( Reuters ) - California Govenor Arnold Schwarzenegger on Saturday signed six budget-cutting bills that will close the projected $3.3 billion shortfall in the state budget this fiscal year, but warned that more spending cuts would be needed.
The spending cuts were approved by the Democratic-led California legislature on Friday and will take a combined budget shortfall for California's current and next fiscal year, which had been expected to to top $14 billion, down to just over $7 billion.
But the reductions fell short of the original proposals of Schwarzenegger, a Republican, to meet the financial challenges California faces because of flat revenues brought on by a sharp housing downturn.
"I respect the fact that it is not exactly what I proposed," Schwarzenegger told reporters as he signed the bills into law.
"There is much more to come. This is only the beginning," he said.
Schwarzenegger had originally proposed sweeping across-the-board reductions for state agencies. The agreed cuts, which are expected to take effect immediately, largely address spending in education and social services.
Fitch Ratings last month warned that California was at risk of a credit rating downgrade if state officials failed to address budget shortfalls promptly.
Standard & Poor's reduced its outlook on California's general obligation bonds from positive to stable last year.