After railing against labor unions, waste and fraud in the past, Gov. Arnold Schwarzenegger on Wednesday found a new target to blame for California's budget woes: judges who "are going absolutely crazy."

As pieces of the July state budget solution begin to unravel, the Republican governor said judges – especially on the federal level – are preventing California from solving its problems.

He complained in particular about judicial actions that have struck down some state worker furloughs, required reductions in the prison population, imposed restrictions on water delivery in the Sacramento-San Joaquin Delta and this week blocked cuts to in-home care services.

"They are going absolutely crazy," Schwarzenegger said of judges. "So we have to have a very serious conversation with the federal government, because they have to let us run the state."

"Whenever they agree with me, they're right, very simple," Schwarzenegger said wryly when told they sometimes rule in his favor. "When they don't agree with me, they're wrong and they're interfering with our governing of the state."

State fiscal reports through September show the state has collected $1.1 billion less in tax revenue than was anticipated. Previous internal estimates also assumed the state would enter 2010-11 with a $7.4 billion deficit, on top of the $1.1 billion just reported.

The state is also at risk of losing money as courts invalidate other cuts. Federal judge Claudia Wilken on Monday imposed a preliminary injunction against the elimination of caregiver services for elderly and disabled residents that would save $82.1 million.

Redevelopment agencies sued this week to block the state's plan to take $2 billion from them. State Insurance Commissioner Steve Poizner has sued to block the sale of California's quasi-public worker's compensation insurer for $1 billion.

When tackling a two-year deficit of $60 billion in the past year, state leaders pursued solutions that experts warned were legally risky. But without enacting them, leaders risked further damage to California's credit rating as it paid bills with IOUs.

By passing such solutions, the state could borrow billions from Wall Street to keep the state running.

"The budget is about trying to push off fiscal problems into the future, and one way to do that is to do things that may be legally dubious because you know it's going to take the courts time to strike them down," said Vikram Amar, a constitutional law professor at the University of California, Davis. "Doing things that are arguably illegal is a form of borrowing because no court has told you yet that you can't."

In his defense, Schwarzenegger said, "Every decision that we make we run by the legal department and the experts, and their opinion is that those things are legal."

The governor blamed judges for not considering the state's fiscal straits when issuing their opinions.

Amar said judges have some flexibility in their decisions – and have exercised it, as when a federal three-judge panel gave the state time to develop a plan to reduce its prison population.

"From his point of view, they're not taking into enough account the state's fiscal constraints," Amar said. "But maybe from the judges' point of view, they're saying that he's being too inflexible, that 'You're not getting enough of your Republican buddies to support tax increases.' "

Call Kevin Yamamura, Bee Capitol Bureau, (916) 326-5548.