Schwarzenegger's solution to California's budget woes: End welfare

Governor Arnold Schwarzenegger on Friday unveiled plans to plug California's budget deficit by slashing billions of dollars worth of funding for services designed to help the state's poor.

Schwarzenegger's budget proposals would see spending cuts of 12.4 billion dollars and include the elimination of California's welfare-to-work program and virtually all child care for low income families.

"California no longer has low-hanging fruits," Schwarzenegger said in Sacramento. "We have to take the ladder away from the tree and shake the whole tree. We must make very difficult decisions."

Schwarzenegger said his spending cuts would eliminate 60 percent of funding for community mental health. Low income families would also lose access to state-subsidized day care for children, the governor added.

"The list goes on and on. We're left with nothing but tough choices," Schwarzenegger said.

Schwarzenegger said the cuts were necessary to close a projected 19.1 billion dollar deficit for the fiscal year starting July 1.

Schwarzenegger has refused to raise taxes to narrow the shortfall and described the proposed cuts to spending as "painful" but essential.

"Everyone across the board has been hit in these last three years," Schwarzenegger said. "It is painful to make these cuts, it is painful for me and our entire team that we have to create elimination of certain programs.

"But we are forced to do it. And I see very clearly the faces behind those numbers. I know how many people are suffering out there and how painful this is going to be."

Schwarzenegger compared the problems faced by California -- which had an unemployment rate of 12.6 percent in March, well above the national figure -- to current fiscal crises embroiling countries in Europe.

"You see what's happening in Greece, you see what's happening in Ireland, Spain -- everyone comes to the realization that you can't go spending money and promising things that you can't keep," he said.

A budget crisis last year pushed California, which would have the world's eighth largest economy if it were a country, to the brink of bankruptcy, sending the state's credit-rating plunging and forcing it to start paying bills with IOUs.

Analysts and legislators say California's seemingly eternal fiscal gridlock is a consequence of the state's constitution, which requires a two-thirds majority to pass a budget or raise taxes.

California is only one of three states to require such a margin in its legislature to pass a budget.