refinance the bonds used by Schwarzenegger to cover previous budget deficits. The budget enacted in July would allow the sale of as much as $11 billion more of general obligation bonds through the June 30 end of the fiscal year if financial markets allow, state Treasurer Bill Lockyer said. The exact sale amount hasnt been decided.