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Schwarzenegger says California must slash spending

15 May 10 02:23 GMT
By Rajesh Mirchandani
BBC News, Los Angeles

Huge cuts in welfare spending are being proposed in California as the state struggles with a budget deficit of $19bn.

Governor Arnold Schwarzenegger said the state had no choice but to eliminate spending programmes that help more than one million poor people.

The governor and his Republican colleagues refuse to raise taxes.

Democrats say they will not agree to a budget that protects tax breaks for business at the expense of child care.

'Shaking the tree'

Just as governments in countries hit by recession have been cutting welfare spending, so California's governor has proposed the same for a state with the 8th largest economy in the world and a looming budget deficit of $19bn.

Some social programmes have already been cut.

Now Mr Schwarzenegger wants to eliminate a scheme that helps more than a million people looking or training for work.

With unemployment still above the US average and tax revenues last month $3bn lower than hoped, he said California had no choice.

The Republicans argue that raising taxes would stifle private sector job creation and slow any economic recovery.

Mr Schwarzenegger said: "California no longer has low-hanging fruit. As a matter of fact, we don't have any medium-hanging fruit. We also don't have high-hanging fruit.

"We literally have to take the ladder from the tree and shake the whole tree."

California's constitution requires its budget to be approved by a two-thirds majority of lawmakers.

They are often gridlocked and the state's budget problems mount up.

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