California near "meltdown" as revenues fall: official

SAN FRANCISCO (Reuters) - California's government risks a financial "meltdown" within 50 days in light of its weakening May revenues unless Governor Arnold Schwarzenegger and lawmakers quickly plug a $24.3 billion budget gap, the state's controller said on Wednesday.
Controller John Chiang, who has previously warned that California risks running out of cash without a budget deal, said revenues in May fell by $1.14 billon, or 17.7 percent, from a year earlier.
The revenues of the government of the most populous U.S. state fell short of estimates in Schwarzenegger's budget plan by $827 million, Chiang said.
"Without immediate solutions from the governor and legislature, we are less than 50 days away from a meltdown of state government," Chiang said in a statement.
"A truly balanced budget is the only responsible way out of the worst cash crisis since the Great Depression," Chiang said.
California's revenues have been on a dramatic slide as a result of recession, rising unemployment and its lengthy housing downturn.
The state's revenues from personal income taxes tumbled by 39.3 percent in May from a year earlier while revenues from corporate taxes fell by 52.1 percent and revenues from sales taxes sagged by 7.6 percent, according to a report released by Chiang's office.
Schwarzenegger, a Republican, has proposed filling the state's budget gap with deep spending cuts, borrowing from local governments and by scrapping some state programs, including its welfare program.
Democrats who control the legislature are crafting a rival budget plan that includes spending cuts and saves programs Schwarzenegger has proposed eliminating. They instead would use reserves estimated in Schwarzenegger's budget to narrow the state's shortfall.
State Senate President Pro Tem Darrell Steinberg said on Tuesday he wants a budget through the legislature by the end of this month.
California's new fiscal year begins on July 1. The sooner the state has a budget signed into law the better poised it will be to raise short-term funds to fund its operations through the sale of revenue anticipation notes on the municipal debt market.
(Reporting by Jim Christie; Editing by Diane Craft)

Source: Reuters