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

[javaz]

Wasn't it just a few months ago that Arnold cut state workers pay to minimum wage until the budget was balanced?

Is that still in effect?
Are state workers still working for minimum wage?

Thank you in advance.

[RButler]

I wonder if CA is still a donor state tax-wise, sending more to DC than it gets back. I live in CA and I think I should run for governor. At 63, I can't possibly look any worse in swim trunks than Arnold. Have you seen that photo?

[Rebecca]

But, but, but...he's a Republican. Anyone knows that Republicans are the most fiscally conservative creatures on the planet. Anyone knows that Republicans don't run businesses, much less governments into the ground. Anyone knows that Republicans are so much more intelligent when it comes to money.

[BlackJAC]

Never forget that Ahnold was one of the original investors behind Planet Hollywood...and that needed to be rescued financially, too. That should've been the warning sign right there.

[3worldusa]

YOU VOTED FOR HIM,TWICE

[Garrett123]

Recall

[morningperson]

They already have the highest sales tax in the country don't they?

How many lies do they have to feed you before you stop believing them?

http://theliepoLitic.com/

[vippy]

I bet I could go in there and look at the budget and see what programs are a necessity and what
is not. States wastes so much. When this town here has money left over they re-pave a road,
imagine that and when asked why, they said that not using up the money allocated would mean they
would get less money the following year. No one has yet to come up with a smart budget, all they
know is how to increase! High time those so called LEADERS earn their money!

[TexDennis]

When the state goes bankrupt, all of those programs they are currently sustaining will go bankrupt too. It all works out in the end. One suggestion, stop wasting money enforcing laws against adult marijuana use. That's money down the toilet, might as well take out your ta revenue and flush it.

[Forestfromthetrees]

Question: Am I wrong or wasn't Arnold elected after the former (democrat) governor was recalled because the state was in massive debt? And didn't Arnold campaign on the premise that he and his republican ideologies were more effective than the democratic policies of the former governor?

So...if that's the precedent, isn't about time to start drawing up the papers to have Arnie recalled right about now?

[gintheb]

Republicans are absolutely impossible to work with because of their symbolic stance against raising taxes even when it is in the best interest of the economy.

[ChristianEcon.com]

Who cares, just as long as nobody touches the free ride for the parasitic superrich in CA, and nationwide. Wouldn't want to be "economic girly-men" now would we? Wouldn't want to upset free market capitalism heroine Paris Hilton.

[crica]

Arnold, why don't you do the decent thing and get out.

[MDHutchinson]

"Now, there's another way you can tell you're a Republican. You have faith in free enterprise, faith in the resourcefulness of the American people and faith in the U.S. economy. And to those critics who are so pessimistic about our economy, I say: Don't be economic girlie-men." --Schwarzenegger, 2004 RNC.

Oh, the irony is just so delicious.

[MagistarLudi]

karma

[SickOfTheCorruption]

:-( I hate California. I wish so badly I could pick up my family and move out of this crap-hole. How much damage does Arnold have to do before someone on a federal level stops him? Are we in California just going to be left to drown? My hope about Obama and the great things that he's going to do for this country just faded because while all of that is great, but what about us in California? There have been so many budget cuts on so many necessary things that we all benefit from here in California and this creep still refuses to raise taxes for the people who can actually afford it. My Obama high is gone now :-(

[CARF]

Yet I'd give anything to move back to San Diego from this hell hole I got stuck in here.... My husband and I are even considering moving to Mexico instead, as California is so expensive anymore to live in.... I'm alreay retired and he is soon to be retired....

I'm a military brat and was born in San Diego, which was always home to us growing up....

[spyguy68]

Schwarzenegger is NOT the problem. The fiscal problem is caused by a small number of republican ideologues in the legislature.

Because of the way legislator are elected, extremist on both sides rather than moderates get elected. Once in office, they are more interested in self aggrandizement than the health of the state.

[suec03]

Because state law requires a supermajority to pass the state budget, the Republican minority leadership can block all Democratic budget proposals. The Republicans have refused to vote for tax increases of any kind. They would rather borrow.

[bobbyperu]

I take it that you have never lived in any other state. Grass isn't all that much greener anywhere else.