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Arnold Schwarzenegger

Schwarzenegger, California's financial meltdown

Arnold Schwarzenegger 69%

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Staving off California's financial meltdown will be the toughest role ever for Hollywood hero Arnold Schwarzenegger as he enters the last 18 months of his governorship.

The most populous and often trend-setting U.S. state has racked up a $26.3 billion budget gap -- about a quarter of its total annual spending -- and could run out of cash this month if its books are not balanced.

Financial woes in California, home to both Hollywood and high-tech hub Silicon Valley, are so severe that some state officials have begged Washington for financial aid.

The state is resorting to issuing "IOU" notes to preserve its dwindling cash -- essentially promises to pay money owed to vendors and local agencies, including ones overseeing health programs and financial aid to the elderly, the blind and college students.

The vast majority of U.S. states face budget shortfalls as the economy crumbles, and nearly half also have divided rule, where control over the governorship and legislature is split between the Democratic and Republican parties.

Schwarzenegger is the third conscutive governor who has tried to govern from the center and has ended up fighting with the base of his own party just as much as with members of the opposition

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By Jim Christie

See Reuters


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