Schwarzenegger declares fiscal emergency

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Closing state offices 3 days per month

Wednesday, July 01, 2009

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BY ASSOCIATED PRESS

12:30 p.m.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 on 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 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.

43 comment(s)

midvalley wrote on Jul 1, 2009 1:17 PM:

" $31 billion deficit, issuing of IOUs and the possibility that some of our state parks will soon be managed by the feds. We are in for some serious hurt! We need drastic changes now. We elect these officials into office and they just sit there and watch it get worse. Very sad days for the state of CA. "

kbf wrote on Jul 1, 2009 1:17 PM:

" Since the little guys have to take the brunt of this problem, I wonder if the people that do the budget and all the lawmakers have to take furlough days that would cut their pay? It is only right. "

Ruff Limblog wrote on Jul 1, 2009 1:24 PM:

" Arnold is such a hypocrite.

He sure fits in as a Republican.

He declares a fiscal emergency that he help precipitate.

~Ruff "

midvalley wrote on Jul 1, 2009 1:35 PM:

" Ruff, the problem is bigger then one Republican. How about the hundreds of elected officials who keep spending more money than the state makes? "

magnum wrote on Jul 1, 2009 2:00 PM:

" When people in this state recalled Gray Davis due to a 16 billion dollar deficit, did anyone thought about what we should do about a Governor that is responsible for a 31 billion dollar deficit?????
Arnold will blame others but it always start at the top and he needs to quit talking and starting working on fixing this mess! "

kbf wrote on Jul 1, 2009 2:07 PM:

" Sorry Ruff- Arnold is a Democrat in Republicans clothing. Look who he is married to and the family he married into. "

TAXPAYER wrote on Jul 1, 2009 2:19 PM:

" Ruff, Arnold needs to fire all of the Demorates some his allowed to do his job! "

servant wrote on Jul 1, 2009 2:25 PM:

" Our legislators have messed up so bad!! Remember our giant surplus? Complete mismanagement. What a joke, we need leaders with a spine...and we've got jelly fish. "

reason-ator wrote on Jul 1, 2009 3:34 PM:

" Some emergency that'll allow 45 days to fix. "

napasnapper wrote on Jul 1, 2009 3:34 PM:

" Well,California just keeps on electing those Democrat socialist types and Calfornians keep getting fleeced by them. Remenber what they say: Socialism is just fine, until they run out of other peoples' money. But in all reality,Californians will keep on voting for the Democrat party,after all, it's better than working!! "

Napa_Citizen wrote on Jul 1, 2009 4:00 PM:

" Maybe California cant keep supporting illegal immigrants that arent paying taxes for the schooling of their children and and also free services from our hospitals??? Hmmm maybe that could be part of it???? "

savenapa wrote on Jul 1, 2009 6:28 PM:

" Napa_Citizen: Well said. The budget issue that California is facing is complex, but we all know that what you mentioned is more than "part of it". Too bad denial won't make the problem go away. "

ctworker wrote on Jul 1, 2009 6:42 PM:

" So let me get this straight... the governor and a few of his cronies, in their infinite wisdom, decided that it is better to put the state $7 billion more in the hole than to pass a stopgap to keep that from happening??? All because they want to fix the whole problem at once??? So lets make the problem BIGGER in the meantime... The ineptitude never ceases to amaze me. "

Just Concerned wrote on Jul 1, 2009 7:13 PM:

" There is a solution, although most don’t want to hear it – declare bankruptcy! This will alleviate the State from most financial and contractual obligations. This will also give the State an opportunity to renegotiate contracts, default on loans, and start from ground zero. This may appear as throwing in the towel, but the game is so far out of whack drastic and courageous measures are needed. "

athought wrote on Jul 1, 2009 7:42 PM:

" Ruff- must be nice that no Democrats have ever done anything hypocritical huh? "

Paddy wrote on Jul 1, 2009 7:52 PM:

" There's nothing Republican about CA politics and there hasn't been in many decades. The socialist giveaway that's been occuring here is brought to you by hyper-liberal Sacramento, CA. "

reader wrote on Jul 1, 2009 7:53 PM:

" This is what happens when republicans are elected. First Bush, which brought us the biggist depression since the great one and now Arnold S. who was elected based on his promise of balancing the budget. Useless, all of them. "

ctworker wrote on Jul 1, 2009 8:22 PM:

" I am pretty sure that states can't declare bankruptcy. "

Mr. Feasor wrote on Jul 1, 2009 8:23 PM:

" ctworker -

I think you may have misread the article. It says "[t]he shortfall is expected to grow by $7 billion because the LEGISLATURE did not enact several stopgap measures on Tuesday" (emphasis added).

The governor and his 'cronies' are part of the executive branch, not the legislative branch... "

109823 wrote on Jul 1, 2009 8:33 PM:

" So why not just file for Bankruptcy every few years after we're billions in the hole again? I'm OK with it if we cut out all the aid to illegals and stop the anchor baby instant citizenship farce. "

Madison Jay Hamilton wrote on Jul 1, 2009 8:56 PM:

" I hope all those who voted for Arnold and his fellow GOPers recognize their error.

The Bush Administration punished California for voting for Gore (2000) and Kerry (2004). Not even the (R) printed after his name could convince Bush to help California when it mattered. "

reason-ator wrote on Jul 1, 2009 9:07 PM:

" JustConcerned, will it be any easier for California to borrow money if they declare bankruptcy ? "

Just Concerned wrote on Jul 1, 2009 10:12 PM:

" If only California had made billions in bad mortgage loans ... we could've gotten a $100 billion bailout. "

Raven wrote on Jul 1, 2009 10:14 PM:

" States are not allowed to declare bankruptcy because they have the power to tax and raise money.

I notice the GOP in the legislature have still not submitted a plan they would accept....

feasor, yes the gov, since he vetoed the bill that was passed and his cronies, the GOP minority in legistaure.... "

duck wrote on Jul 1, 2009 10:25 PM:

" How about revisiting Prop 13? "

John Richards wrote on Jul 1, 2009 11:17 PM:

" States are not allowed to declare bankruptcy. "

5th generation napan wrote on Jul 2, 2009 7:45 AM:

" Bottom line is both Democrats and Republicans in the legislature bought votes by giving money to worthwhile programs they DIDN"T HAVE! This group has bought vote using Californias credit card and the limit is now maxed out and they can't pay for it. Arnold is being realistic and some how the legislature and a lot of the population can't see it.
YOU spend money you dont have, then eventually the repo guy comes, and the legislature acts supprised?
Give me a break.
Declare total bankrupsy, fire all the legislatures, and all the state workers and start over with a clean set of books. We'll call it "Wiser California", list ourselves as a new reformed, smarter state and the first law is we can only spend money that we took in the Previous year. Then we can have a real budget.
Painful, yes but necessary. "

Raven wrote on Jul 2, 2009 10:32 AM:

" 5th...you want try try for some solutions that state can legally do? "

5th generation napan wrote on Jul 2, 2009 2:50 PM:

" Here you go Raven:

http://www.sacbee.com/1098/story/1666241.html

How about limiting some of the gross fat in the state employee budget.

Why does the State of California have over 31 Cheif Dentist's on staff totalling over 12 million dollars?
And this is outside the UC System.
UC System 52 people making over 58 million dollars, and 6 professors making over 11 million dallars, and our educational system is junk right now!

http://www.sacbee.com/1098/story/1669273.html

Why is the state hitting the essential service when there is a whole lot of disgusting FAT in the budget. The wool is being pulled over our eyes with smoke and mirrors and we are being miss directed into looking at the wrong places.
I, me, myself group protecting their buddies, and its not right.
Yes RAVEN its time for the people to have a revelution in this state and start over.
But will the state union, representing 141,000 employeed and retired people like this, no I doubt it.
You do the math.
And this is only the public data, just imagine if you took the budget line by line, the amount of graft you'd find. "

Raven wrote on Jul 2, 2009 3:45 PM:

" 5th...I have done the math, you could cut every state employee and not even hit half the deficit ... and you really mean 'graft' or waste? "

5th generation napan wrote on Jul 4, 2009 10:51 PM:

" Raven, your smart. I'm sure you can tell me better how the definition of "graft" and "waste" both applies to the California State Budget.

For me it's from reading articals such as the cal-tax commentary By Larry McCarthy making statements "After a year of careful review, the Sacramento Bee identified categorical school spending which is 30 percent of school spending or $17 billion spent on programs for which there are no measurable results. The Los Angeles Times has reported that Medi-Cal fraud consumes 10% (or $3 billion) of the revenues for the Medi-Cal program. On January 31, 2006, Los Angeles Daily News reported that fraud in state funded child care programs could reach $1.5 billion. Additional press reports on waste and fraud can be found at Cal-Tax Online .

http://www.caltax.org/Digest/2006/mar06_mccarthy_california_structural_budget_deficit.html

But I'm sure everyone will say this is a subversive group.

Goring said "if you tell a big enough lie, everyone will believe it"

Yes I stick by my statement there is in the california budget, payoff's, waste, ineffective spending, trailers, pork bellies, and plain mis management.
The legislature have been approving budgets, guessing at how much they will bring in that year.
Why is it so hard to operate off the previous years intake. Then you know what your budget can handle.
No that would eliminate giving special interest anything they want. With the current system they can slide anything into the budget and say I think this revenue this year will cover it. Its all a guess. Its called Enron accounting, or Madoff financing. "

Raven wrote on Jul 6, 2009 6:33 AM:

" you can stick by your statement of graft, 'payoffs' but you have said there is illegal activity, which graft is, where is it?..who received it? who paid it?...where is your evidence of graft?
No one has said there isn't waste and fraud, but no estimate says that would come close to filling the 27 billion dollar hole in the budget. "

5th generation napan wrote on Jul 6, 2009 9:39 AM:

" Sorry Raven, your right. Its just a gut feeling the "graft part". I have no evidence. I'll just wait til the paper or someone else smarter than me finds another dirty, person involved with the budget. Or defrauding the government.
But I guess the bigger question is how did we get to this large hole?
Your statement seems to say that waste and fraud is an acceptable system with people handling public money?
So I told you my view, bankrupt and start over, oh yah we legally can do it, so I guess we have to go line by line and cut out the fat!
So whats your answer? Cut out the slick debating methods and propose a solution, you heard mine. "

tomhansen wrote on Jul 6, 2009 12:33 PM:

" Kerry is a war hero and G.O.P.'s Carl Rove makes the draft dodger Bush into the hero. We Americans, on the whole, don't appear that bright collectively speaking. Regardless of party affiliation, I wish Arnold could fix this mess. There's a reason some California voters were duped into ousting Gray Davis. The W Bush presidency did little to help make California's gas prices recede for we California residents. I bet if Arnold had been Governor then, gas prices would've fell to make Arnold appear more competent. W had no such desire to assist a Dem California governor. Fact is, Arnold is no miracle worker, and certainly no better than Gray Davis as governor. Cheney/Bush..."Those wasteful Callifornians are learning a lesson about electricity usage." All the while, Bush's Best Buddy Mr. Kenneth Lay and Enron bent us over the barrel with phony electric rate. Thanks a lot. Keep up the good work. "

Raven wrote on Jul 6, 2009 2:24 PM:

" No, my statement is that everything, private and public has waste and that the amount of waste is far smaller than most people think and eliminating every iota of it would have very little effect on the current budget crisis. Do I endorse waste? No, but I prefer to deal in the facts of the subject rather than wishful thinking.

One of the first things I would do is remove term limits. We have had more late and deficit budgets since they began that at any other time in the state's history. Prior to term limits, the latest a budget was passed was by mid July. term limits removes any incentive for any legislator of either party to look at long term solutions to the state's issues. Instead, we now have a group of legislators that, for the most part, are looking for the next office to run for and raising money to run for that office.

I would work to reform the initiative process and reduce or even eliminate the budgeting by initiative that have become prevalent in the last several decades, locking in spending and tying the hands of any legislature who wants to try and change that.

As for your solution, other than dealing with your inflated version of waste, and proposing 'solutions' like bankruptcy which the state cannot do, I haven't heard any. "

5th generation napan wrote on Jul 7, 2009 9:45 AM:

" I'm sorry you don't see any waste in govenment.

I disagree about eliminating term limits.
Main reason, we partially based our govenment on the greeks. Their senate had a two year term limit and every citizen had to be a part of govenment at one time. This is a good concept we missed.
Reason, we have polititions building empires . Some of these legislatures have way too much power. This means we are relying on a person to save us an we eliminate competition, free thinking, and new ideas. We are looking at a politition "plugged into the system" to get things done. Well that is what the system of laws were supposed to do. Laws are like the constitution, a system to guide us. We now rely on longterm "select" group of people that have so much power they can manipulate the system.
Im sure you will complely disagree with me Raven and thats ok. My last note had a typo, "oh yah we legally can do it" was suppose to say "legally can't do it". My message is firm, I dont have a copy of the budget in front of me and I'm sure you don't either, if you do, I bet you would find tons of wasted, misspent money. You dont seem to belive the posts I listed showing waste.
The initiative process has come about because the senate hasn't listen to what the people want. Its still a government "of the people" and not just a few. Even though I know in reallity we are being run by just a few people looking out for themselves.
And that is the upsetting part.
You gave long term ideas Raven but as you asked me, what should be done now? "

Raven wrote on Jul 7, 2009 5:47 PM:

" 5th, let me repeat part of my last post about waste,
.....everything, private and public has waste and that the amount of waste is far smaller than most people think and eliminating every iota of it would have very little effect on the current budget crisis. Do I endorse waste? No, but I prefer to deal in the facts of the subject rather than wishful thinking.

Raise the revenues, for example, the re was a plan put forward to use a 15 fee on vehicle regs for fund all the state parks and allow anyone with a CA licnes plate to use the parks for free, that was rejected by the GOP under their no new taxes mantra, now we face closing more than 200 of our state parks, resulting in lower revenues to the communities that are near them, hurting the small businesses that the GOP like to tell everyone they support - and cut as appropriate, but don't let the poor, the elderly and the schools bear the overwhelming brunt of the cuts.

I do have a copy of the budget...but what is misspent is a matter of opinion, I am sure we have different priorities

As for what this state based it govt on, it wasn't the Greeks, each city state of Greece had it own form of govt from monarchies to oligarchies to direct democracies.
The common model used here seems to be closer to a hybrid of the roman republic and the English parliamentary system. Terms limit have moved power from legislators who haven't been there long enough to know how the state works to lobbyists who have the knowledge and expertise in increasingly complex areas of our state - they are responsible to no one. "

5th generation napan wrote on Jul 7, 2009 9:30 PM:

" I agree with most of what your saying Raven.

Bottom line is special interests groups are running the govenment. California is losing jobs and manufactruring has become a dirty word.

I still believe there is a lot of mis spent money. A well run project can minimize waste. But when waste is an income to some special interest how do you control it then.

You never commented on this artical,

http://www.caltax.org/Digest/2006/mar06_mccarthy_california_structural_budget_deficit.html

The budget seems to reley on Personal and Sales tax. Well both are US. and it amount to about 83% of the state income. Well if there is no jobs how are we going to cover 83% of the budget. A new tax on, appliances, furniture repair, vetinerian services, amusment parks, sporting events, and golf is just a tax on US people. Where's the end.

You give no sources for your view "waste is far smaller than most people think".

Whats missing is a manufacturing base in this state. We have driven it out and we better figure out how to get it back.

Our infastructure is crumbling waiting for disaster, the legislature is playing smoke and mirrors saying the police, fire, schools, parks and health of our seniors is too much of a burden to the budget.

Meanwhile we need to get our basic principals in place, and thats why I say line by line look and eliminate. #2) base a budget on the previous year so they know how much to spend. #3) Outlaw trailer bills. #4) somehow reel in special interest groups.

But to raise revenue this state needs to become the agricultural and manufacturing power house it once was with a uniform fair taxing system and uniform design and waste requirements. "

Raven wrote on Jul 8, 2009 12:04 AM:

" 5th...you have to decide what services you want the state to provide and then decide how to pay for them.

The shift to personal and sales tax took place after Prop 13 removed the property tax a a stable source of revenue for the services people are demanding the state provide....and prop 13 removed the local control element from property taxes as well, making the state the major player.

As for caltax.org, it's mantra of no new taxes under any circumstances as well as its history with prop 13 and other moves to tie the hands of the state to do what is needed, makes them a less than reliable source of neutral information IMHO.

But it is a given that structural changes must take place or we will be going this every year - just saying no is not the answer. "

5th generation napan wrote on Jul 8, 2009 9:28 AM:

" Well we better figure it out fast Raven.

For the amount of taxes California people pay out and what we get in return is zilch.

We have a 1000 miles of levies needing repair, dams needing repair, roads, water / sewer piping all needing repair and updating, let alone trying to prepare for the next big quake.

Along with this we have a school system that has become trash compared to 30 years ago. We have kids scoring the highest in science and math test ever, and we're facing a major engineering shortage in 3 or 4 years? The biggest plus coming out of your UC system use to be creative problem solving. All we seem to beable to do now is create viruses for computers to mess everyone else up.

There are a lot of good thinking, moralistic people in this state that are being squeezed to the breaking point.

It was not prop 13 that destroyed our school system, it was the lottry. When we put the lottry in place to augment school funding, the fed goverment said, thank you now we can pull our funding to you. The lottry ended up giving the school less finding than we had from the fed's. Which is fine, we should be self supporting but we have been behind the curve ever since.

Your right we need to decide what we need. And maybe we could put effort into bringing businesses and manufacturers BACK into the state to pay for it?
But first we need to clean house and get rid of back door politics.

I don't think you believe there is any questionable practices in the state or washinton, so we'll just agree to disagree. "

Raven wrote on Jul 8, 2009 11:14 AM:

" 5th, federal funding has actually risen since the lottery, not fallen.

and agian, I have never said there weren't questionable practices in either or waste in either, but unnecessary or questionable is in the eye of the beholder...programs you think may be essential I may not and vice versa.

But anyone who thinks we can simply cut our way out of a nearly 30 billion deficit is in my opinion, naive. That analogy often floated about families and businesses needing to tighten their belts is only half true...they also need to find new sources of revenue. The state needs to look at both. "

5th generation napan wrote on Jul 8, 2009 12:32 PM:

" Sorry Raven, but lets face it this blog is just "opinions".
All my reading says we have been taken for a ride, the federal governmanet raiding our state budget, trickling down to the counties and cities by Reagan, Clinton, Bush Sr and Jr. and our budget from the feds have been less, thats just my "opinion" from my selective reading.
If we can't simply "cut" our way out of 30 billion how did we "so complicatedly" ADD 30 billion we can't afford? Unchecked credit we can't afford? and a depression blowing our bubble?
Its complicated I grant you, but the S&L's of the 80's destroyed manufacturing by borrowing low interst money from the feds to leverage hostal takeovers and garage sale out manufacturing for a profit. Congress eliminated the Glass Segal act put in place after the last depression separateding banking and financial investments, and guess what happened. The two got mixed again and Wall street took us for a ride. This country is destroying itself from inside , and middle america better start getting a backbone again and clean house or China and Denmark will forclose on us without firing a shot. Mergers have been allowed and anti trust laws have NOT kicked in? Giving big oil and financial house the power to manipulate.
We are being manipulated and the country's identity has been stolen.

The legislature, Congress, and Lobbiest need to start being held accountable!
My God am I the only one seeing this?
But once again this is just "My opinnion" and I guess your right, I'm just naive.
Lol best of luck Raven, I hope your method works better than my solution.
In the end I do believe we both are thinking alike, How do we solve this. "

Raven wrote on Jul 9, 2009 12:44 PM:

" when you are lining up people to be held accountable 5th...don't forget to include the voters as well...they have had their hand in this mess for decades as well. "

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