Schwarzenegger prepares for final annual address facing familiar problems in Calif. budget

Schwarzenegger faces final year in sea of red ink

SACRAMENTO, Calif. — California Gov. Arnold Schwarzenegger is entering his final year in office much as he began his up-and-down tenure: overseeing a state beset by financial turmoil.

He has only a few months left to tackle the reforms he promised after he became governor in 2003, yet faces a $21 billion budget shortfall.

On Tuesday, the Republican governor declined to say what he would include in his final State of the State address, which is scheduled for Wednesday morning. But he told reporters he does not want to admit it’s his final year.

The governor’s state of denial may be linked to his lack of progress on California’s fiscal condition. Plans for a rainy day fund, overhauling the tax system and systemic budget reform have largely fizzled.