For the second year in a row, the state faces a budget problem in excess of $20 billion. Our updated forecast indicates the following. Current Year: California will end the 2002-03 fiscal year with a General Fund deficit of $6.1 billion. Budget Year: The 2003-04 budget faces a cumulative year-end deficit of $21.1 billion, absent corrective actions. However, if California's economic performance continues to lag the shortfall could easily be several billion dollars higher. Beyond the Budget Year: Over the longer term, the state will face annual operating deficits of between roughly $12 billion and $16 billion per year.