Schwarzenegger Pledges to Balance California Budget -- Somehow

Arnold Schwarzenegger downplayed concerns that a bundle of California budget measures aimed at closing his state's deficit will not be approved by voters Tuesday, despite previous warnings that the state will have to make deep cuts if they fail.

"You win or you lose. And I think that we always will know how to move forward and make the adjustment," Gov. Schwarzenegger said in Washington, where he joined President Obama in announcing new auto efficiency standards. "We always respect the will of the people."

Voters were participating in a special election Tuesday to weigh in on six state budget measures, five of which are expected to fail.

California is trying to close a two-year, $42 billion budget gap, and the failure of the ballot measures could lead to deeper cuts than were already expected.

The governor told FOX News on Tuesday that he was not looking for a "bailout" from Capitol Hill, but he acknowledged his state is in a bind and would have to tighten its belt.

"We have a major problem with California. And I think if we work together we can make it through this crisis," he said. "I didn't come for any bailout. We (are going to make) the necessary cuts. They're going to be fiscally disciplined. But we still need to work together in order to move forward and make everything function well in our state."

California's not alone. It is one of a slew of states struggling in the recession with budget shortfalls.

A study from the Center on Budget and Policy Priorities shows that 47 states are facing substantial budget gaps this year -- only Montana, North Dakota and Wyoming are not. The shortfalls in all 47 states add up to close to $60 billion for this year.

The key problem for states is that the recession has caused their two major sources of revenue -- state sales tax and income tax -- to plummet.

"When the housing bubble burst, people stopped -- they didn't buy new houses, they didn't buy new furniture or do repairs. They also felt less wealthy and they just spent less in general, so sales tax collections were hit in the states," said Liz McNichol, with the Center on Budget and Policy Priorities. "And then as the recession continued, people lost their jobs, wages went down, the stock market declined, so capital gains went down, and that all is hitting state income tax collection."

To combat this, state legislators and governors have been tapping into rainy day funds and cutting budgets where they can be cut.

Congress already has returned of lot of federal tax dollars back to the states as part of the stimulus package. GOP sources on Capitol Hill point out that in the bill, they provided at least $170 billion for state government bailouts -- including money for education and Medicaid.

They said federal coffers are tapped out when it comes to any more state assistance of that kind.

FOX News' Brian Wilson and Chad Pergram contributed to this report.