California Gov. Arnold Schwarzenegger signed a revised $85 billion budget Tuesday morning and took aim at welfare for even deeper cuts. But the budget battle may not be over.

Before signing the budget, Schwarzenegger used his veto power to trim another $656 million. Protestors hit the streets before the ink was dry.

"This kind of game playing by the governor doesn't bode well for success in terms of water, corrections, pensions or any of the other items that he is looking to in order to build some kind of real legacy," Assembly Speaker Karen Bass said Tuesday, after the Republican governor announced his vetoes.
    
California Democrats are crying foul because the vetoes cut millions from child welfare, health care, and aids prevention programs. The governor said he had no choice because the legislature's package fell $1 billion short.

"That's ugly. Already, we have cut so much and then we had to make additional cuts," Schwarzenegger said. "This been a very tough budget, probably the toughest since I've been in office in Sacramento."

Senate President Pro Tem Darrell Steinberg is now vowing to fight to restore every dollar of the additional cuts.

"We will fight to restore every dollar of additional cuts to health and human services," he said. "This is not the last word."

Even with the new budget, California will need to borrow between $8 to $10 billion to cover its cash needs this year. The state faces another $7 to $8 billion deficit next year.

Source: The Associated Press