"There is absolutely no time to waste," Schwarzenegger said. "We must solve this deficit now or we will run out of cash."
He said he was not making an idle threat.
"I don't have to shut down state government, because when (legislators) don't produce a budget on time, we will run out of cash and therefore our government will shut down by itself," he said.
Schwarzenegger said that after June 15, "every day of inaction jeopardizes our state's solvency and our ability to pay schools and teachers and keep hospitals and ERs open."
Schwarzenegger said state revenue is down 27 percent from last year, contributing to a $24 billion spending shortfall.
To balance the budget, Schwarzenegger has called for huge cuts to education and health and human services, the early release of prisoners, selling off state properties and slashing university funding.
The governor has also proposed that the state temporarily shift $2 billion in property tax revenue away from municipalities.
According to city officials, Schwarzenegger's plan to borrow money designated for local governments would cost San Diego $36 million in property tax revenue and another $24 million in gasoline tax revenues over the next fiscal year, which begins July 1.
Under Schwarzenegger's proposal, the county would lose about $70 million in funding.
During his speech, Schwarzenegger said the plan to shift money away from municipalities is "not a 100 percent thing."
"My Republican colleagues have already said they don't like that idea of borrowing from local government," Schwarzenegger said. "My Democratic friends have also said they don't like to borrow from local government. So, if both parties don't like to borrow from local government, of course we will not borrow from local government."
Schwarzenegger said if money is borrowed from municipalities, "we want to work with local governments so that we can figure out a way so no one does have to get laid off and that you can borrow against that money and our promise to pay you back."
The governor's remarks were made before a crowd of local government officials, laborers and school children at the California Center for the Arts Escondido. The speech was part of a statewide tour by Schwarzenegger to update Californians on the status of California's budget and he seeks public support for massive cuts in spending and state programs.
Bruce Wettstein, President of Pure Water Industries spoke about the differences between "saltwater pools VS. more traditional chlorine pools.
UC San Diego is the world's 15th-best university according to new rankings released Wednesday by the Academic Ranking of World Universities.
A newly built northbound pedestrian-processing facility will open Wednesday afternoon on the east side of the San Ysidro Port of Entry, one of the busiest land border crossings in the world.
Investigators executing a search warrant on Wednesday at a La Jolla home found and disposed of what was believed to be a pipe bomb.
Join Kids4Community on Sunday, September 2nd from 1:30 - 3:30 p.m. in putting together care packages for elementary students at Perkins Elements in Barrio Logan.
Major League Baseball umpires made a special visit to treat some local kids to much-needed smiles on Wednesday. They brought a Build-A-Bear workshop to patients at Rady Children's Hospital.
The body of a 12-year-old girl was found Wednesday in San Vicente Reservoir, five days after she fell from a boat, authorities said.
Whether as the backdrop for a film or the location of a television special, San Diego has sparkled on screens big and small over the years.