Senate President Pro Tem Don Perata estimated Tuesday the state will face a $3 billion to $5 billion deficit this fiscal year without corrective action, a significant gap that increases the possibility lawmakers will have to consider new spending cuts or tax increases in a special midyear budget session.

State Controller John Chiang, meanwhile, announced California has taken in $1.1 billion less through the first quarter than state officials projected earlier this year.

The bad fiscal news came as Gov. Arnold Schwarzenegger and legislative leaders prepared to meet today to discuss whether to call a special session to negotiate ways to close the latest budget gap. They also plan to discuss how the state can obtain a $7 billion short-term loan in the wake of a worldwide credit shortage, a separate issue from the revenue problem.

The Republican governor two weeks ago signed the tardiest state budget in state history, a $103.4 billion spending plan that assumed stronger revenues than the state is currently taking in.

Lawmakers relied heavily on accounting maneuvers and cuts to state services to break a nearly three-month deadlock. Majority-party Democrats and Schwarzenegger called for new taxes, but they pulled back those demands in September when they determined Republicans would not agree to them.

Perata, an Oakland Democrat, further predicted that California faces a $15 billion to $18 billion budget shortfall through June 2010, comparable to the $15.2 billion deficit lawmakers faced this past year. He expressed little optimism that Republicans would support tax increases if the governor calls a special session.

"Once we get there, we've got to do something," Perata said. "And we have not had great successes in the past getting supermajorities for anything except for what day of the week it is. I am not confident that just going into special session will solve anything."

Republicans said they remain even more opposed to tax increases than during last month's budget negotiations. They suggested higher taxes would serve as a further drag on a struggling economy.

"As this continues to get more serious, it's going to take even more drastic action on the part of the state to rein in spending," said Senate Republican leader Dave Cogdill of Modesto. "We're not supporting any additional tax increases. It makes less sense today than it did the day we put the budget out."

Besides raising taxes, Perata suggested the state could save money by releasing low-level prisoners who committed nonviolent crimes. But Cogdill said the state could find other ways, such as selling off excess state-owned land.

Perata blamed a variety of factors for the newest revenue problem. He said predictions of a weak holiday season would drag down sales tax revenues and that reduced property tax assessments would result in lower revenues.

"The next question that has to be answered has to be, how do we get this budget that we just passed for this fiscal year into better alignment than it is right now?" Perata said. "It is out of whack already, and revenues are going down."

Advocates for spending on education and social services are bracing for a new round of cuts, which occurred the last time the Legislature had a midyear budget session in February. The governor has kept in place an executive order that laid off 10,000 temporary and part-time state workers and eliminated overtime in July to save about $340 million.

"After less than a month, to no one's surprise, California's irresponsible, gimmick-filled budget is falling apart," said Courtni Pugh, executive director of the Service Employees International Union California State Council, which represents 95,000 state workers.

"If the governor and legislators had crafted real solutions to generate lasting revenues, we wouldn't be facing a problem of this scale," Pugh said.

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