12/01/2008 GAAS:811:08 FOR IMMEDIATE RELEASE Print Version |
Gov. Schwarzenegger Calls New Legislature into a Prop 58 Special Session and Second Special Session to Address State’s Economy
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. At that time, the Governor also unveiled a
separate plan of targeted actions that will stop our economy's downward spiral. 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 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 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 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
are below:
Prop 58 Special Session Proclamation December 1, 2008 (PDF)
