This from the Governor’s office:
After the previous legislature’s inaction in both addressing the state’s $11.2 billion current year revenue shortfall and enacting economic stimulus in the last legislative special session, Governor Arnold Schwarzenegger today declared a fiscal emergency for the state of California, allowing him to call a Proposition 58 legislative special session to address this emergency. The Governor also called a second legislative special session to address the state’s economy. The Governor reiterated his call for a combination of difficult spending cuts and new revenues to solve the state’s revenue shortfall – and
also reiterated his call for the legislature to enact plans previously outlined by the Governor to stimulate job creation, address the mortgage crisis and fix the state’s Unemployment Insurance Fund.
“Without immediate action our state is headed for a fiscal disaster and that is why with more than two dozen new legislators sworn in today – I am wasting no time in calling a fiscal emergency special session,” Governor Schwarzenegger. “We must act now to address the current year revenue shortfall of $11.2 billion and we must implement an economic stimulus package to help retain and create jobs, keep Californians in their homes and fix the state’s Unemployment Insurance Fund. I look forward to working with the legislature in attacking these problems head on, making the difficult choices and working together for the common good and future of the state of California.”
While Governor Schwarzenegger has worked to fix California’s spending problem and has kept state spending relatively flat for the past three budget cycles, the dramatic deterioration in revenue projections since the signing of 2008 Budget Act presents an extraordinary situation which, combined with the
volatility of our tax system, creates a revenue problem. The current fiscal year budget shortfall is projected to be $11.2 billion. Over the next 18 months, preliminary estimates from the Legislative Analyst’s Office show the budget deficit reaching a staggering $28 billion.
Under Proposition 58 the legislature has 45 days to pass and send a bill or bills to the Governor’s desk addressing the state’s budget crisis. If the 45 days pass and the legislature has not passed bills to address the problem, they cannot adjourn or act on other bills until the state’s fiscal emergency
is addressed.
The Governor previously called a legislative special session and announced a plan to close California’s budget shortfall. (http://gov.ca.gov/index.php?/press-release/10966/) At that time, the Governor also unveiled a separate plan of targeted actions that will stop our economy’s downward spiral.(http://gov.ca.gov/index.php?/press-release/10966/) His prescription is full of specific actions to generate jobs, keep jobs and businesses that are tempted to leave in California and lure those that have left back to the Golden State. The Governor’s plan to stimulate employment in our state includes: accelerating hospital construction to inject approximately $160 million into California’s economy; expediting infrastructure bond monies to create jobs and help unemployed residential construction workers in the hardest hit areas of the state get trained in a new type of construction; keeping high paying jobs in California by providing overtime exemptions and allowing more flexible work schedules to increase productivity; clarifying meal and rest periods to save businesses hundreds of millions of dollars in litigation costs and create less confusion from meal break violations which will mean fewer terminations; reducing barriers to public-private partnerships and “design-build” agreements to enable more infrastructure to be built better, faster and cheaper and generate more jobs during the housing downturn ; and keeping television and film production in California by providing targeted tax credits and keep thousands of jobs in the state and economic output in our state.
The Governor also recently provided the legislature an aggressive plan (http://www.gov.ca.gov/press-release/10959/) to help shore up our state’s economy by helping Californians stay in their homes. His proposal would bring down foreclosure rates by helping both borrowers and lenders modify existing home loans in ways that benefit both parties. Also, to prevent another mortgage crisis in the future, the Governor prescribed changes to the way mortgages are brokered and originated to make lenders more accountable, guard against risky mortgages and prevent unsustainable bubbles from ever arising again.
Governor Schwarzenegger also recently _unveiled a plan_ (http://gov.ca.gov/index.php?/press-release/10966/) to continue to help those Californians most in need by ensuring benefits for the state’s unemployed through restoring solvency to the unemployment insurance fund. The financing system for the trust fund is over 20 years old – and while benefits have increased, contributions have remained the same. The fund is projected to be $2.4 billion in the red for the coming calendar year and $4.9 billion in the red in 2010. If no changes are made, federal taxes for California employers will increase in 2012.
To shore-up the fund and protect benefits to unemployed Californians, the Governor has called for a gradual increase in contributions into the fund, combined with a small reduction in benefits in order to maintain the fund’s solvency.
In an effort to avoid the extreme revenue swings that have caused crippling deficits in our state, the Governor and legislative leaders announced (http://www.gov.ca.gov/press-release/10927/) the long-term action of creating the bipartisan Commission on the 21st Century Economy to re-examine and modernize California’s out-of-date revenue laws that contribute to our feast-or-famine state budget cycles. The commission will suggest changes that will result in a revenue stream that is more stable and reflective of our economy while maintaining a fair and equitable revenue structure that will ensure our
continued competitiveness and attraction to employers and workers.
The three proclamations Governor Schwarzenegger signed today can be found at http://gov.ca.gov/.
