Those are the words of the governor's new director of finance, Tom Campbell, who started an hourlong session with several reporters this afternoon by sharing this bit of honesty: he now projects the coming year's deficit at $8.1 billion dollars.

If you're keeping score, that's higher than the projection made just last month by Legislative Analyst Elizabeth Hill, who put the shortfall at $6.7 billion.

Campbell's wide-ranging discussion of the budget and the state's financial problems was noteworthy for its candor and thoughtfulness, but also for how the former legislator was careful not to get out in front of Governor Schwarzenegger, who Campbell says still hasn't made the final call on many issues.

The former legislator and business school dean pledged to avoid a budget rife with "gimmicks", though some may still take exception with his definition (example: he does not consider borrowing money from Proposition 42's transportation funds a gimmick).

Some of the other highlights of Campbell's peek into the budget, and into the way Schwarzenegger works:

* His larger-than-expected deficit number is partly based on the new lawsuit challenging plans to borrow money for the payment to state worker's pension plans.

* The governor's budget will likely include "restrictions" on the rate of growth of many state programs. And he is proposing, at least for now, that all state agencies take an equal cut in money they receive from the General Fund.

* Discussions are still underway with education leaders about whether more than $1 billion of unanticipated education money should be diverted. This, by the way, has the potential to be a major flashpoint in early budget battles. Campbell says the governor has not made a final decision on what to do.

* What has surprised him the most after 2 weeks on the job? "What I most was surprised about was the autopilot [nature of the budget], the fact that so much of what is spent is programmed by formulas."

* Since taking the job, Campbell has spent 3-4 hours a day with Schwarzenegger going over budget issues and ideas. He says the governor is a man with a "great interest in detail." And in a lighthearted moment, he described how a budget staffer came in on her birthday, how everyone sang "Happy Birthday", and how the governor asked if there was a cake from the Finance Department. Campbell said, somewhat sheepishly, there was one... right after that.