Fewer and fewer dollars are going into state programs forcing the deficit to balloon even more. The Governor is calling for more a combination of nearly $6 billion more in taxes and more spending cuts.
As the state budget goes deeper into the red, your budgets could too. Governor Schwarzenegger will be pushing, once again, a temporary one-percent sales tax hike when he calls lawmakers back to special session next week.
He thinks the worsening housing and economic crises will change the minds of some normally anti-tax Republicans who blocked the same proposal earlier this year.
"They will see we are in the state of emergency," said Gov. Arnold Schwarzenegger (R) California. "They will make decisions based on what is best for the people of California."
Anti-tax groups say this is the worst time to raise taxes. They worry the results of next week's election may pressure Republicans to cave.
"If the Republicans lose big next week, then I think it'll be easier to negotiate a tax increase," said Jon Coupal from Howard Jarvis Taxpayers Association.
But a tax increase will not cover the entire budget deficit, which the governor ballparks to be between $5 and $8 billion. Some say it could be as much as $10 billion.
He's already met with education and law enforcement groups to brace them for immediate cuts.
"It's just the math, it's not me. It's the mathematics that tell you, you have to make cuts," said Gov. Schwarzenegger.
Education leaders and parents are appalled classrooms are on the chopping block again. It'll be difficult to trim mid-year.
"There's no meat left on the bone to cut. We cannot take any more money away from our students," said Public School Financial Expert Brian Lewis.
"It sickens me, our education is everything. If our kids aren't educated, where are we headed?" said concerned mother Monica Fialho.
Those education cuts are somewhere in the $2 to $4 billion range. It's an easy target because it is 40 percent of the entire state budget. Other departments are also slated for some cuts.