California faces yet another large budget shortfall and that means policymakers in the nation’s biggest state may face a new round of tough decisions on early learning spending.

Earlier this month, Gov. Arnold Schwarzenegger kicked off the debate by declaring a fiscal emergency and proposing his new budget, which contained potential child care cuts, Preschool California reported. If California doesn’t receive a big bump in federal funding, it would trigger cuts that could eliminate the state’s CalWorks program, which supports poorer families with child care aid and employment help, and its Healthy Families health care coverage for kids, according to an analysis provided by the advocacy group.

The governor’s budget also contains cuts to child care reimbursement rates. It wasn’t all bad news, however. The governor’s budget “increases by $65.5 million to backfill Pre-School one-time funds used in the current year,” Preschool California said. (We are still waiting for more details about the budget plan.)

Now isn’t a great time to cut child care spending in California because the state received a C for its early learning and development in a recent report card issued by Children Now, an Oakland, California-based advocacy group.

It could be another tough year of state funding battles.