Schwarzenegger calls for thousands of layoffs

SACRAMENTO (AP) He called the cuts painful but said he was left with no other choice as the nation's most populous state sinks further into the fiscal abyss.

Billions of dollars in spending cuts and tax increases imposed earlier this year have not been enough to keep up with a sharp drop in tax revenue as the recession batters the state's economy.

The state faces a deficit of $15.4 billion in the fiscal year that starts July 1. That will grow to $21.3 billion if voters reject the budget-related measures during a special election next week.

Defeat of the ballot measures will force lawmakers to make even deeper cuts, the governor said as he released budget proposals that account for both deficit numbers.

"I understand that these cuts are very painful and they effect real lives," Schwarzenegger said during a news conference. "This is the harsh reality and the reality that we face. Sacramento is not Washington -- we cannot print our own money. We can only spend what we have."

The recession has taken a deep toll on California, which relies heavily on income tax and capital gains from the wealthy to fuel its government. The state's unemployment rate has jumped beyond 11 percent, the construction industry is in a tailspin and the retail landscape is dotted with empty storefronts.

Personal income has fallen statewide for the first time since 1938, leading to a sharp drop in revenue.

Schwarzenegger did not seek to sugarcoat the problem, proposing across-the-board cuts that will strike at the core of state services.

If voters reject the ballot measures next week, as polls indicate they are inclined to do, education will be cut by $5.4 billion and the school year will be shortened by 7.5 days.

Starting Friday, the administration will send layoff notices to 5,000 state government employees, a move designed to cut the general workforce by 5 percent.

Health and human services and the higher education system also would be cut.

Schwarzenegger also proposed releasing thousands of nonviolent inmates before their sentences are up and transferring illegal immigrants in the state prison system to federal custody.

The governor also wants to sell state property, including the Los Angeles Memorial Coliseum and San Quentin State Prison, to raise $600 million to $1 billion over the next two to five years.

His plan calls for $6 billion in borrowing and, under the worst-case scenario, taking $2 billion from local governments, a move that would affect local police and fire departments.

"This goes to the very heart of our communities," Schwarzenegger said. "But these are the numbers, and they don't lie."

(Copyright 2009 by The Associated Press. All Rights Reserved.)

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