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Schwarzenegger Urges Fiscal Reform In Final Year

— Gov. Arnold Schwarzenegger on Wednesday acknowledged that more pain lies ahead for California as it confronts yet another massive budget deficit, but pledged deep reforms he said are vital to the state's economic future.

The Republican governor, in his final State of the State address to state lawmakers, said California faces a $20 billion deficit, but he remained optimistic about the state's prospects.

Pulling the nation's most populous state out of a deep fiscal mess will require teamwork to enact tough choices on tax changes, pension reform and strengthening the economy.

The top priority is to create jobs, he said. Schwarzenegger outlined a plan to train 140,000 workers and create 100,000 jobs in a state that is facing an unemployment rate of greater than 12 percent.

He will try to persuade lawmakers to dedicate $500 million to his stimulus plan even as they face difficult choices about further program cuts. California lawmakers already have slashed $60 billion from state programs over the past two years.

Schwarzenegger acknowledged the decisions in the months ahead will not be easy.

"First, as bitter as the words are in my mouth, we face additional cuts. We know what that means. We know the pain it entails," he told lawmakers packed into the Assembly chamber as his wife, Maria Shriver, looked on. "What can we say at this point except the truth? That we have no choice."

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