"If we continue spending and don't make cuts, California will be bankrupt" by June, new Gov. Arnold Schwarzenegger (R) warned in his first State of the State address Tuesday, while reaffirming that he won't raise taxes. The actor-turned-politician is expected to detail deep cuts to health, welfare, and other programs in a budget to be released Friday. Schwarzenegger also urged voters to approve a $15 billion bond in March to ease the budget crisis, and pledged to travel the world to drum up business for the state.

In the latest move to allay concerns over mad-cow disease, 449 calves were being slaughtered by federal workers at a private facility in Wilbur, Wash. One was the offspring of a Holstein cow diagnosed with the ailment last month in the first such US case, but Agriculture Department officials said they couldn't determine the exact animal. The remains were to be buried at a landfill. Meanwhile, agriculture officials said DNA tests confirm the ill cow was from Canada, as authorities on both sides of the border worked to trace the rest of its herd.

Announcing that construction giant Bechtel Group won a second contract - worth $1.8 billion - to rebuild Iraq, the US Agency for International Development (USAID) defended the decision Tuesday as based on competitive bids and past performance, not politics. "There was no influence whatsoever," said Tim Beans, procurement director for the agency, an arm of the State Department. Democrats criticized the previous no-bid contract because executives at San Francisco-based Bechtel, a global leader in such projects, contributed to President Bush's 2000 campaign and two of its executives serve on advisory boards to the White House and the Defense Department.

Northrop Grumman, BAE Systems, and United Airlines will get $2 million apiece under a Homeland Security Department contract to study ways to protect commercial aircraft from shoulder-fired rockets. Terrorists used such a missile in a failed attempt to down an Israeli airliner in Kenya in 2002, and another damaged a DHL cargo plane at Baghdad's airport in November.

"Reflecting Absence" was chosen as the design for a World Trade Center memorial by a New York jury Tuesday, from among more than 5,000 entries. The design, by Housing Authority employee Michael Arad and San Francisco architect Peter Walker, features two reflecting pools on the "footprints" of the towers destroyed Sept. 11, 2001.

Rare heavy snows and record cold temperatures closed roads, schools, and businesses in parts of Oregon and Washington State Tuesday. One weather-related death was reported.

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