Arnold Schwarzenegger and fellow Californian politicians have reached a deal to close a $26 billion (£15.8bn) budget shortfall that has left the state so broke that it has been printing IOUs.
After five hours of talks and months of bickering, Mr Schwarzenegger, the state’s Republican governor, and Democrat leaders thrashed out a compromise agreement on Monday night that calls for more than $15 billion in cuts across most of the state’s public services.
As California’s financial crisis has worsened, Mr Schwarzenegger lived up to his Hollywood tough guy image by rejecting tax increases and calling for large welfare cuts including health care schemes for children.
His Democrat opponents managed to water down his proposals but still had to accept large cuts in all public services, including social services, health and local government.
The rest of the budget shortfall will be clawed back by increased borrowing, accounting changes and accelerating the collection of certain taxes.
Mr Schwarzenegger compared the negotiations to a “suspense movie”, adding: “We accomplished a lot. We made government more efficient and also we’re cutting waste, fraud and abuse”.
“We have closed the deficit. … We have protected the safety net,” said Karen Bass, a Democrat and speaker of the state assembly. She described the budget as “shared pain and shared sacrifice”.
Other US states, also facing huge budget deficits as the recession has cut their tax revenue, have been watching the unfolding crisis in California with interest.
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They of course did not get it right, had to start with cutting off entitlement to illegals.
They cut OVER 50% of the budget? How? 50% is impossible. This is a strangely weird item – file under fluffy bullsh*t.