Faced with California's budget deficit to the tune of almost $28 billion, Governor Arnold Schwarzenegger has called for cuts aimed at containing this monumental shortfall. With his proposed cuts on welfare, health, environment, and public transport, a huge furor has engulfed the state as to whether the governor is right in making such moves. Let us examine some solutions to the problem and examine how far the proposed cuts are justified.

Though many public programs will face the axe as proposed by governor Schwarzenegger, the CalWORKS welfare program would be the one that gets the largest hit. Except for after-school and preschool programs, doing away with child care funding will save the state nearly $2.2 billion. Drastic spending cuts with respect to the state's welfare-to-work program, CalWORKS, or state-supported child care will worsen the situation. Economists have long recognized that coming to the aid of struggling families is one of the best ways of boosting an ailing economy, as the money that goes into the pockets of these people come right back to landlords, grocery stores, gas stations, and other merchants, thus strengthening the economy. 

Suspending some local programs and mandates like those related to the tenure for which abandoned animals can be kept in shelters and notification to stolen car owners once their vehicles are recovered are welcomed as it will help save over $230 million.

Another move to cut the wages of 200,000 state workers to $7.25 an hour is also facing a legal stalemate. However, rather than cutting spending or wages of middle-income residents, raising taxes on high income earners can be a feasible way to beat the budget blues. Even if the budget proposal to decrease contributions to state worker pensions and state worker salaries is implemented, extending the unemployment insurance benefits that is going to expire in November can help by ensuring the steady flow of money into the economy.

For the fiscal year of 2010–2011, the proposed $1.2 billion budget cut to state prison systems including $811 million cut to prison health care expenses related to psychological, medical, and behavioral health will help the state have an annual savings of $17-35 million. 

Cutting education spending however will have severe effects. Statistics as per Capitol Weekly state that education spending has risen by almost $20 billion in two budget years. From 2004 to 2009, while K-12 enrollment stayed flat, the budget shot up from $30.3 billion to $39.4 billion. However, the proposed cuts are likely to make the state become less competitive for high skilled jobs, thus compromising on its long-term ability to compete in the global economy.  

Now it’s time to wait and watch how and to what extent the proposed cuts get implemented.