California governor promises budget and tax reform

California Governor Arnold Schwarzenegger says he is planning to undertake a budget and tax reform this year.

California Governor Arnold Schwarzenegger says he is planning to undertake a budget and tax reform this year to give the state a more solid and reliable source of revenue.

"I will talk more about this in my State of the State but the bottom line is, our budget and tax systems are the root of a lot of our state's fiscal problems," Schwarzenegger said Friday in his New Year's radio address.

Over the last 12 months, California faced a 60-billion-dollar deficit and a 12.5-percent unemployment rate.

The governor said the deficits have led to painful spending cuts and tax increases, which hold the economy back from its full potential.

"So this year, we must finally find the will to fix them and to give California a more solid, a more reliable source of revenues," Schwarzenegger said. "As we embark on this new year, I have great hopes for California."