Schwarzenegger threatens state shutdown

SACRAMENTO, June 11 (UPI) -- California Gov. Arnold Schwarzenegger threatened to let government's lights go dark if a budget deal can't be struck in the coming weeks.

Schwarzenegger also reversed his decision to end health insurance for families of police officers and firefighters who died in the line of duty, saying it was a "terrible screw-up" that was being corrected, the Los Angeles Times reported Thursday. The proposal would have saved the state $1 million in fiscal 2010.

Finance officials say funds will run out in late July if the projected $24 billion budget shortfall isn't resolved soon. Saying emergency borrowing would be too expensive, Schwarzenegger said his threat to shut down state government was necessary to goose lawmakers into acting quickly.

A high-interest emergency loan would provide lawmakers "another reason why we don't have to do it now," the governor told the Times. "What we need to do is just to 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."

The governor, and legislative leaders have pledged to resolve California's deficit by the end of June. The state's new fiscal year begins July 1.

"We will meet the July 1 deadline," Senate leader Darrell Steinberg said in an e-mail to the Times.