"What's happening right now is big in terms of the revenue hit," he said. "The numbers are coming in way below where they should be."
The growing deficit, Thornberg said, will also probably create trouble for California on Wall Street, where bond rating agencies typically punish the state if the budget falls too far out of balance.
"I think we're going to see a downgrade," he said. A lowering of the state's credit rating, already one of the lowest in the country, will make it more difficult -- and more costly -- for the state to borrow money.
Mendelsohn, however, denied that the state's financial woes threaten to throw the governor's agenda off track. He said that though California may be short on cash, the state can't afford not to address the issues on the governor's agenda.
"The question people have to ask themselves is what will happen to the economy without a water plan," he said. "The failure of our healthcare system is costing taxpayers money."
But many in the Capitol suggest the governor will need to scale back his policy goals if the budget shortfall continues to grow.
"Every time the economy catches a cold, the state budget catches pneumonia," said Republican political analyst Tony Quinn.
"It just hits it so hard. . . . And then we have a period of political paralysis."
--
evan.halper@latimes.com
Times staff writer Nancy Vogel contributed to this report.
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Voices
'The question people have to ask themselves is what will happen to the economy without a water plan. The failure of our healthcare system is costing taxpayers money.'
-- Adam Mendelsohn administration spokesman
'If we are going to talk about the spending side, which we must, we should look at tax credits and that side of the ledger as well.'
-- Sen. Darrell Steinberg (D-Sacramento) member of the Budget Committee
'We are among a handful of states that has a lot of exposure to the housing crash.'
-- Ted Gibson former state economist
'We never fixed the problem. It's been Scotch tape and glue and staples and just praying we will never have to face the reality that state government is on a path that is not sustainable.'
-- Chris Thornberg principal with Beacon Economics
'Every time the economy catches a cold, the state budget catches pneumonia. It just hits it so hard. . . . And then we have a period of political paralysis.'
-- Tony Quinn Republican political analyst
