07/24/2009 Print Version |
WHEREAS on November 6, 2008, and again
on December 1, 2008, due to concerns regarding dramatically declining revenues
and worsening economy, I issued a Special Session Proclamation and convened the
Legislature to meet in extraordinary session to address the budget and fiscal
crisis that California faces; and
WHEREAS in
February 2009, after months of deliberation and debate, the members of the
Legislature came together, with a two-thirds vote, to address the unprecedented
$41.6 billion state budget deficit; and
WHEREAS the state budget I signed in
February 2009 for Fiscal Year 2009-10, enacted revenue measures and expenditure
reductions to address the then-projected cumulative budget shortfall, and
reflected an expectation that the September 30, 2009 General Fund transfer to
the Budget Stabilization Account required by Section 20(b)(3) of Article XVI of
the state Constitution would be suspended; and
WHEREAS the failure of budget solutions
brought to the people of California in the May 19, 2009 Special Election had
the effect of reducing the net impact of budget solutions to $36 billion; and
WHEREAS the State ended the
2008-2009 fiscal year on June 30, 2009, with a balance of negative $8.189
billion in the Special Fund for Economic Uncertainties that acts as the State's
reserve fund; and
WHEREAS on July 1, 2009, I issued a
Special Session Proclamation and convened the Legislature to meet in
extraordinary session to address the fiscal crisis that California faces; and
WHEREAS on July 1, 2009, I issued an
Executive Order which required that state employees be furloughed three days
per month to reduce current spending and improve the State's ability to meet
its obligations to pay for essential state services; and
WHEREAS the State Controller has
determined that the State's $2.8 billion cash shortage in July 2009 will grow
to $6.5 billion in September, and a double-digit freefall after September; and
WHEREAS the State Controller began issuing registered
warrants (IOUs) on July 2, due to severe state fiscal hardship, and to date the
State Controller has issued over 172,850 registered warrants, and an estimated
$2.87 billion of General Fund disbursements will be paid with registered
warrants for the month of July to preserve cash and payments so that the State
can make payments required by the California Constitution, federal law and
court orders; and
WHEREAS the
global recession has deepened, California's economy continues to struggle, and further
deterioration of revenues has caused the Fiscal Year 2009-10 budget to fall out
of balance and created an additional budget shortfall in the State General Fund
of $24 billion; and
WHEREAS the State must take
action to address the entire $24 billion shortfall to increase cash flow to
meet the State's needs, improve the State's faltering credit ratings, and protect
the health and safety of its residents; and
WHEREAS the pending budget
amendments that I have negotiated with the Legislature propose to address the current
budget gap by implementing $24 billion in solutions, which includes the
suspension of Section 25.5(a)(1)(A) of Article XIII of the state Constitution in
order to enact a key borrowing component of these budget solutions; and
WHEREAS the total budget gap of
$1 billion is the largest deficit the State has faced, both in dollar amount
and as a portion of General Fund revenues; and
WHEREAS the $1 billion in
enacted and proposed solutions represent the largest and farthest reaching
package of budget solutions ever contemplated by the State, and touched all
three of the State's major revenue sources and every state program that receives
General Fund support; and
WHEREAS Section 25.5(a)(1)(A) of Article
XIII of the state Constitution prohibits, unless certain conditions are met,
the Legislature from enacting a statute that modifies the allocations of ad
valorem property taxes; an
WHEREAS Section
25.5(a)(1)(B) of Article XIII of the state Constitution provides that beginning
with the 2008-09 fiscal year, the requirements of section 25.5(a)(1)(A) of the state
Constitution may be suspended for a fiscal year if all of the following three conditions
are met:
1.
The Governor issues a proclamation declaring that due to a severe
state fiscal hardship, such a suspension is necessary; and
2.
The Legislature enacts an urgency statute, pursuant to a bill
passed in each house of the Legislature by roll-call vote entered in the
journal, two-thirds of the membership concurring, that contains a suspension of
Section 25.5(a)(1)(A) of Article XIII of the state Constitution for the fiscal
year and does not contain any other provision; and
3.
No later than the effective
date of the statute described in 2 above, a statute is enacted that provides
for the full repayment to local agencies of the total amount of revenue losses,
including interest as provided by law, resulting from the modification of ad
valorem property tax revenue allocations to local agencies. The full repayment shall be made not later
than the end of the third fiscal year immediately following the fiscal year to
which the modification applies.
NOW, THEREFORE, I, ARNOLD SCHWARZENEGGER,
Governor of the State of California, in accordance with Section 25.5(a)(B)(i)
of Article XIII of the state Constitution, do hereby proclaim and declare that due to a
severe state fiscal hardship, the suspension of Section 25.5(a)(1)(A) of
Article XIII of the state Constitution is necessary.
IN
WITNESS WHEREOF I have hereunto set
my hand and caused the Great Seal of the State of
California to be affixed this 24th day of July 2009.
ARNOLD
SCHWARZENEGGER
Governor
of California
ATTEST:
DEBRA
BOWEN
Secretary
of State
