12/19/2008 GAAS:841:08 FOR IMMEDIATE RELEASE Print Version |
Gov. Schwarzenegger Calls Legislature Into Second Prop 58 Special Session
Following
the legislature’s failure to pass a comprehensive budget solution, 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. Yesterday, the Governor declared he would veto the
budget bills sent to him by the legislature which failed to provide real
revenues balanced with real long term cuts, aggressive economic stimulus
to put Californians to work and mortgage relief to keep Californians in their
homes.
The
Pooled Money Investment Board voted this week to stop $3.8 billion in state
infrastructure financing over the next six months - including the stoppage of
an $18 million grant recently allocated to build a permanent school for
Fresno’s award-winning University High School, which has operated for ten years
out of temporary trailer facilities which the Governor visited today. Due to
the legislature’s continued failure to provide a real and comprehensive budget
solution, 2,000 infrastructure projects valued at more than $16 billion are in
jeopardy and tens of thousands of California jobs are immediately at
risk.
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 the 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 $14.8 billion. Over the next 18
months, the Department of Finance shows the budget deficit reaching a
staggering $41.8 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 Controller, Treasurer and the Department of Finance expect the
state to run out of cash in February, which is 45 days from today.
The
Governor previously called a Proposition 58 special session and two legislative
special sessions 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.
