Gov. Arnold Schwarzenegger estimated Monday that California's budget will fall out of balance by $5 billion to $7 billion this fiscal year, on top of a $7.4 billion gap already projected for 2010-11.

If true, state leaders would confront at least a $12.4 billion to $14.4 billion problem when Schwarzenegger releases his budget in January. California currently has an $84.6 billion general fund budget.

The Republican governor spoke with The Fresno Bee editorial board Monday after signing a bill placing a water bond on the November 2010 ballot.

He emphasized deep spending cuts as a budget solution but did not mention tax increases. Schwarzenegger and legislators agreed to cuts to education and social services, as well as temporary tax hikes, in two budget deals earlier this year.

"We are not out of the woods yet. ... The key thing is, we have to go and still make cuts and still rein in the spending," Schwarzenegger said. "It will be tougher because I think the low-hanging fruits and the medium-hanging fruits are all gone. I think that now we are going to the high-hanging fruits, and very tough decisions still have to be made."

The state is $1 billion behind in tax revenues through the first three months of the 2009-10 fiscal year. Courts also have blocked some cuts in the current budget, such as in-home care reductions.

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