The report by Legislative Analyst Elizabeth Hill shifted the state's fledgling budget debate to whether new taxes should be part of the solution — an approach the Republican governor has opposed.

It also sparked the kind of partisan sniping that Democrats and Republicans had so far avoided in hopes of preventing a repeat of the protracted budget debate that paralyzed the capital last summer.

Schwarzenegger last month pegged the shortfall at $14.5 billion through June 2009, but Hill said it has grown to $16 billion. She said Schwarzenegger's proposal for the 2008-09 budget year was flawed because it fails to set funding priorities or correct the state's chronic imbalance between spending and revenue.

"A decline in revenue means we have a larger shortfall than the governor projected," she said. "Our recommendations will affect all Californians in some way. However, we think that will benefit all Californians in the long run."

Overturning a lower court decision that AIG could withhold the documents as privileged, a unanimous five-judge panel of the Appellate Division of New York State Supreme Court ruled that the two former AIG executives are entitled to the legal memoranda, which include some related to AIG’s allegedly fraudulent 2000 loss portfolio reinsurance deal with General Re Corp.

Yesterday’s appeals ruling stems from then-New York Attorney General Eliot Spitzer’s 2005 lawsuit charging Messrs. Greenberg and Smith with fraud related to the Gen Re deal and other allegedly sham transactions designed to manipulate AIG’s financial statements. AIG itself was originally a defendant, but settled with regulators in 2006, paying $1.6 billion.

Messrs. Greenberg and Smith have argued in part that they relied on the advice of legal counsel in the transactions cited in the attorney general’s lawsuit, and have sought copies of all legal memoranda related to the transactions prepared at the time they were AIG officers.

AIG refused to turn over the documents, and a New York judge ruled that they were protected by AIG’s attorney-client privilege.

The Appellate Division panel reversed that ruling, though, finding that the two former executives have a qualified right to inspect the memoranda.

Luxembourg parliament adopted a law late on Tuesday to legalize euthanasia and assisted suicide, adding the Grand Duchy to a small group of countries that allow the terminally ill to end their lives.

The law, expected to come into force towards the summer, was passed by 30 votes to 26. Luxembourg's media said it was a symbolic defeat for Prime Minister Jean-Claude Juncker whose Christian Social Party opposed it.

"The Christian Social Party and the Catholic church were against the euthanasia law, calling it murder but we said no, it's just another way to go," said Jean Huss, a member of parliament of the Green Party and co-sponsor of the bill.

Huss said he expected that the legislative process needed for the law to come into force would take a few more months and would most likely be implemented towards the summer.

The Netherlands became the first country to permit assisted deaths for the terminally ill in April 2002.

Opponents there had drawn parallels with Nazi Germany, where authorities killed thousands of disabled children and mentally ill adults.

Huss said fears that old people would be pressured to commit suicide were groundless, given the checks and balances built into the law.

Euthanasia would be allowed for the terminally ill and those with incurable diseases or conditions, only when they asked to die repeatedly and with the consent of two doctors and a panel of experts.

Wilyum Henderson, 50, entered the plea Tuesday in federal court in Beaumont.

The U.S. Attorney's Office said Henderson filed a fake claim with the Federal Emergency Management Agency for disaster housing and individual assistance for losses from the hurricane that hit the Gulf Coast in 2005. He received $2,000 in assistance.

Henderson could be sentenced to up to five years in prison and fined up to $250,000. A sentencing date hasn't been set.

The U.S. Supreme Court Wednesday unanimously rejected provisions of a Maine law that restricts the shipment of tobacco products in the state.

"Despite the importance of the public health objective, we cannot agree with Maine that the federal law creates an exemption," Justice Stephen Breyer wrote in the court's majority opinion. "The act says nothing about a public health exception."

The ruling determines that federal trucking laws bar state regulation of tobacco shipments, despite Maine's concern that tobacco products might be shipped to minors.

The state law, passed by Maine in 2003, required shippers such as United Parcel Service Inc. (UPS) to follow special handling procedures when delivering cigarettes or other tobacco products with the aim of keeping tobacco from being shipped illegally to minors. The industry challenged the provisions, arguing they were onerous, increased costs and ran afoul of the federal limit on state shipping regulations.

Major shipping companies, including UPS and FedEx Corp. (FDX), already have voluntarily agreed not to ship cigarettes in a settlement with New York over tobacco restrictions enacted in that state.

In previous legal action, the Maine law was struck down by a federal trial court. The 1st U.S. Circuit Court of Appeals in Boston affirmed lower-court rulings that held federal shipping laws pre-empted the Maine law. The Supreme Court's opinion affirms the appeals court holding.

The order in the U.S. came after a Swiss bank, the Julius Baer Group, filed a complaint earlier this month against the site and San Mateo, Calif.-based Dynadot LLC, Wikileaks' domain name registry, for posting several hundred of the bank's documents.

Some of those documents allegedly reveal that the Julius Baer Group was involved in offshore money laundering and tax evasion in the Cayman Islands for customers in several countries, including the U.S.

The court ordered that "Dynadot shall immediately clear and remove all DNS-hosting records for the wikileaks.org domain name," according to court documents. It also said that Dynadot should prevent the domain name from resolving to the wikileaks.org Web site, or any other Web site or server other than a blank park page until further notice.

A spokesman for the Julius Baer Group could not be reached for comment Monday.

According to its Web site, the purpose of Wikileaks, founded in 2006, is to develop "an uncensorable system for untraceable mass document leaking and public analysis."

Wikileaks has been plagued by controversy since its inception, coming under fire from institutions whose confidential documents have been posted on the site and from critics who have questioned the motives of the site's founders. Still, others have praised the site for supporting the free dissemination of information.

Wikileaks posted a press statement on its site about the U.S. order, calling it "clearly unconstitutional" and said it "exceeds its jurisdiction."