Schwarzenegger Proposes Layoffs, Deep Budget Cuts

Gov. Arnold Schwarzenegger has called for laying off thousands of state employees and slashing billions from education to deal with California's latest budget deficit.

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 were not 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 Thursday as he released budget proposals that account for both deficits.