According to our projections, the state is facing a year-end shortfall of $10.2 billion in 2004-05 assuming the vehicle license fee (VLF) rate increase remains in effect, and substantially more if the rate is rolled back and the state resumes backfill payments to localities. Over the longer term, absent corrective actions, the state faces annual current-law operating deficits that remain over $9 billion through the end of the forecast period—and $14 billion if the VLF rate is rolled back.