Deeper cuts ahead for California

LOS ANGELES " Now what? With few tricks up their sleeves, Gov. Arnold Schwarzenegger and state lawmakers agree they can no longer avoid deep cuts to schools and government services after California voters rejected their special election budget proposals.

"I think the message was clear from the people: Go all out and make those cuts and live within your means," Schwarzenegger said Wednesday in Washington, D.C., after voters rejected a complex slate of propositions that included a spending cap, higher taxes, borrowing and raiding money from programs dedicated to young children and the mentally ill.

Schwarzenegger said the budget cuts ahead may be more painful than California voters realize.

Tuesday's ballot defeat was resounding, with two-thirds of voters rejecting the five budget-related propositions.

They overwhelmingly passed a sixth proposition, which denies lawmakers and state elected officials pay raises when the state runs a deficit.

Defeat of the measures means California's deficit for the fiscal year that begins in July will grow from $15.4 billion to $21.3 billion, roughly a quarter of projected general fund spending.

The shortfall remains that great even after lawmakers account for billions in aid from the federal stimulus package and more than $12 billion in higher income, sales and vehicle taxes imposed earlier this year.

A sharp drop in tax revenue has left a widening gap between the state's income and its spending obligations.

The Republican governor has proposed shortening the school year by seven days, laying off up to 5,000 state employees and taking money from local governments, a move that will directly affect police and firefighting services.

Schwarzenegger is open to lawmakers' alternatives to the budget options he presented nearly a week ago, said the governor's spokesman, Aaron McLear.

"If there are other ideas about how to close that $21 billion deficit, he wants to talk about that," he said.

Tens of thousands of teachers also face the prospect of layoffs. The state's largest teachers union, the California Teachers Association, has threatened legal action to recover $9.3 billion that would have been repaid to schools over several years under one of the rejected measures.