Deficits predicted for state
Davis' budget would balance for a year then dive, says report

May 20, 2003

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million by changing Medi-Cal back to the old accounting method that allows the state to save money on paper by pushing off payment into a new fiscal year of a service rendered in the previous year.

Besides long-term borrowing and accounting gimmicks, the state must take out a record $11 billion loan in June to repay the balance of several loans totaling $12 billion that are due before June 30.

With the new loan, the state will have enough cash to operate until late August, according to State Controller Steve Westly.

"We are running out of runway," Westly said Monday. "Everyone needs to realize this. It's more important than ever to have a budget done on time."

Lawmakers are supposed to complete work on a spending plan by June 15. Davis is supposed to sign it before June 30, the end of the fiscal year.

E-mail Greg Lucas at glucas@sfchronicle.com.

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