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Schwarzenegger: No borrowing to keep California running

  • Story Highlights
  • Schwarzenegger: No borrowing if lawmakers can't agree on how to close budget gap
  • High-interest, short-term emergency borrowing is too expensive, he says
  • Controller says state could run out of money by end of July without budget accord
By Jim Roope
CNN
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(CNN) -- Unless lawmakers agree on how to close the budget gap, California Gov. Arnold Schwarzenegger says he refuses to borrow money to keep the state running in the face of a $24.3 billion budget deficit and a new fiscal year on the horizon.

"We need to just basically cut off all the funding and just let them have a taste of what it is like when the state comes to a shutdown -- grinding halt," Schwarzenegger said outside the state capital late Wednesday.

High-interest, short-term emergency borrowing is too expensive, he said, adding that borrowing money would tell legislators they don't have to worry about it now.

Schwarzenegger said voters made it clear in last month's special election that they did not want lawmakers to raise taxes or borrow money to balance the budget, so he has proposed spending cuts that will first affect high-profile budget drainers, including education, health care and corrections.

State Controller John Chaing said a budget must be in place by the start of the fiscal year July 1 so he can borrow money, otherwise California will run out of money by the end of July.

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