LOS ANGELES -- All the candidates agree: California's finances are a mess. Its checkbook doesn't balance and its credit card is maxed out. What's a new governor to do?

The major contenders to replace Gov. Gray Davis (D), if he is ousted next month, say they can solve the budget crisis. They make it sound easy. It's not. And the pain facing the Golden State is shared by states with budget shortfalls nationwide.

While the Oct. 7 recall election in California has been compared to "The Gong Show," populated with 135 candidates, the reality is that the state with the fifth-largest economy in the world faces serious and immediate challenges, and voters are telling pollsters they want answers.

A review of the challengers' proposals, as judged by seasoned budget-watchers, economists and Sacramento legislators, comes down to this: Either taxes must rise, dramatically for corporations and individuals, or deep cuts must be made in education, corrections, medical care and social services.

What cuts? Republican Arnold Schwarzenegger is mostly mum. In fact, of all the candidates, the front-running Hollywood actor has been most elusive when it comes to specifics. If elected, Schwarzenegger said, he will bring in an outside auditor to go through the books and then he'll decide. That is a stalling tactic, his critics charge. But some of his competitors have not been much more specific.

"Lock all the legislators in a room," says Republican Peter Ueberroth. Go after waste and fraud, says GOP state Sen. Tom McClintock, or privatize state services. Stop building prisons, says columnist Arianna Huffington, an independent.

The reality is that by the time taxes are collected, most of the California budget is already spent because of mandates imposed by federal law and the state's numerous ballot initiatives that require dedicated percentages of spending.

Half the budget goes to education, which all the candidates say they would not touch. Almost a third goes to medical and social welfare spending. Another large slice goes to corrections and prisons -- and the prisons are full because voters approved a three-strikes mandatory sentencing measure a few years ago.

"Sure, there's cuts. But a lot of it is chump change," said John Burton, the leading Democrat in the state Senate. "A lot of this stuff has already been tried or talked about. Some of it makes sense, okay? But a lot of it doesn't. Raise taxes? Sure, but you need a two-thirds majority in the legislature, and as everyone knows, we've tried that this year and failed. Cut services? Okay, tell me what you're going to cut. Fire and police? Roads? Textbooks?"

A spending limit? There is already one on the books, dating to the late 1970s, but it is toothless. A more stringent limit would require an amendment to the state constitution, which must be put before the voters. The earliest that could happen is March.

A revision of Proposition 13, which guarantees that property taxes cannot exceed 1 percent of assessed value? That also requires a vote by the citizens, and messing with it would face extreme resistance in a state as obsessed with real estate values as California.

"It's a cliche, but it's true. There's no silver bullet. Nothing that sounds painless works. All of the easy solutions have been tried," said Jean Ross, executive director of the California Budget Project. "That's not to say there aren't programs that can be cut. Sure. But on order of billions of dollars? That's billions with a capital B."

The electorate is angry. Although Davis has been bashed for his handling of the state's energy crisis and his relentless fundraising, it is the state's budget freefall -- with shortfalls now estimated at $8 billion to $12 billion -- that has raised the hackles of voters and plunged Davis to historic lows in approval ratings.

In Davis's first term in office, California was booming, flush with revenue from capital gains taxes fueled by the Internet and technology bubble. And the state did do a lot for its schools: It cut classroom sizes and hired more teachers.

This summer, it all came crashing down. The legislature cobbled together a budget that neither party liked; it reduced the budget shortfall from $38 billion to a deficit estimated at $8 billion to $12 billion for next year. How did they do it?

"We borrowed a lot of money," said Kim Rueben, a public finance economist with the Public Policy Institute of California. Specifically, the legislators took out billions of dollars in bonds; they postponed payments and salary raises; they froze cost-of-living increases; they took one-time federal allocations and spent them; and Davis triggered a tripling of the state car tax.

"The state has a problem, and the problem is long-term and structural," said John Ellwood, professor of public policy at the University of California at Berkeley. "The basic reason we're in trouble is not the economy. The problem is that we over-rely on income taxes, on capital gains and stock options. So when the bubble burst, we're in the hole."

California is much more reliant on income taxes than property taxes. In 2000, the states overall relied on income taxes for 24 percent of revenue. In California, that figure is 33 percent. Other states, on average, got 29 percent of their revenue from property taxes; California got 22 percent.

The state budget is almost $100 billion. "And as you can see, Californians are getting some $10 billion more in services than they're paying for. It's phony," Ellwood said.

How to balance the books? All the major candidates to replace Davis, including tax hawks such as McClintock and more liberal tax supporters such as Huffington and Lt. Gov. Cruz Bustamante (D), say they would repeal the car tax.

But that would create an additional $4 billion shortfall. Add that to the $8 billion to $12 billion already carried over, and the new governor would have to present a budget in early January that somehow would replace $12 billion to $16 billion.

"So they're going to have to find the cuts, and the cuts get real, and the cuts get harder to find, and what gets cut will cause pain," Rueben said. "That, of course, and taxes."

So what to tax? Cigarettes, Bustamante and several other candidates say. But economists say there is a limit to what that will bring in. They point to New York, where the high tax on nicotine has spurred a flourishing black market. Alcohol? Hard to do in a state famed for the vineyards of Napa and Sonoma.

Ueberroth, a former Major League Baseball commissioner, proposed a tax amnesty and initially said that billions could be raised if tax cheats were allowed to pay off their debt penalty-free. But the problem is that few scofflaws will pay their state taxes if they are still facing tax liabilities from their presumably much larger federal debts. And the Internal Revenue Service is not offering any help.

Bustamante, Huffington and the Green Party's Peter Camejo advocate raising income taxes for the wealthy -- and they have projected revenue of $3 billion or more.

There is, economists say, money to be made off the rich. California has a progressive income tax structure -- the wealthiest 5 percent pay almost 70 percent of the income taxes; the bottom 40 percent of working families pay less than 1 percent. But when the total tax burden is examined -- for income, property and sales taxes -- the rich actually fare well in California. The bottom 20 percent pays 11 percent; the top 1 percent pays 7 percent.

Bustamante, Huffington and Camejo want the rich to pay more; Camejo wants tax levels for the wealthy to rise to 14 percent of their income.

There are two main problems when it comes to taxing the rich, economists say. First, any tax increase must pass by a two-thirds vote of the legislature, which is dominated by Democrats but has enough Republicans to block it. And then there is what one economist called "the Nevada option."

Meaning: "There is nothing as mobile as rich people and their money," said James L. Brulte, the leading Republican in the state Senate. "You can get an increase in revenues but for how long? Take Tiger Woods. He grew up in California. He gets a $40 million contract from Nike and what does he do? He moves to Florida" -- like Nevada, a state without income taxes.

Another proposal is to increase taxes on corporations, by reassessing commercial property values (property is assessed in California only when it is sold) and by tightening corporate tax incentives.

There is money to be had, everyone agrees, in regularly assessing commercial property taxes. One leading GOP officeholder in Sacramento said this makes sense. It is politically tough, though. The defenders of Proposition 13 rally around any meddling with the property tax codes -- but a strong governor facing a budget crisis? It's doable. But Ueberroth and McClintock say anything that further hurts the business climate in California is "a job killer."

As for closing "loopholes," there is abuse in the system, as Huffington and Camejo have highlighted. "But the problem," said Ross of the California Budget Project, "is that one person's loophole is another person's incentive to create jobs and stimulate the economy."

And finally, there is Native American gambling. Larry Flynt, running for governor as "the porn peddler who cares," says there's gold in those slot machines. The California gambling tribes pay far less than their counterparts in Las Vegas and Atlantic City. But to get more money from the tribes, they have to renegotiate their contracts, and most believe the Native Americans are going to wait and see who is governor in October, a friend or a foe.