10 Jan 2010

More budget cuts in California

7:00 am on 10 January 2010

Spending on health, welfare, transport and the environment is to be reduced.

California Governor Arnold Schwarzenegger has proposed another round of deep cuts to the state budget to contain a $US20 billion deficit.

Spending on health, welfare, transport and the environment is to be reduced.

Mr Schwarzenegger acknowledged that the cuts would be painful, but said there was no conceivable way to avoid them.

California's economy has been hit by the global downturn. Unemployment is the third highest in the United States and the state's tax revenue has plummeted.

Mr Schwarzenegger was elected on a pledge to fix California's economy, but the BBC reports it has gone from bad to worse.

Now the governor proposed an $US82 billion budget that would take the state's spending back to the levels of six years ago.

It represents a cut of $US3.1 billion from last year's budget and is $US20 billion less than three years ago.

"Tough times still lie ahead," Mr Schwarzenegger said.

Less money will be spent on prisons, health services, transport and environmental programmes, but education will not see cuts.

The plan includes measures to boost the economy, including a $US500 million programme to train 140,000 workers and create 100,000 jobs.

Mr Schwarzenegger will also seek to raise funds by rolling back corporate tax breaks, expand oil drilling off the coast of Santa Barbara to provide $US140 million for parks, and demand more money from the federal government.