Video: California budget goes bust

updated 5/20/2009 7:29:14 PM ET 2009-05-20T23:29:14

California Gov. Arnold Schwarzenegger said Wednesday he's heard "loud and clear" a voter message to take care of deficits through budget cuts alone, without passing additional costs along to them.

Voters on Tuesday resoundingly rejected Schwarzenegger's package of budget-balancing measures that he promised would temporarily fix the state's financial crisis.

Instead, he now faces a $21.3 billion budget deficit.

Schwarzenegger said the state's residents have had to sell off motorcycles, second cars and hold garage sales to make ends meet in recent months. Now, they're telling state officials that the government has to shrink, too.

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"Don't come to us for extra help. That was the message," Schwarzenegger said after a meeting with Health and Human Services Secretary Kathleen Sebelius. "And you know something. I appreciate that when you hear that from the people. It gives us a chance to go and adjust, and say 'OK, we went in the wrong direction. Now lets go in the right direction and lets go do what the people want.' "

Still, Schwarzenegger said the budget cuts to come may be more painful than California voters realize. While they may not want to pay more for services, they can't say specifically which services they would pare, he said.

He said cuts will certainly come in education, health care and in prisons by transferring undocumented immigrants to federal facilities and transferring more non-violent offenders to local jails. He plans to meet with state lawmakers in the afternoon to discuss the state's options.

Schwarzenegger did get some good news on Wednesday. The federal government informed him that California will remain eligible for an extra $8 billion in Medicaid funds despite complaints from unions that it violated the terms for getting extra stimulus dollars for health care.

The governor said he felt all along the state should trim certain government services, but he didn't want to make what he described as drastic cuts.

"Now we have to. There's no other choice. I think the message was clear from the people: Go all out and make those cuts and live within your means," Schwarzenegger said.

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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