A large-scale plan is to be undertaken for major budget and tax reforms this year by California Governor Arnold Schwarzenegger, which he says will give his state a more strong 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", Mr. Schwarzenegger said on Friday.

Over the past year, things with California have not been very good, with a $60 Billion deficit and an unemployment rate of 12.5%. The Governor shared that the deficits have led to some very painful spending cuts and tax hikes which have held the economy back from growing to 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. As we embark on this New Year, I have great hopes for California", Governor Schwarzenegger said.

On December 22, Governor Schwarzenegger had sent a letter to House Speaker Nancy Pelosi which said that the federal reimbursement rate put forward for the state's Medicare program have forced California to cut down health costs for other states, and if the state managed to "received a reimbursement rate equal to the average of the 10 largest state", it would be receiving billions more every year.