State in the red

California's fiscal woes are worsening as a slowing economy, sputtering housing market and unexpected setbacks have created a nearly $10 billion budget shortfall over the next two years, state officials said Wednesday. Harrison Sheppard in the Daily News.

The projection from Legislative Analyst Elizabeth Hill comes less than three months after the Legislature and Gov. Arnold Schwarzenegger passed what was believed to be a balanced budget for 2007-08 with a $4 billion reserve.

But now the state is instead likely to face a $2 billion shortfall this fiscal year - a swing of $6 billion - and an additional $8 billion next year.