[UPDATE: It appears that Schwarzenegger is now abandoning his call for about $5.5 billion in borrowing for the year starting July 1, a borrowing plan that the LAO (see below) has criticized. That means, according to his advisers, more spending cuts. --JM]

A new analysis of Governor Schwarzenegger's revised budget suggests that the deficit could end up being as large as $24 billion by July 2010, forcing even more severe choices by lawmakers over the next few months.

Legislative Analyst Mac Taylor released his new report this morning, and estimates that even if all of the governor's budget ideas are adopted, California faces a shortfall in excess of $15 billion the year after next. As a result, he says long-term planning is a must.

But the LAO also takes aim at about $6.5 billion of Schwarzenegger's solutions -- most notably, the plan to borrow $5.5 billion in what are normally cash-flow loans... not budgetary loans.

"It would set a terrible precedent for state finances," says Taylor's report on what's called RAW (revenue anticipation warrant) borrowing. Taylor says there are serious legal questions about the plan, and that legislators should look towards more certain solutions.

The report is here. More on the analysis after Taylor's news conference this morning...