It is the third major budget hole the state has faced in two years as tax revenues have plummeted during the economic downturn.
"I wanted to give people a taste of how difficult it is to balance the budget," she said.
About two dozen residents attended the meeting, including elected representatives from Burbank and Glendale.
Liu said she was surprised by the minimal turnout despite the growing public frustration toward budget cuts.
"Can you imagine? No one is interested in the budget," she joked with those in attendance.
She outlined the recent revised budget proposal from Schwarzenegger which budget committee members will begin to tackle next week.
The governor's plan calls for eliminating CalWorks, a welfare-to-work program, and other services for poor and underserved populations.
The proposal also includes further reductions in funding for schools and mental health services.
Liu encouraged feedback from those in attendance, saying that she wants the public to help her make the budget-cut decisions.
"What would you do?" she said. "For me, I get really angry about this whole thing."
One resident suggested taking a hard look at all non-teaching positions at schools, while another said the state should allow the production of hemp as a moneymaker.
While she did not outline her opinions on all of the governor's proposal, Liu, chairwoman of the Senate's budget subcommittee on education, repeatedly spoke against the proposed education cuts, which she said would continue to hurt the competitiveness of California students.
She also spoke in favor of prison reform, citing that the state's Department of Corrections, which has 170,000 inmates, has a similar-sized budget to the state's community college system, which enrolls 2.8 million people annually.