The governor of California, Arnold Schwarzenegger, has declared a 'fiscal emergency' after politicians failed to balance the state budget. If agreement isn't reached soon, the state could stop the payment of bills and welfare support.

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The new financial year has now begun, and because lawmakers have failed to agree on a programme of cuts, officials are warning that drastic measures may have to be taken to conserve cash. The state controller, John Chiang, has said he may order his department to delay payments to companies who work for the state and to those who rely on benefits and grants, among them vulnerable members of the population.

Arnold Schwarzenegger has declared a fiscal emergency and vowed to force Democrats and Republicans in the state legislature to reach agreement as soon as possible. Meanwhile the White House has said it's keeping a close eye on the situation, although a bailout at this stage seems unlikely.

Jon Bithrey, BBC News, Los Angeles

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subsequent
happening after something else

put a large dent in the state's finances
produced a gap or shortfall in how much money the state has

income taxes
money that comes out of people's salaries and goes to the government, national or local (people who earn larger amounts usually pay a higher amount of income tax)

grappling with a deep and growing budget deficit
struggling to deal with serious financial problems, that there is not enough money to pay for what is needed

a programme of cuts
a series of measures for the government to spend less money

drastic measures
severe or sudden actions which will have noticeable effects

conserve cash
save money

vulnerable members of the population
members of the population people who are sick, old, poor and who rely on the state to help them financially

a fiscal emergency
a serious and dangerous situation concerning lack of funds

keeping a close eye on
watching closely to see if anything changes

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