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Moody's: Next California budget deficit likely to be $12 billion -- or more

Moody's, one of the nation's big credit-rating agencies, issued a report Tuesday that said California's next budget deficit is expected to be "at least $12 billion" after state lawmakers and Gov. Arnold Schwarzenegger approved a spedning plan that "relies heavily on one-time measures, optimistic revenue assumptions and the receipt of funds, some of which may not materialize."

The ratings agency said the spending plan, inked on Day 100 of the fiscal year, making it California's latest in modern history, "continues a long practice of pushing problems into the future."

The agency also called the emergence of a midyear budget shortfall "likely" and said California "will have a more difficult time growing its way out" of the budget crisis as a slow economic recovery is expected.

-- Shane Goldmacher in Sacramento

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