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California Governor Schwarzenegger declares state of emergency due to budget impasse
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10:38, July 02, 2009

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California Governor Arnold Schwarzenegger on July 1 proclaimed a fiscal emergency following the legislature's inability to pass a comprehensive solution to solve California's entire 24.3-billion-dollar deficit.

The governor said he has to exercise his executive authority to save cash for vital state functions and services by ordering three furlough days every month.

The governor reaffirmed that he will not sign any legislation until a solution for the entire budget deficit is in place.

"Though the legislature failed to solve our budget problem yesterday, rest assured that solving the entire deficit remains my first and only priority, and I will not rest until we get it done," said the governor. "I will not be a part of pushing this crisis down the road -- the road stops here."

The governor called a Legislative special session to address this emergency.

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 a bill or bills to address the problem, they cannot adjourn or act on other bills until the state's fiscal emergency is addressed.

Schwarzenegger said several measures have to be taken to cope with the budget crisis.

Beginning July 10, the Department of Personnel Administration (DPA) will direct state offices to be closed the first, second and third Friday of every month through June 2010, requiring state employees to take unpaid furloughs on those Fridays.

For employees who work in critical positions that cannot be furloughed on this schedule, the furlough days can be used at another time;

The furlough order would save the state 420 million dollars, according to H.D. Palmer, a spokesman for the Department of Finance.

All state hospitals, prisons and other 24-hour care facilities will maintain normal hours of operation, as will the California Highway Patrol and CAL fire stations. A limited number of state offices also will remain open on these "furlough Fridays."

State Controller John Chiang has said he will begin issuing IOUs instead of payments to state vendors tomorrow.

Because of the worldwide economic slowdown, California's deficit has snowballed from 42 billion dollars several months ago to the current 24.3 billion dollars.

To bring the budget back into balance, the governor unveiled his May Revision budget proposal on May 14, 2009 including a mix of cuts, borrowing and other measures to solve the deficit.

He further urged the legislature to take immediate action on the state's fiscal crisis when he addressed a joint session of the legislature on June 2, 2009, noting that even though the state would be forced to take unprecedented actions to bring the budget back into balance -- the deficit would only get larger and the decisions more difficult as more time passed.

California risks running out of cash in July if no budget agreement is reached in the legislature.

The Legislature has failed several times to produce a remedy for California's insolvency.

Republican senators blocked several budget revisions that included a 15-dollar hike in the annual vehicle license fee to keep roughly 220 state parks open and a new tax on homeowners' insurance to pay for emergency response systems. A third measure contained accounting maneuvers to accelerate tax collections.

Schwarzenegger has made it clear that the legislature must solve the entire deficit and must not increases taxes.

"It's clear that if the legislature does not send a full budget solution to my desk by June 30, California will face an extreme cash-flow problem that will threaten our ability to pay for vital services," Schwarzenegger said earlier.


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