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California Disability Community Action Network (CDCAN)

December 1, 2008

Governor declares "fiscal emergency"

Text of proclamations for special session and declaration of "fiscal emergency" - Constitutional provision forces Legislature to act within 45 days - but has limited impact

SACRAMENTO (CDCAN) – As previously reported, Governor Arnold Schwarzenegger declared today, as he did last January, a "fiscal emergency", putting in motion a State constitutional requirement that puts a 45 day time limit for the Legislature to act in special session. The budget shortfall, barring any action from the Legislature or Governor could grow to over $28 billion by June 30, 2010 – the end of the 2009-2010 State Budget year that begins July 1. That constitutional provision was passed in March 2005 by voters as Proposition 58 (see below for full text of the constitutional provision).

The Governor signed three proclamations this afternoon following his press conference.

* Fiscal Emergency Proclamation – under the State Constitution (Proposition 58 as passed by voters in 2005 - see below for text of that proclamation) the Governor must issue a proclamation that declares officially a "fiscal emergency". That triggers the constitutional provision and the 45 day deadline for the Legislature. He then has to issue a separate proclamation for a special session.

* Proclamation for Special Session Under "Fiscal Emergency" (see text below)

* Proclamation for Special Session covering additional subjects beyond fiscal emergency. The Governor also signed a proclamation calling the Legislature back into special session that covers additional subjects – subjects that he had included in the special session he called in November, however the Legislature ended up not acting on any of those issues, including the budget shortfall. Those three additional issue areas are (see full text below):

1. To consider and act upon legislation to address the economy, including but not limited to efforts to stimulate California's economy, create and retain jobs, and streamline the operations of state and local governments.

2. To consider and act upon legislation to address the housing mortgage crisis.

3. To consider and act upon legislation to address the solvency of the Unemployment Insurance Fund.

While the Governor under the "fiscal emergency" declaration, can force the Legislature to come back into a special session – and force them to respond with a bill or bills that deals with that emergency within 45 days, the Governor cannot force them to pass any specific proposal that he makes. As long as the Legislature indicates in the bill or bills it sends to the Governor that it is responding to the fiscal emergency

The Governor did not propose any new additional spending cuts or proposals to raise revenues – proposals which he made on November 6th, but which the Legislature took no action on.

While the Governor called the Legislature into a special session on the budget crisis in early November, he did not at that time declare a "fiscal emergency" triggering the state constitutional provision. The Legislature then, who had 100 of 120 members whose terms expired November 30th, did meet in special session on November 6th and 25th, but failed to come to any agreement in resolving the budget crisis.

"Fiscal emergency" proclamation requires Legislature to act within 45 days

Though the Governor called a special session of the Legislature in November, that Legislature included members whose terms expired after November 30th, and he did not officially declare a "fiscal emergency" under the State Constitution then. He didn't declare a "fiscal emergency" then because the terms of office of the "old Legislature" would expire before the 45 day time limit.

A "fiscal emergency" under the State Constitution Section 10(f) of Article IV] sets in motion a process that requires the Legislature to send a bill or bills to the Governor addressing the fiscal emergency within 45 days. It was passed by voters in March 2005 as Proposition 58 as part of an overall budget reform deal with the Governor and Legislative Democrats and Republicans.. But it is limited in its impact.

If the Legislature fails to send a bill or bills to the Governor within that time period, the Legislature cannot take up any other business or adjourn until it does so,

Beyond that the constitutional provision is very limited, especially with the Legislature beginning a new two year session, there is virtually little business in passing bills in the first 3 months of the new year (the new bill introduction deadline is in February).

The constitutional provision does not require what the Legislature must pass and send to the Governor or require the Legislature to make cuts or to approve reductions or proposals by the Governor.

There is however a new constitutional amendment that was approved by the Legislature as part of the budget deal in September that still requires voter approval in the next statewide election (the Governor is expected to call a special election sometime in 2009) that would give a governor more authority when there is a budget shortfall, including making cuts in state operations and suspending for at least 120 days cost of living increases scheduled for several programs – though the Legislature could intervene under a timetable.

TEXT OF STATE CONSTITUTION PROVISION - "FISCAL EMERGENCY"

CALIFORNIA CONSTITUTION

ARTICLE 4 LEGISLATIVE (amended into Constitution March 2005 Proposition 58)

Section 10(f)

(1) If, following the enactment of the budget bill for the 2004-05 fiscal year or any subsequent fiscal year, the Governor

determines that, for that fiscal year, General Fund revenues will decline substantially below the estimate of General Fund revenues upon which the budget bill for that fiscal year, as enacted, was based, or General Fund expenditures will increase substantially above that estimate of General Fund revenues, or both, the Governor may issue a proclamation declaring a fiscal emergency and shall thereupon cause the Legislature to assemble in special session for this purpose. The proclamation shall identify the nature of the fiscal emergency and shall be submitted by the Governor to the Legislature, accompanied by proposed legislation to address the fiscal emergency.

(2) If the Legislature fails to pass and send to the Governor a bill or bills to address the fiscal emergency by the 45th day

following the issuance of the proclamation, the Legislature may not act on any other bill, nor may the Legislature adjourn for a joint recess, until that bill or those bills have been passed and sent to the Governor.

(3) A bill addressing the fiscal emergency declared pursuant to this section shall contain a statement to that effect.

TEXT OF "FISCAL EMERGENCY" PROCLAMATION

A PROCLAMATION

BY THE GOVERNOR OF THE STATE OF CALIFORNIA

WHEREAS, due to developments in the worldwide and national financial markets, and continuing weak performance in the California economy, it is estimated that there will be a General Fund revenue shortfall of at least $11.2 billion for the 2008- 09 fiscal year. Additionally, the weakening economy will increase the expenditures for health and social services beyond what is provided for in the Budget Act.; and

WHEREAS on November 6, 2008, due to concerns regarding dramatically declining revenues, I issued a Special Session Proclamation and convened the Legislature of the State of California to meet in extraordinary session to address the fiscal crisis that California faces; and

WHEREAS the Legislature failed during that Special Session to enact any bills to address the State's significant economic problems; and

WHEREAS immediate and comprehensive action is needed to address the revenue shortfall facing the State of California; and

WHEREAS within months the State will not be able to meet all of its expenses outside of debt service, without immediate and comprehensive action; and

WHEREAS failure to substantially reduce the deficit carried forward from the current fiscal year into the next fiscal year will likely prevent the State from being able to finance the cashflow shortages of billions of dollars that will occur in July and August, thus making it likely that this fiscal year's deficit will cause the State to miss payroll and school payments at the beginning of 2009; and

WHEREAS, according to the Legislative Analyst, next fiscal year's budget will be even more out of balance than the current year budget and balancing the 2009/2010 budget will be immeasurably more difficult if actions to reduce spending trends and increase revenue trends are not put into place immediately,

NOW, THEREFORE, I, ARNOLD SCHWARZENEGGER, Governor of the State of California, in accordance with Section 10(f) of Article IV of the Constitution of the State of California, HEREBY DETERMINE that General Fund revenues for Fiscal Year 2008- 09 will decline substantially below the estimate of General Fund revenues upon which the 2008 Budget Act was based.

I, ARNOLD SCHWARZENEGGER, Governor of the State of California, HEREBY DECLARE that a fiscal emergency exists.

I, ARNOLD SCHWARZENEGGER, Governor of the State of California, HEREBY IDENTIFY THE NATURE OF THIS FISCAL EMERGENCY to be the projected budget imbalance and insufficient cash reserves for Fiscal Year 2008-09 and the projected insufficient cash reserves and potential budgetary and cash deficit in Fiscal Year 2009- 10 which are anticipated to result from the dramatically lower than estimated General Fund revenues in Fiscal Year 2008-09.

FURTHER, on this day, as required by Section10(f) of Article IV of the Constitution of the State of California, I will cause the Legislature to assemble in special session to address this fiscal emergency, and I will submit to the Legislature proposed legislation to address this fiscal emergency.

IN WITNESS WHEREOF I have hereunto set my hand and caused the Great Seal of the State of California to be affixed this

1st day of December, 2008.

______________________________
ARNOLD SCHWARZENEGGER
Governor of California

ATTEST:

______________________________
DEBRA BOWEN
Secretary of State

TEXT OF "FISCAL EMERGENCY" SPECIAL SESSION PROCLAMATION

A PROCLAMATION

BY THE GOVERNOR OF THE STATE OF CALIFORNIA

WHEREAS on this date, pursuant to Section 10(f) of Article IV of the Constitution of the State of California, I have proclaimed a fiscal emergency; and

WHEREAS on this date, I am submitting to the Legislature proposed legislation to address that fiscal emergency; and

WHEREAS this extraordinary occasion having arisen and now existing, it requires that the Legislature of the State of California be convened in extraordinary session.

NOW, THEREFORE, I, ARNOLD SCHWARZENEGGER, Governor of the State of California, by virtue of the power and authority vested in me by in accordance with Section 10(f) of Article IV of the Constitution of the State of California, do hereby convene the Legislature of the State of California to meet in extraordinary session at Sacramento, California on the 1st day of December 2008, at a time to be determined, to consider and act upon legislation to address the fiscal emergency proclaimed by me this day.

IN WITNESS WHEREOF I have hereunto set my hand and caused the Great Seal of the state of California to be affixed this 1st day of December, 2008.

_____________________________
ARNOLD SCHWARZENEGGER
Governor of California

ATTEST:

_____________________________
DEBRA BOWEN
Secretary of State

TEXT OF PROCLAMATION FOR ADDITIONAL SPECIAL SESSION SUBJECTS

A PROCLAMATION

BY THE GOVERNOR OF THE STATE OF CALIFORNIA

WHEREAS, an extraordinary occasion has arisen and now exists requiring that the Legislature of the State of California be convened in extraordinary session.

NOW, THEREFORE, I, ARNOLD SCHWARZENEGGER, Governor of the State of California, by virtue of the power and authority vested in me by Section 3(b) Article IV of the Constitution of the State of California, do hereby convene the Legislature of the State of California to meet in extraordinary session at Sacramento, California on the 1st day of December 2008, at a time to be determined, for the following purpose and to legislate upon the following subjects:

1. To consider and act upon legislation to address the economy, including but not limited to efforts to stimulate California's economy, create and retain jobs, and streamline the operations of state and local governments.

2. To consider and act upon legislation to address the housing mortgage crisis.

3. To consider and act upon legislation to address the solvency of the Unemployment Insurance Fund.

IN WITNESS WHEREOF I have hereunto set my hand and caused the Great Seal of the State of California to be affixed 1st day

of December, 2008.

__________________________________
ARNOLD SCHWARZENEGGER
Governor of California

ATTEST:

__________________________________
DEBRA BOWEN
Secretary of State