California's governor Mr Arnold Schwarzenegger has sworn he will not use new taxes to sort out the struggling state's financial crisis.
In his annual address Mr Schwarzenegger said that if legislators did not back his plans, California would run out of cash.
"We have no choice but to cut spending, which is what caused the crisis in the first place," Mr Schwarzenegger said. "These are cuts that will challenge us all. But we cannot give what we do not have. If we continue spending and don't make cuts, California will be bankrupt."
Mr Schwarzenegger takes over at a critical juncture. California has a deficit of close to $15 billion. Although voters will be asked to borrow the money needed to pay off that debt, Mr Schwarzenegger also faces a new deficit of at least $14 billion next year.
In his two months in office, Mr Schwarzenegger has been busy cutting car taxes, forging agreements on borrowing billions of dollars and invoking emergency powers to make payments to cities and counties, but the biggest tests are still to come.
Mr Schwarzenegger did not detail his budget proposal, to be released Friday, but he noted that cuts would be imposed at all levels of government. And he asked voters to approve the $15 billion bond on the March ballot.
"The alternative is economic chaos," he said. During his campaign, Mr Schwarzenegger promised to find billions of dollars in waste, but so far he has not acknowledged publicly any he has found.