California current two-year deficit reduction plan might be at least $3.8 billion out of balance, the Commission on State Finance said last week.
Although California prepares annual budgets, state officials adopted a two-year deficit reduction plan last June. The plan kicked in on July 1.
The commission attributed part of the estimated shortfall to a delayed economic recovery, which is unlikely until late 1994.
The delay will cause revenues from the budget forecast to fall by $1 billion in the current year and by $1.3 billion in fiscal 1995, the commission said.
Unanticipated cost overruns also could drive expenses $1.5 billion higher than expected over the two-year period, the commission said.
The $3.8 billion shortfall could go even higher if a lower court decision that invalidated certain school loans is upheld on appeal or if the state loses other pending litigation, the commission said.
Without corrective actions, the state budget may remain pinched in fiscal 1996 and 1997, the commission said citing rapid caseload increase in key state programs and spending deferrals.
The commission also cited temporary law changes, such as the suspension of the renters' credit, currently on the books.
"Economic growth alone will not be sufficient to replace the loss in budget resources that will take place when the temporary measures become inoperative," the commission said.
Gov. Pete Wilson will unveil his latest budget and economic forecasts in early January.