With empty pockets and maxed-out credit, California is debating whether it can continue honoring all parts of its social contract with the state's most vulnerable residents.
The state faces an unprecedented drop in tax revenue and a widening budget deficit, prompting Governor Schwarzenegger to propose cost-cutting steps that once seemed unthinkable.
The budget proposals include ending the welfare-to-work program for mothers and their children and eliminating health insurance for 1 million children from low-income families. Cutting such programs could place millions of people at risk of falling through a decades-old social safety net.
California stands to lose billions in federal matching dollars if Schwarzenegger's proposals pass. Advocates have argued that his cutbacks would jeopardize even more money from the federal stimulus program.
The governor says his decisions will be painful for many. As he puts it, "It's an awful feeling, but we have no choice."
