Treasurer Bill Lockyer says it’s critical the state invest in highways and schools as the population grows.  But he warns if California doesn’t balance spending and revenues, it could be more than 14 billion dollars in the hole in 20 years.   

“I don’t know any other way to get through the problem than to do basically what Ronald Reagan and Pete Wilson did when they were responsible for solving these problems, which is, a combination of cuts and taxes.”

Lockyer’s report lays out options for both.  But he doesn’t specifically endorse any of them.  They include: eliminating state support for the University of California system, expanding the sales tax and increasing the top income tax rates.    A spokesman for the state Department of Finance says they applaud the report’s focus on slashing the budget shortfall.