Associated Press | JUDY LIN

SACRAMENTO, Calif. — Gov. Arnold Schwarzenegger on Tuesday is expected to use his line-item veto power to make additional cuts to the California’s latest spending plan — a move advocates fear could hurt the poor.

Social service advocates worry the Republican governor has little choice but to go after money counties receive to administer welfare and social service benefits. Likely targets include welfare-to-work assistance, in-home support, foster care and health insurance for poor families.

With much of state spending tied up by federal and constitutional requirements, the Schwarzenegger administration believes more cuts are necessary to provide a cash cushion for the state in case of emergencies such as earthquakes and wild fires.

Sign on San Diego | Dean Calbreath

After five months of wrangling, our leaders in Sacramento have finally reached a deal on the budget. We now have an accord that will allow the state to stride strongly into the future – at least for another six months or so until we dip back into the red again.

Of course, to get that deal, the budget-cutters slashed $9 billion from schools and universities. By some measures, we already have the fourth-worst elementary school education system in the country, but maybe with those cuts we can leapfrog over Mississippi, Alabama and New Mexico to finally make it to No. 1. (On the other hand, 20 other states cut education spending this year, so we’ll have competition on the race to the bottom.)

The budget-cutters also chopped $1.4 billion from health care programs for the poor and borrowed nearly $4 billion from local governments, including an estimated $70 million to $100 million from the city of San Diego, since we’re so awash in cash that we don’t know what to do with it.

Rasmussen | Rasmussen Reports

Democratic incumbent Barbara Boxer leads former Hewlett-Packard CEO Carly Fiorina in an early look at California’s 2010 race for the U.S. Senate.

The latest Rasmussen Reports telephone survey finds that Boxer attracts 45% of the statewide vote while Fiorina, her best-known possible Republican challenger, earns 41%. Seven percent (7%) say they’d vote for some other candidate, and seven percent (7%) are undecided.

LA Times | Tiffany Hsu

People holding California state IOUs — including taxpayers, vendors and local governments — will soon have a tougher time redeeming them, as most major banks are standing firm on a vow not to cash the vouchers after today (July 10).

Many credit unions say they will continue to redeem the IOUs for customers. But without mainstream banks as an option, recipients of the IOUs who need cash immediately could be tempted to sell them at a discount to third-party speculators, including ones popping up on the Internet.

Meg Whitman for Governor of California

Reuters | Jim Christie

Governor Arnold Schwarzenegger, optimistic California can finish its budget negotiations in a few days, is willing to reconsider his proposed cuts to education in hopes of averting a cash crisis, the San Francisco Chronicle said on Saturday.

A compromise between the Republican governor and Democratic lawmakers may help clear the way for an agreement on an overdue state budget and avert a cash crisis for the government of the most populous U.S. state. California already is issuing billions of dollars in “IOUs” and, without a deal, is on track to run out of cash this month.

CQ Politics | Josh Goodman

As California drowns in a sea of red ink, its budget problems are serving as a political inkblot test.

Why does California have a $26 billion hole in its budget that has placed it on the brink of default? Why are its finances in such bad shape that it went begging to Congress and the Obama administration for loan guarantees, a manner of bailout, to save it? Democrats and Republicans have different explanations — explanations that just happen to support their pre-existing notions about the size of government.

California, you see, is either paralyzed by anti-tax ideologues or a cautionary tale as to what happens when tax-and-spend liberals run wild.

A California Republican is likely to start by pointing out that the state has unusually high income and sales tax rates. If government can’t live within its means with those taxes, the argument goes, clearly the state has too much government.

Washington Examiner | Examiner Editorial

While promoting his new cap-and-trade energy tax bill, which passed the U.S. House last week, President Obama revealed in a White House address on Monday his model for the nation’s economy - California. “In the late 1970s, the state of California enacted tougher energy-efficiency policies,” Obama said, noting that the state and its residents use less energy today per capita than the national average. “Think about that,” he said, “California producing jobs, their economy keeping pace with the rest of the country and yet they’ve been able to maintain their energy usage in a much lower level than the rest of the country.”

Obama might want to rethink his choice of a model state because it is easy to understand how California has curbed its energy use.

The Associated Press | Juliet Williams

SACRAMENTO, Calif. (AP) — State Attorney General Jerry Brown and former eBay chief executive Meg Whitman have raised the most campaign money this year for the 2010 California governor’s race, according to preliminary figures released Wednesday.

Brown, a Democrat and former California governor, has collected $7.3 million through Tuesday, the end of the current reporting period. Whitman, a Republican, said her campaign brought in $6.5 million, on top of $4 million she contributed from her personal fortune.

NY Times | Bloomberg News

Gov. Arnold Schwarzenegger of California said he would order some 200,000 state workers to take a third furlough day every month if lawmakers could not agree on how to close a $24 billion deficit.

Mr. Schwarzenegger wants lawmakers to send him a package of spending cuts by Tuesday.

California is set to run out of money in July unless lawmakers can find a way to close the gap. Mr. Schwarzenegger and his fellow Republicans want large-scale spending reductions. Democrats are seeking to limit those cuts and, instead, raise taxes. The state controller, John Chiang, said he would start paying bills with i.o.u.’s as early as Thursday unless an agreement was reached.