Dec. 10 (Bloomberg) -- California’s budget deficit has widened to $14.8 billion for the next seven months, $3.6 billion more than forecast last month, amid lawmaker disagreement on how to close the gap, Governor Arnold Schwarzenegger said.

During a press conference in Sacramento, Schwarzenegger said the size of the gap grows by $28,000 every minute the Legislature fails to act. The governor’s office estimated last month that the state had an $11.2 billion deficit for the current fiscal year, which ends in June.

“When you have a crisis, the most important thing is to make a decision,” Schwarzenegger told reporters. “The worst thing is not to make a decision.”

California, the most-populous state, may run out of money as early as February unless lawmakers and the governor pass spending cuts or tax increases needed to make up for revenue lost because of the U.S. recession. This week, Treasurer Bill Lockyer said as much as $5 billion of infrastructure spending set for the current year may be halted because of bond investor unease about the state’s solvency.

Like other states across the country, California is collecting less from income and sales taxes as workers lose their jobs and consumers cut spending at the fastest pace since 1980. Nationwide, states are expected to collect about $100 billion less than they will need during the current and coming budget years, forcing spending cuts and higher taxes at a time when the federal government is trying to stoke the economy.

Revenue Trails Forecasts

Yesterday, California Controller John Chiang said the state’s general fund revenue, which pays for the government operations, fell short of forecasts by $1.3 billion, or 19 percent, in November. Retail sales taxes were $630 million below estimates, while income tax collections trailed by $479 million.

Schwarzenegger, a 61-year-old Republican, wants lawmakers to raise taxes and cut spending, though his fellow Republicans have opposed seeking more money from residents to make up for the shortfall. On Dec. 1, he ordered lawmakers into an emergency session to deal with the budget, a step that will stop all other statehouse business by mid-January if a fix isn’t found.

Democratic state Senate President Darrell Steinberg said his party showed it was willing to compromise when it proposed cutting $8 billion in spending along with moves to raise more in revenue. That plan was struck down for lack of Republican support.

Partners or Partisans

“We need partners, not partisans, at the negotiating table,” Steinberg said in a statement.

Schwarzenegger is among governors who have called upon Congress and President-elect Barack Obama to spend billions on highways and other public works, saying it would provide a needed jolt to their economies. On Dec. 6, Obama pledged to revive the economy and create jobs by making the “single largest new investment” in roads, bridges and public buildings since the 1950s, though the size of the package hasn’t been announced.

Meantime, the governor is prodding the Legislature to compromise, saying the problem grows by $40 million for every day of delay. “This problem gets worse every day,” he said.

To contact the reporter on this story: William Selway in San Francisco at wselway@bloomberg.net.

Last Updated: December 10, 2008 17:45 EST