It is as bad as everyone thought. Part of it is that lottery money would help us this year, but the rest would go into that rainy day fund for future economic downturns.
"We're $17.2 billion that we're short," says the Governor Arnold Schwarzenegger
The Governor's revised budget proposal relies partly on the lottery to help erase the state's enormous $17 billion dollar deficit.
California would borrow billions against future lottery revenues to help close the budget gap. Voters will have to make a choice to approve it or pay higher taxes.
"If revenues fall short, or if it doesn't get approved in November, a one-time trigger would temporarily increase the sales tax by one percent," says Schwarzenegger.
The Governor, who has for four years said he won't raise taxes, has finally given in.
"The way we see it is we want to help to make sure we have enough funding programs," says Schwarzenegger.
Both Democrats and Republicans hate the idea of borrowing against future lottery revenues.
The Senate leader likened it to a subprime loan.
"It's kind of like: 'Hey, California. You can have it all. And now gaming interests and gaming revenues will pay for good schools, a healthcare system, public safety. It's not unlike Countrywide telling people you can this house for no money down and interest only payments," says Senate President Don Perata.
But increased revenues won't fix the budget mess alone. Schools sort of came out okay in this proposed budget. They got $200 million more in Proposition 98 funding, but they'll lose $4 billion in cost-of-living increases for programs.
State parks won't have to close, but entrance fees will increase by a dollar or two. And the state will not have to release 22,000 low-risk inmates, thanks to a declining prison population.
The biggest losers of this budget are the poor. Half a million kids will get booted off welfare, and the old and disabled will see fewer home services.
"A governor who ran on a promise to cover all children, and now we're seeing devastating cuts proposed to children," says children's advocate Rebecca Stark.
Mike Herald, a working poor advocate says, "looks like the Governor declared war on the poor today."
The big dance begins when both parties will somehow have to twiddle down that $17 billion deficit to zero by June 30.