California Gov. Arnold Schwarzenegger says the state may need a $7 billion emergency loan from the federal government to pay for government services and salaries.

In a letter sent Thursday to U.S. Treasury Secretary Henry Paulson, he warned that the state is running behind on cash.

The letter was published today in the Los Angeles Times, as the U.S. House reconsiders a federal bailout of the country's financial system.

"The federal rescue package is not a bailout of Wall Street tycoons -- it is a lifeboat for millions of Americans whose life savings, businesses, retirement plans and jobs are at stake," Schwarzenegger wrote.

"Absent a clear resolution to this financial crisis that restores confidence and liquidity to the credit markets, California and other states may be unable to obtain the necessary level of financing to maintain government operations and may be forced to turn to the federal Treasury for short-term financing," Schwarzenegger added.

Schwarzenegger said California will try to sell "$7 billion in revenue anticipation notes for short-term cash flow purposes in a matter of days."

He also said other states are similarly cash-strapped right now.

In Virginia, the declining economy could force additional spending cuts of nearly $3 billion, raising the specter of deeper reductions in public services and broader layoffs. The worst-case scenario, prepared for Gov. Timothy M. Kaine, would come atop $2 billion in reductions already enacted by Kaine and legislators.

The latest projection -- tentative and subject to change -- indicates revenues could fall another $2 billion to $2.9 billion during the remaining 21 months of the current two-year, $77 billion budget. At Kaine's direction, state agencies recently submitted plans to trim spending by 5 percent, 10 percent or 15 percent.