Schwarzenegger proposes deep cuts

Arnold Schwarzenegger
Arnold Schwarzenegger
California is set to run out of money by the end of the month and the hole in the budget is expanding about $US3.5 billion a month

The Terminator was always remembered for his closing movie line: "I will be back."

Well, perhaps not this time.

As California Governor Arnold Schwarzenegger tries to battle what is seen as the last budget crisis of his tenure, he is engaged in a high-stake strategy which would not have gone amiss in his movie career.

His Republican Party does not control enough votes in the Capitol to push through his ambitious programme of budget reform.

California is set to run out of money by the end of the month and the hole in the budget is expanding about $US3.5 billion a month.

Mr Schwarzenegger has offered a plan that includes deep cuts to government services and the elimination of some health and welfare programmes.

On the list is a plan to cut the pensions received by state workers, which unions have stymied before but which he thinks may gain approval from a cash-strapped public.

The governor also views this time as ideal to once again target growth and fraud in the state's multibillion-dollar in-home healthcare programme with employs 300,000 workers.

His agenda includes anti-fraud efforts and tougher enrolment requirements for the state's food stamp programmes, efforts that advocates for the poor say are designed to discourage people from participating.

The Los Angeles Times reported Mr Schwarzenegger as saying the state and counties could get by with a "fraction" of the 27,000 workers now handling eligibility for Medi-Cal and food stamps by using web-based enrolments.

Plans have been revived to allow local school districts to contract out for services such as school bus transportation and lawn maintenance, a proposal favoured by Republicans but despised by school employee unions.

The Democrats are proposing rises in income tax and on things like car registration and tobacco, to help generate income and close the deficit.

Republicans said they would stand fast against any new taxes and that is where the deadlock has been for months.

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