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CDCAN

December 19, 2008

Budget crisis worsens with stalemate – Major impact to people with disabilities, mental health needs, seniors and low income families

California Budget Crisis:

* GOVERNOR WILL CALL NEW SPECIAL SESSION

* WANTS LEGISLATURE BACK BEFORE CHRISTMAS

* NEXT STEPS UNCERTAIN AS CRISIS CONTINUES

SACRAMENTO (CDCAN) - Governor Arnold Schwarzenegger said today that he will sign a new executive order calling for a new special session of the Legislature, ordering them back to Sacramento to come up with a solution to the State's budget crisis that is acceptable to him. The Legislature officially ended the special session Thursday that the Governor called on December 1st, after they passed – over objections of Republicans – a package of bills that would cut the $41 billion projected deficit by $18 billion.

Though no specific date was mentioned when he would issue the order, he did say that "I believe that we can solve this before Christmas. I hope that the Legislature stays in the building, I hope that they continue negotiating, Democrats and Republicans."

While a governor has the authority under the State Constitution to call the Legislature back into special session to address certain specific issues – he does not have the power to force them to meet beyond the date he orders them back to Sacramento. He also cannot force them to take up any bills or pass any legislation during a special session.

The Governor criticized the Legislature saying that "The legislators were sent to Sacramento to do their job and to solve problems. Instead, they're creating more problems. They're making a terrible situation even worse. For weeks and weeks, the legislators postured and played political games while the deficit grew bigger and bigger "

The Governor warned that the State's budget situation was growing worse every day and "as we free-fall toward a fiscal Armageddon the Legislature still can't cross the special interests, and do what is right for the state of California. The people and our economy deserve better."

Not certain if Governor will declare another "fiscal emergency"

He did not indicate whether or not at this point if he would be issuing a new executive order declaring a "fiscal emergency". The Governor can call the Legislature back into a special session without issuing an executive order declaring a "fiscal emergency". The Legislature adjourned the special session that the Governor called under a "fiscal emergency" order, because it met the requirements of the Constitution by sending him a bill – in this case 16 bills – that addressed it.

The "fiscal emergency" order is a provision in the State Constitution that can be used by the Governor when state revenues fall and creates a deficit or a potential deficit.

Declaring a "fiscal emergency" means that the Legislature would be forced to return to special session to address the emergency. They would be required to send a bill or bills back to the Governor within 45 days of the order being issued. If they fail to do so, the Legislature cannot take up other business in passing bills and cannot adjourn. However the provision is limited beyond that – and it does not require that the Legislature must send a bill that the Governor will sign, nor does it specify what kind of bill the Legislature must pass other than to require that it "addresses" the emergency.

Governor promises ceto of Democratic seficit eeduction plan passed Thursday

The Governor yesterday late afternoon said in a press conference that he would veto the Democratic deficit reduction package of bills that the Legislature passed to address the growing State budget deficit, projected to be over $41 billion by the end of the 2009-2010 State Budget year (June 30, 2010).

The Democratic plan contained a mixture of major spending cuts of over $7 billion and revenue increases – including tax increases of over $9 billion that was crafted in such a way to avoid the need for any Republican votes. Spending cuts were identical to what Democrats proposed on November 25th – including cuts to regional centers that the Governor proposed earlier, cuts to SSI/SSP grants that were significantly less than what the Governor proposed, cuts to CalWORKS – but no cuts to the Cash Assistance Program for Immigrants that the Governor wanted eliminated, and no cuts to In-Home Supportive Services or Medi-Cal or mental health services.

Legislative Republicans said the legislation was illegal and predicted that the courts would overturn it. The Governor said yesterday he did not want to get into the debate about whether or not the Democratic plan was legal or not.

But he blasted the Legislature for failing to send him a budget solution that he said needed deeper cuts, more provisions to improve the economy and less revenue increases to close the huge state budget deficit.

"Yesterday I was sent legislation that asked Californians to pay higher taxes and fees - without making a real attempt to put Californians back to work and help them keep their homes. Because of the legislature's continued failure to pass a real budget solution for California's budget crisis, funding for infrastructure projects like this school in Fresno has been stopped. This not only impacts students but also halts job creation and economic stimulus across the state," said the Governor

The Governor said that "Tens of thousands of hard-working Californians face the possibility of being laid off this holiday season while Democrats and Republicans continue to play politics. The time for political posturing is over - it's time for the state legislature to solve problems instead of creating them