SAN FRANCISCO - Barely three months after putting together a package to close a $40 billion gap and balance its budget through fiscal 2010, California is facing a new deficit of at least $15 billion, according to Gov. Arnold Schwarzenegger.

The fiscal 2010 budget, adopted in February, assumed $97.7 billion in general fund revenue for the year.

By March, the independent Legislative Analyst's Office was already warning that the state could end up $8 billion short.

Schwarzenegger upped the ante to $15.4 billion Monday in a letter to the four party leaders in the Legislature.

"Changes in the state's economic and revenue pictures have caused a significant new budget problem to emerge," he wrote.

"We now face the leanest of times," Schwarzenegger's letter said. "California, for the first time since 1938, faces a decline in personal income."

That $15.4 billion problem assumes next week's ballot measures pass. "If the initiatives fail, the size of the problem would grow to $21.3 billion," the governor wrote.

Those are budget deficit figures, distinct from the state's cash-flow borrowing needs, though they are similar in scale, said H.D. Palmer, the governor's budget spokesman.

California governors traditionally issue revised budget proposals every May.

Schwarzenegger had been planning to do so after the special election, but now is planning to release two May Revise budgets on Thursday.

"The governor is going to put forward two scenarios," Palmer said. "One if budget related propositions are approved, and one if they are not."

The ballot measure with the largest potential budget impact, Proposition 1C, would authorize the state to borrow $5 billion against future lottery proceeds. The adopted budget assumes the measure will pass.

The budget measures are all faring poorly in public opinion surveys, and the lottery bond proposal is faring the worst.

The administration's finance staff has been working on budget scenarios for months, under the theory of hoping for the best and preparing for the worst, according to Palmer.

"And planning for the worst was prudent in this situation," he said.

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