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Schwarzenegger declares Calif. fiscal emergency

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July 1, 2009 03:30 PM EST | AP


SACRAMENTO — Gov. Arnold Schwarzenegger has declared a fiscal emergency to address California's deficit and has ordered state offices closed three days a month to save cash.

The Legislature will have 45 days to send him a plan to balance the state's budget, which ended the fiscal year with a $24.3 billion deficit. The shortfall is expected to grow by $7 billion because the Legislature did not enact several stopgap measures Tuesday.

If lawmakers fail to act within the 45 days, they cannot adjourn or act on other bills until they solve the crisis.

The government shutdown will lead to a third furlough day each month for 235,000 state employees, bringing their total pay cut to about 14 percent.

California began its new budget year Wednesday without a balanced spending plan, which will force the controller to issue IOUs.