As California’s housing slump punches through the state economy, it’s leaving bruises on the state budget, the Sacaramento Bee reports.

Four months into the 2007-08 budget year, state revenue is $1.1 billion below what was forecast. The decline can be seen in all major revenue streams both state and local including property, income, sales and corporate taxes.

Elected officials have been advised to keep expectations low for the rest of the fiscal year, which ends June 30. Last week the Legislature’s chief analyst predicted state revenue for the year would be $3.8 billion below the original forecast.

If that forecast had held, the projected deficit in the state’s general fund would have been far less than the current estimate of $9.8 billion.

While it’s not clear how much the state has lost in the collapse of the overheated real estate market and the subprime mortgage crisis, finance officials say the fallout is having a substantial impact on California’s treasury.

Even a wealthy man like Gov. Arnold Schwarzenegger is worried about the high rate of foreclosures, sharp declines in home prices and far fewer construction starts.

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