Schwarzenegger signs $85bn budget compromise

[Peikko 1,575]

Arnold Schwarzenegger, California's governor, signs a $85bn compromise for the state's budget. Photograph: John G Mabanglo/EPA

Governor cuts millions of dollars from state funded programmes in an effort to end California's cash crisis

Arnold Schwarzenegger made additional cuts to child welfare programmes, medical care for the poor and Aids prevention efforts today as he signed an $85bn (£51bn) compromise spending plan that he called "the good, the bad and the ugly".

Schwarzenegger used his line-item veto authority to save an additional $656m that will let the state restore a reserve fund he says is needed for tough times.

Schwarzenegger's vetoes include $80m from child welfare programmes; $61m in county funding to administer Medi-Cal, California's version of Medicaid; $52m from Aids prevention; $50m to Healthy Families, the low-cost health insurance programme for poor children; and $6.2m more from state parks.

"Those are ugly cuts and I'm the only one that is really responsible for those cuts because the legislature left, they didn't want to make those cuts," he said.

The Republican governor called the budget package aimed at balancing the state's budget through 30 June 2010 the toughest since he took office in 2003. Still, Schwarzenegger said the package included reforms he has long sought and forces government to live within its means.

The additional cuts were needed to build a $500m reserve fund after the state assembly rejected about $1.1bn in revenues from local transportation funding and by allowing new offshore oil drilling.

With much of state spending tied up by federal and constitutional requirements, the Schwarzenegger administration wants to ensure the state has a cash cushion in case of emergencies such as earthquakes and wildfires.

The governor and state politicians hope the revised spending plan will end California's cash crisis and allow the state to spot issuing IOUs. Representatives for the treasurer and controller said it would take a few more days to determine if the cuts were enough.

California's economy has been hit by the housing market slump and high unemployment, and the latest efforts to close a $26bn shortfall came just five months after lawmakers and the governor ended months of negotiations to close a previous $42bn deficit.

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[Niels Bohr 72]

It takes 1 trillion dollars to run the federal government for a little over 3 months. Amazing how the government survives today.