Schwarzenegger to Unveil Revised Budget Proposal

California lawmakers are bracing for Governor Schwarzenegger's May budget. That's when Sacramento finds out Wednesday just how bad the state deficit is, and which state programs the Governor wants to cut to close the gap. KPCC's state capitol reporter Julie Small says some economists say his earlier proposals don't pass the smell test.

Julie Small: The California Budget Project came up with 10 questions for the governor, 10 ways of asking, what were you thinking? Starting with the governor's deficit projections. April 15th turned out to be good for California. The tax man collected $738 million more in personal income than Schwarzenegger had projected back in January. The Budget Project's Jean Ross said that means things won't be as bleak as the Governor had predicted.

Jean Ross: I don't think we will see the $20 billion number that was rumored. We do anticipate a larger gap that the governor will need to fill, hopefully in a balanced way, looking both at revenues and spending reductions.

Small: Ross warned against overestimating how much one of the governor's pet proposals, selling or leasing the state lottery, would bring in. Last year Schwarzenegger projected that selling the state's student loan guarantor EdFund would generate a billion dollars. Now number crunchers expect only about a quarter of that.

Ross also questioned Schwarzenegger's proposal to cut medical coverage for low-income Californians. She said the state could lose more than a billion in federal matching dollars. The federal government might even penalize California for cutting foster care, because that would mean the state's fallen below the minimum funding for the program.