A tax increase "could mean the difference between life or death for UC Merced," state Controller Steve Westly told about 50 members of the UC Merced Foundation Board of Trustees Wednesday.

The state's top financial officer said voters' approval of the governor's plan -- Propositions 57 and 58 -- "was a terrific victory, but it's only given us, frankly, a bit of a breather."

There's still a $12 billion hole in the state budget, he said.

"The big issue, to be blunt, is do we raise taxes to close the deficit?" the Democratic controller asked. If the governor does not raise taxes, he said, University of California at Merced funding will be cut.

He said no one will approve $12 billion in cuts, nor will they approve a $12 billion tax increase. Instead, there may need to be a mix of cuts and "some small revenue increases," said Westly, speaking to the board via a telephone conference call.

Otherwise, he said, "we at UC Merced are likely to be held hostage."

Westly was one of about a half- dozen foundation board members who joined the meeting at the DoubleTree Hotel in Modesto via conference call.

Construction is ongoing in a push to open the university in fall 2005. But funding is a critical factor in making that happen, university officials say.

Westly said if the Republican governor were to raise taxes, he would need his party's support.

Reached after the meeting, a spokesperson for the governor's office said the governor has no plan to raise taxes.

In his State of the State address in January, the governor said: "A tax increase would be the final nail in California's financial coffin. The people of California did not elect me to destroy jobs and businesses by raising taxes. I will not make matters worse."

Westly said he got a flurry of calls after Gov. Schwarzenegger celebrated the passage of Proposition 57 -- a $15 billion bond initiative -- and its companion measure, Proposition 58. People called to ask how Westly, a Democrat, could back the Republican governor's plan.

He told them: "I do not want the state of California to run out of money." Westly said the state was on course to do so by mid-June.

UC Merced Chancellor Carol Tomlinson-Keasey and state Insurance Commissioner John Garamendi, who is chairman of the foundation board, urged members to talk to leaders in Sacramento about the importance of opening UC Merced in 2005.

Besides a budget presentation from Westly, the foundation board listened to two faculty members talk about research projects.

Professor Roland Winston, an expert in solar energy, talked about cooling buildings with sunlight and using solar panels three times as efficient as those based on current technology.

"We want to bring new energy resources to the state and to the world," he said.

Solar technology Winston developed at the University of Chicago sparked an interest in government officials there. The city has plans to begin using solar to heat and cool buildings, he said.

Sam Traina, who came from Ohio State University, is originally from Patterson. He directs UC Merced's Sierra Nevada Research Institute, which focuses on environmental issues.

The institute is developing research collaborations, he said. Earlier Wednesday, 20 people from Lawrence Livermore National Laboratory visited UC Merced to talk about developing a partnership, he said.

Foundation board trustees meet four times a year in an advisory capacity. The board offers counsel and direction to the chancellor and vice chancellors. The fund-raising body was introduced in March 2000.