Borrowing $23.3 billion for state budget won't be easy, analyst says

The budget Schwarzenegger outlined Dec. 31 relies on borrowing $5 billion against future state lottery earnings, $7 billion in new infrastructure bonds and $11.3 billion in short-term borrowing so that the state does not run out of money.

Schwarzenegger has depicted his proposal, which he intends to formally submit to the Legislature Friday, as the only financially responsible solution to a budget gap estimated to reach $41.6 billion by the middle of next year. But Legislative analyst Mac Taylor questioned whether the degree of borrowing Schwarzenegger is requesting can happen given the turbulent credit markets and investors' shaky faith in the ability of California lawmakers to fix the state's fiscal problems.

"There is major uncertainty about the state's ability to access the capital markets for anywhere close to this volume of financing over the next 18 months," Taylor wrote in his report , which was released this morning.

Taylor also said it was not clear whether it would be legal to use short-term debt to balance the state's budget, as the governor has proposed. He also noted that voters would need to approve the lottery plan, necessitating a special election.

Voters have already approved the infrastructure bonds.

But Taylor praised the governor's overall plan as "a good faith effort" and implored lawmakers to act immediately.

"The time available to achieve current year savings has shrunk, and cash problems have worsened to the point that the state may not be able to pay all its bills beginning next month," Taylor wrote. "It is even more urgent that the Legislature and governor begin acting now."

jordan.rau@latimes.com