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.

Story continues below

advertisement

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.

___

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

Comments

[Carolab]

Of course it is; Goldman Sachs ensnared California in a huge muni-bonds derivatives scheme. And it's not the only state involved.

[Carolab]

Here, READ THIS:

http://www.latimes.com/news/printedition/front/la-fi-goldman11-2008nov11,0,6214586.story?page=1

[Carolab]

Cut and paste the link. You won't be sorry you read it.

[JBS]

Can you say "Breach of Fiduciary Responsibility" boys 'n girls?

I knew you could.

[JimGroom]

Whatever you do Gov...don't tax business like Reagan or that other GOP governor? Do ya wonder why there is lack of funds coming into the state treasury? Yeah, I'm not buying stuff so you can't depend on consumer spending to bail out the system.

Let's see, how about taking more funding from the sick, children and schools just like always when times get tough? Oh I forgot you are doing that! Can you spell RECALL?

[Indubio]

California has been living on borrowed time since 1978 when we stupidly passed Proposition 13; one of the greatest calamity this state has ever experienced. We have the 7th/8th largest economy in the world and we act as if we're a third tier economic power. California will never reach fiscal stability as long as 1/3rd of the electorate/Assembly can veto the will of the majority with respect to a budget/taxes and as long as we have a property tax law that makes as little sense as that instituted by Proposition 13. Furthermore, as long as California voters continue to pass propositions that hijack the budget from the legislature/governor, we can demand fiscal responsibility from our elected officials but they won't be able to provide it. There's plenty of money in California but too many taxpayers have been convinced they can have everything without paying for it. California needs to eliminate government by proposition. We also need a 2 year budget process. None of this is going to happen unless California collapses economically because that's the kind of shock it's going to take to wake people up to reality.

[epitomized]

"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.

That statement says it all. Republicans would rather bankrupt a government than raise taxes. For if they raise taxes, however will they be re-elected? It is pathetic.

Federal bailout for California up next. They are going to run out of money before the Big 3. When are we going to learn to not elect actors? Ventura, Schwarzenegger, et. all.

[JohnnyKong]

[Republican] political ideology over reason, logic, and pragmatism will always lead to a disaster, Mr

[Julie02]

Arnold is a gubernatorial disaster. The Repubs were dancing in the streets when Davis was given the boot and now they're crying their eyes out.

[unhipcat]

Arnold had a solution for this situation when Davis was governor.

[LiarLiarIraqsOnFire]

Don't blame me, I voted for the Porn Star.

[fiberoptimist]

Schwarzenegger has twice vetoed legalizing industrial hemp for California, an industry that could raise billions in tax revenues over the long term, and clean up the environment. What foolishness in the face of these deficits.

[epitomized]

But people will get high!

We should chip in and get them a subscription to High Times so that they can learn that hemp does not necessarily equal THC.

Who's going in with me?

[imadf]

Let's total-recall the motherf*&%. He needs to learn his arrogant selfish lesson (and his ilk too) that you don't go around steroid-muscle-pumping, sun-tanning, cigar-smoking, to recall governors just so you screw an entire state into bankruptcy, and call that a "successful" career!!!!

You really don't, and that's exactly what he's done.

Let's call an end to his brain retarded politics. Let's do a Total Recall of Total Recall. Now. Cameras will love it, and newsmen will make a bundle covering it...

[SurferKit]

Another fiscally conservative Republican F's up!

Where is Gray Davis when we need him?

[CaliforniaJake]

You got that right, Kit.

Arnold has screwed California.

[JBS]

And wouldn't even give 'em a reach around!.

[CaliforniaJake]

Indeed, Kit.

But then most rethugs svck at governing.

[Artemis34]

I always say we shouldn't ask people who don't believe in government to govern!

You said it CaliforniaJake!

[Myshkin57]

Ask Enron.

[Littlewords]

...and the GOP wonders why it is losing seats to dems and independents across the country and why the great state of California is so blue. Well it is tied to folks like Gogdill who boasts about blocking the severe spending cuts and tax increases to address the obvious impending calamity. Cogdill does his chest pounding political grand standing, like many GOP peers, at the peril of the people.

The GOP party today is like a bad zombie movie. The party is dead, but the players don't seem to realize this and instead continue to haunt the living world with their incessant moaning and continued attacks.

Good job Cogdill: GOP 1 point, people of california 0 points.
Good luck in the next election.

[KickerBoard]

What goes round comes around. Guess Arnold's gonna need some help from the man whose "puny legs and arms" he stupidly ridiculed, Never knock a competent, NATURALLY fit man, Arnold, if you're going to be coming round with a begging bowl just a few weeks later! It just makes you look kinds D U M B!

[SimJack]

Trying to govern California is why some burn out and others get out and run for president. Since you can't run for president, you are left with the other option. Having a successful career in your previous life will ensure your continued success. As for the rest of us regular folks, danke fur naught. Auf viedersehen meine liebe schnitzel! Bitte kisse mein popo.

[Artemis34]

I think McCain was a set up for Arnie to slam dunk the presidency. John McCain was born in 1936 at Coco Solo Naval Air Station in the Panama Canal Zone, Panama. He was not born in the United States. McCain was not really popular with the Republicans, but he was their candidate. Why? They knew no Republican was going to win and they wanted to set Arnold up for a future run. They wanted to create a precedent for a foreign presidential candidate. And if we object to Arnold, they will say "Well, you didn't object to McCain and he was born in Panama!"

[epitomized]

That's a bit of a stretch. Amending the constitution doesn't happen overnight and McCain was not voted president and therefor did not set precedent. The constitution does not state that you must be a natural born citizen to run for president -- just to be president.

[GoKings57]

Correct me if I'm wrong, but wasn't McCain's father a serving U.S. Naval Officer on duty in Panama, thereby qualifying McCain for "natural-born" status? I don't know the dates of the laws, but I'm pretty sure everything I've read to date shows that McCain's citizenship meets the Constitutional requirements for the Presidency.

[castlerider]

Yellow panties said:
"When you exploited the recall effort against Gray Davis, you decried Davis' plan to issue bonds, and you belittled his efforts to keep the power on during the summer when Enron was literally holding California to ransom.... Then the crisis passed and you had to issue the same types of bonds that Davis advocated, yet because of the delay CAUSED BY YOU, by calling Davis a girly-man and using your celebrity to convince voters to dump Gray, it ended up costing Californians an extra 7 or 8 BILLION DOLLARS."

She's right, ya know.
You could also get smart and legalize Pot, letting thousands free for all those charges that serve absolutely no purpose but to make people suffer. Research has been done to figure the cost to the state for holding these people and it would mean close to 1.2 billion that the state could save and free up.
Get smart and do the right thing, Arnold.

[Artemis34]

And California could charge a sales tax too. So they'd get revenues in addition to reducing costs!

[Carolab]

And make biofuel.