They have a long way to go.
These first cuts freeze half a billion dollars that would have gone to public schools, and another $544-million dollars will be cut from medi-cal payments.
The drastic cuts came after governor Schwarzenegger - issued the state's first fiscal emergency declaration last month. It required the legislature to begin dealing with the budget problem within 45 days.
The emergency cuts are headed to Governor Schwarzenegger for his signature. On Thursday, a $500 million dollar cut to education and it's just as bad to healthcare.
The emergency budget cuts are so bad, even some Republicans couldn't stomach the pain.
Healthcare for the poor, known as Medi-Cal, generated the most debate because a $500 million dollar cut from the program means doctors will be reimbursed less, therefore, there's less incentive for them to treat low income patients.
Doctor reimbursement rates were also slashed for kids treated under California Children's Services, which cares for nearly 200,000 of the state's sickest kids.
That worries Yessena Aspeitia and her family who have nowhere else to go.
"I think it's ridiculous. They made enough cuts already. And to make more cuts as it is, it's really limiting the amount of help we can get," said Yessena's cousin Jorge Jimenez.
As it was cutting state-funded medical care, the Assembly protected the wealthy. Residents who buy yachts out-of-state can avoid paying state sales taxes if they don't bring it into California for 90 days.
It could have brought in about $25 million dollars over the next year.
"Any tax is an extraction of funds out of the economy and therefore, by definition, has a negative impact on the economy," said Assemblyman Roger Niello (R) Sacramento.
"It's pretty hard to consider cutting people's medical care and not closing this loophole at the same time," said Assemblyman John Laird (D) Santa Cruz.
In the end, only a handful of Republicans crossed over to support closing the yacht tax loophole -- five votes short.
Cutting the program for Yessena's care won overwhelming support.
"They are our sickest most vulnerable citizens, so we're taking a step backwards. The priorities are wrong," said Pediatric cardiologist Dr. Gregory Janos.
Four of every $10 dollars in cuts will come from low income programs. At the Alameda County Food Bank, they foresee more financial strain on families already stretching to their limits.
"You know it's hard for me to say. But the same families will be impacted again and again. We're talking real money," said Allison Pratt from the Alameda County Food Bank.
The State Senate passed its own proposal to close the yacht tax loophole, and sent it to the Lower House, giving Republicans another chance to reconsider.
This is just the tip of the iceberg. These are cuts for the current budget year, the new budget year starts July 1st and there could be even more drastic cuts.
ABC7's Wayne Freedman contributed to this report.
