The Governor now puts the budget gap at 17.2 billion dollars. That’s a 15 billion dollar deficit – and two billion he wants to put in reserve. To help balance that, Schwarzenegger’s proposal includes deeper cuts to health and welfare programs: “I know this is going to be very difficult and this is going to be very painful. This is why I had a hard time to make those cuts. But the absolute bottom line is we cannot spend money that we do not have.” Schwarzenegger also wants to make the lottery more lucrative – then sell bonds based on future lottery revenues to bring in 15 billion dollars. But he says if voters don’t approve that – or lottery revenues fall short, a one-cent sales tax increase would kick in for three years. Schwarzenegger backed off some of his more unpopular ideas from January. He dropped his plan to release thousands of prisoners early, and has decreased the cuts to education. And instead of closing state parks, he now proposes new fees.