LOS ANGELES -- The state Department of Finance yesterday said California's economic situation is "the worst since the late 1930s" and called for $5.7 billion of cuts from the governor's fiscal 1993 budget proposal.
In a 13-page report released yesterday, finance officials urged major reductions to bring expenditures in line with updated revenue forecasts for the $43.8 billion general fund budget proposed by Gov. Pete Wilson in January for the fiscal year starting July 1.
Possible budget tightening includes student fee increases, health and welfare cuts, 5% salary reductions, and a shift of property taxes from enterprise districts to school districts.
"It is becoming very clear that the state can no longer afford the current level of services. These are tough times," said Cynthia Katz, assistant finance director.
During the first four months of this year, California's tax collections dropped an estimated $1.6 billion from earlier projections, according to Ms. Katz. The state already expects to complete the fiscal year ending June 30 with a $4 billion budget shortfall. Gov. Wilson has called on the legislature to approve a new budget by June 15.
The annual May revision numbers released yesterday are designed to assist lawmakers in the upcoming budget negotiations.
"We want to see a good plan and a solid budget," said Steve Zimmermann, a managing director with Standard & Poor's Corp.
Last month, Standard & Poor's placed California's AA general obligation debt rating on Credit Watch after April tax collections were less than expected.
Yesterday's report said California has lost nearly 690,000 jobs since 1990 and income collections for 1991 were the lowest since 1938.
The state has entered its 22d straight month of recession.