If California voters defy expectations and pass the half-dozen propositions on the May 19 ballot, it will be a start toward filling the yawning hole in the state's budget. But it's only a start.

The state's financial forecast has gone from bad to worse since the propositions were drafted. At the time, the state was looking at a $6 billion gap through June 2010, and that is the amount of money this package of propositions is designed to generate, said state Sen. Joe Simitian, D-Palo Alto.

"Then word came out that the revenues are in an even deeper decline, and could be off by $8 billion," Sen. Simitian told The Almanac. "Now that looks like an understatement. We're hearing numbers of $10-$12 billion of revenue shortfall, to add to the $6 billion."

One of the reasons for the increasing size of the revenue shortfall is a precipitous decline in personal income tax revenue. California's income tax revenues for the month of April are down 35 to 40 percent from April 2008, said Sen. Simitian.

"When that happens, especially since our system is so heavily based on personal income tax, the consequences can't help but be severe," he said. "One of the reasons everyone hated the vehicle license fee is that everyone has to pay it, year in and year out, but that's one of the things that made it a stable source of revenue for the state, which meant that programs funded by the state, like public education, could rely on a measure of stability."

Relying on a volatile revenue source like income taxes leaves the state vulnerable. "There's no cushion there," Sen. Simitian said.

So where is the state going to find $12 billion or $18 billion in next year's budget? That gets complicated, quickly. Sen. Simitian said he doesn't expect new revenue will be an option.

"I don't think there's much stomach for an increase in taxes and fees in a recessionary economy," he said. "My Republican colleagues have said -- and I believe them -- that they've gone as far as they're prepared to go."

And because of strings attached to federal stimulus money, the state can't make cuts to a number of programs without fear of forfeiting the stimulus funds, he said. Gov. Arnold Schwarzenegger recently announced that he would try to seek a waiver from the federal government to get around that restriction.

If the May ballot propositions don't pass, education funding in the state could take another $3 billion hit, Sen. Simitian said. He said he plans to hold his annual education update meeting in June this year, in order to assess the impact of the May 19 election.

"There aren't any good answers at this point. We're just going to have to try and share the pain as equitably as we can," Sen. Simitian said.

No one could have predicted the severity of the current, once-in-a-lifetime recession, he said.

"My frustration is that I think the state could have been better prepared for this eventuality," Sen. Simitian said. "For the past seven or eight years, I've been saying: 'Spend less. Collect more. Do it now.' As complex as the budget situation is, what's happened repeatedly is that folks have not come to grips with that challenge."

There's plenty of blame to spread around for why the state is in the mess that it is in, he said.

"All of us want what we want, but we are reluctant to pay more for it," Sen. Simitian said. "We're at the point now where denial is no longer an option."

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