Expansion of sales taxes, the slashing of new state programs and freezes on replacing state workers are among the steps Gov. Arnold Schwarzenegger may propose to balance California's gaping budget deficit, Assemblyman Rick Keene said Friday.

With few options left to borrow money and hard choices on the horizon, Schwarzenegger will offer his budget revision to legislators on Wednesday. That will be just the start of a long and wrenching process to bring spending into line with state income, Keene warned.

"We have increased spending by 33 percent" to $104 billion yearly since Schwarzenegger took office, Keene said. Yearly budget deficits in the last two years and revenue declines linked to the economic slowdown combine for a $20 billion shortfall projected for the next fiscal year.

But bonded debt and voter-mandated spending give lawmakers little wiggle room. Of every tax dollar that comes in, 85 percent is committed, Keene said.

Keene, a Republican from Chico, blamed Democrats - the majority party in the legislature - for allowing the structural deficit to balloon into a crisis.

"What they have done is delay the discussion (about cutting costs), and they can no longer delay it," Keene said during an interview at The Union.

"There's no longer any money to be borrowed."

Schwarzenegger is likely to seek some relief by expanding sales taxes to service providers such as lawyers and accountants, Keene said. Democratic lawmakers are likely to propose nearly $30 billion in new taxes to close the budget gap, he added.

But tax increases won't fly, Keene said.

Hikes in the budget have come mainly from expanded spending in education and health care. All new programs and expansions, including "early childhood education, after-school care - it's all on the block," Keene said.

In addition, mandates to programs including Propositions 98 and 42, which fix funding each year, need to be reconsidered, Keene added.

In his proposed budget in January, the governor suggested a 10 percent cut in spending across the board.

"You can't cut everything by 10 percent," but lawmakers should consider cutting programs that are less effective.

"If you were to cut that spending back by 10 percent, over two years that is $20 billion," Keene said. "That's doable if you have the will ... to look at programs that are effective."

Last year, legislators debated on the budget well into August, keeping agencies and schools statewide in limbo over the amount of money they would receive.

City Editor Trina Kleist contributed to this report. To contact Soumitro Sen, e-mail ssen@theunion.com or call 477-4229.