SACRAMENTO — Providing a glimmer of optimism for the state's gloomy financial picture, California's tax revenues soared $1.2 billion higher than expected last month, marking the third time in four months that the state's income topped forecasts.
If that pattern holds, the state's $19.9 billion budget gap might actually shrink this spring — which would be the first time since 2007 that the governor's spring budget update has brought a bit of good economic news.
Although some analysts stress it's still too early to tell, one economist estimates the deficit could shrink by $2 billion to $5 billion, buoyed by Silicon Valley's stock market prowess. Lawmakers have floated similar numbers.
The possibility of such rosy news has quietly emboldened Democrats to put off some of Gov. Arnold Schwarzenegger's harshest proposed cuts to education, social services and health programs.
"There is a reasonable scenario by which we can get through this budget with minimal pain," said Senate President Pro Tem Darrell Steinberg, D-Sacramento, noting "hopeful signs" in the state's economy after four years of multibillion-dollar deficits.
"As difficult as this budget is," Steinberg said, "we've been through the worst of the worst."
Others are less sanguine.