California Struggles as President-Elect Obama Promises Aid to States

State legislatures across the country are facing budget shortfalls.

By + More

In addition to proposing spending cuts in education and the state's Medicare program, Schwarzenegger has put forward a plan to furlough state workers one day every month and eliminate two paid holidays—a move that would require government employees to take a 5 percent pay cut in exchange for their extra day off, saving the state $320 million through next summer.

If no cuts are made or new sources of funding found, the state's budget gap is projected to grow to nearly $30 billion over the next year and a half. Legislators are scheduled to go into what is likely to be their last session this afternoon. Should they fail to reach a budget agreement, the new legislature takes office on the first day of December.