Schwarzenegger Declares Emergency: California "Is Headed For A Fiscal Disaster"

SACRAMENTO, Calif. — Gov. Arnold Schwarzenegger declared a fiscal emergency Monday and called lawmakers into a special session to address California's $11.2 billion deficit.

The state's revenue gap is expected to hit $28 billion over the next 19 months without bold action. The emergency declaration authorizes the governor and lawmakers to change the existing budget within 45 days.

The state is likely to run out of cash in February.

"Without immediate action, our state is headed for a fiscal disaster, and that is why ... I am wasting no time in calling a fiscal emergency special session," Schwarzenegger said in prepared remarks.

The Republican governor and Democratic lawmakers have proposed a combination of tax increases and spending cuts, but Republican lawmakers steadfastly refuse to raise taxes.

No compromise could be reached during a special session last month, which pushed the problem to a new Legislature being sworn in Monday. But there appeared to be little reason to believe that Republican lawmakers would budge.

"If anything, I think our resolve (against raising taxes) is deeper than it has ever been because of the economic realities," Senate Minority Leader Dave Cogdill said Monday.

Democrats don't have the two-thirds majority in either the Assembly or Senate that is required to pass tax increases or a state budget.

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During last month's session, Democrats proposed $8.2 billion in spending cuts and $8.2 billion in tax increases. Republicans rejected it and instead sought an economic stimulus program.

Schwarzenegger asked for both, offering essentially the same plan rejected last month.

His proposal includes raising the state sales tax by 1.5 percentage points _ or 1 1/2 pennies on the dollar _ for three years, generating $3.5 billion in the current fiscal year. He also seeks to increase the annual fee for registering vehicles.

The stimulus would focus on loan modifications to prevent more home foreclosures and saving an unemployment insurance fund from insolvency by raising taxes employers pay into the pool and slightly reducing benefits.

Schwarzenegger enacted the fiscal emergency under a voter-approved initiative. If the Legislature fails to address the current-year budget deficit within 45 days, the initiative prevents them from acting on any other bills until it's resolved.

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Associated Press writers Samantha Young in Sacramento and Solvej Schou in Los Angeles contributed to this report.

Comments

[Mildmannered]

Republican State Senator Cogdill wants to take the entire state down with him instead of raising taxes as part of a budget compromise.

[ksmms]

My 86 year old mother lives in Orange County, in a home my parents bought in 1962. She pays $770 a year in property taxes on a home that has an assessed value of $52,000. Homes in her neighborhood sell for around $500,000-600,000. When she passes on, she will leave an estate over $1.5 million. My father was a college professor, and mother never worked outside the home. She thinks her taxes aren't high at all, and hates Prop 13 because she knows the tax burden is on the younger people who can't afford it. She also hates what Prop 13 has done to the school system in California.

I live in Johnson County, KS (suburb of Kansas City), and have an assessed value of $43,000 for a home that would sell for around $400,000. We pay $5200 a year in property taxes. We have fabulous, well-funded public schools in an area of high growth. Schools are being built right and left out here.

Even though I was raised in California, I wouldn't go back if my life depended on it. People in California want the good life without paying for it.

[MizLiz]

When are republicans going to realize taxes are necessary? Don't they see what happens when costs go up and income remains the same?

[Mildmannered]

I truly don't think that they see it, MizLiz. And Republican State Senator Cogdill wants to take the entire state down with him instead of raising taxes as part of a budget compromise.

[BillZBubb]

Republican Arnold supported Bush and his policies, he even supported McSame. Now CollieFornYa is reaping the Republican crop for which they threw out Gray Davis to embrace. Enjoy.

[PollyTics]

I've lived in California for about 14 years now and have been livid about much of Arnold's decisions and edicts. We recalled Gray Davis a few years back (who was a Democrat and also a rotten governor) and we get this? Actually, I supported Arianna until she withdrew and threw her support to whats-his-name, you know the guy who lost.

This state is a mess....

[commonsensor]

Wasn't this the Governator who led the viscous recall on Davis because of his "incompetency' to manage California's fiscal problems? Wasn't this the guy who arrogantly claimed HE was going to bring 'balance' back to the state budget?

All we've seen for sure is that there is absolutely nothing this guy they can't financially screw up (or over)!!

CALIFORNIA NEEDS ANOTHER RECALL VOTE!!!

[PollyTics]

Actually the effort to recall Gray Davis began with Republicans Ted Costa, Mark Abernathy, and Howard Kaloogian, who filed the petition with the California Secretary of State and started gathering signatures. The effort was not taken seriously, until Rep. Darrell Issa, who hoped to run as a replacement candidate for governor, donated $2 million towards the effort. This infusion of money allowed Costa and Kaloogian to step up their efforts. Eventually, about 1.6 million signatures were gathered, which was enough to trigger a recall.

[fredamae]

Gov S!
Science and fact finding have Provided you with a "unique Bailout opportunityYou currently have the Number One Cash Crop in the US. Cannabis!

Tax and regulate = Billions in New revenue for CA. The solution is right under your nose.
You could actually move to Change Federal Laws governing the Use of cannabis and benefit from your work.

[Dystopic]

Start taxing the "produce" from the emerald triangle ... Humboldt and Mendocino comes to mind ...

[Babysnake]

heh heh.

[wembles]

the govenator has been a disaster for this state. i always wished he would listen to maria
and enact the things she supports. california would be a much better state.

[Dystopic]

Won't the magic faeries save california? They are far to great to have anything happen to them!!!

Recall Arnold, Already.

[Oldbuck]

When will Arnold and the rest of the Republicans realize that wars and Tax cuts do not stimulate the economy the war put money into none tax payer hands the military industry complex has most of there business located off shore and pay not taxes.

[deanmatteo]

if you realize that they are controled by the military industrial complex then you would understand he doesnt make the rules......he follows orders

[deanmatteo]

who cares what this na zi thinks..........

[catinca]

When he was "elected" he repealed the auto tax now he wants to reinstate ...he's a joke.

[sak]

The moronic attitude of the Republicans is depressing. We can't raise taxes to take care of the basic needs of the state, right? So let the schools close, hospitals shut down their emergency rooms, drug clinics close, roads and highways continue to fill with holes, bridges crumble and on and one. Where do they think this money is going to come from? Is some nice guy going to step up and say, "Hey, let me fund the public school system?" Even vouchers won't work in this mess. A voucher does no good for a family that isn't working. I think the whole country is headed for disaster because of the brainless deeds of the GOP.

[catinca]

Yes they don't care about the state. As long as they protect their buddies it does not affect their lifestyle.

[kellygrrrl]

Ahnold has cut more money from Education here than any Governor I've ever heard of.
But he insists on giving tax breaks to owners of private jets and yachts.
helloooooo