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CDCAN Disability Rights News Report

November 6, 2008

Governor will propose emergency budget proposals today

Governor's proclamation will order Legislature back in for November special session to deal with state budget crisis – budget shortfall could be as high as $10 billion and growing – will also propose revenue increases and economic stimulus package

SACRAMENTO (CDCAN) - With a shortfall now estimated to be over $11 billion for the current State budget year, Governor Arnold Schwarzenegger will issue later today (November 6) an official proclamation ordering the Legislature to return back to Sacramento for a special session to deal with State's economic and budget crisis that grows worse each week. The Governor is calling back the current Legislature – with 100 of the 120 members whose terms will expire after November 30th – and newly elected or re-elected members taking office after December 1, because he felt the current members, with their experience dealing with budget issues the past two years – would be able to take action faster than newly elected legislators. With that November 30th deadline, the current Legislature faces a tight time-frame to take action on the Governor's proposals. [Note: CDCAN will issue special reports today as news of the Governor's proposals become available]

Along with the official proclamation, the Governor will also issue his proposals to address the crisis, including proposals for what is expected to be major across the board permanent spending cuts to take effect immediately if approved by the Legislature, likely proposal for a sales tax increase and other ways to increase state revenues, and a proposal to improve the State's economy. Schwarzenegger Administration officials said last week that the budget situation that California faces is "without precedent" .

Major cuts expected to be proposed impacting people with disabilities, seniors, mental health needs

Schwarzenegger said late last month that California faced a budget "state of emergency" and warned education leaders to expect major cuts to public education.

Health and human service advocates – including those for children and adults with disabilities, mental health needs, seniors, low income children and families, were warned also of major cuts. Details of those cuts will be available later today when the Governor releases his proposals, but advocates fear proposals for spending cuts will have a dramatic and significant impact on services and programs impacting hundreds of thousands of children and adults with disabilities, mental health needs, seniors, low income families, veterans with disabilities and mental health needs, and thousands of community providers, health facilities and workers providing supports and services across the state.

The Governor already, on Wednesday (November 5th), issued his proposals, that will be considered during the special session, to help people who are facing loss of homes due to foreclosures, a housing crisis that has significant impact on the State's economy and ability to raise revenues. No cuts or other special session proposals were included with that proposal.

Governor's proposals will need approval by Legislature

Any proposal by the Governor – whether to increase revenues or to cut spending – would need approval by the Legislature. While the Governor can order the Legislature to return for a special session – which has never before been held this late in an election year before – he cannot force them to act. However, given the enormous projected budget shortfall – that is also impacting the State's cash flow so it can pay its monthly bills – legislative leaders from both parties promise action. However, Democrats and Republicans in the Legislature, as they did in the budget stand-off this past summer, have sharp differences on how to address the budget crisis. Democratic legislative leaders – and the Governor – want to include tax increases, though the Governor is likely only to propose some form of increases to the state sales tax. Democratic legislative leaders insist that the budget shortfall cannot be closed only with more spending cuts alone.

Republican legislative leaders are adamantly opposed to any tax increases, saying it is a bad idea during a time when the economy is so bad in California.

Either way, the Legislature when it returns, will be acting – or not acting – on a fast track because terms of office for many will expire by November 30th. In addition, the State Constitution requires that the Legislature must send any bill to the Governor on or before November 15th. It is not absolutely clear how that provision in the State Constitution applies to a special session "urgency" or emergency bill, because there never has been a special session held at this time of the year before.

The Legislature will almost certainly hold some form of public hearings – though it is not clear how or when that will happen.

If the current Legislature fails to take action this month, the Governor could call the new Legislature, with new members taking office December 1, in December or in January, to meet at the same time when the regular session for 2009 officially begins.

Total budget shortfall could grow to nearly $25 billion by June 2010

Underscoring the seriousness of the crisis, the Governor is expected to confirm when he issues his special session proclamation, that the shortfall for the current State budget year –which began July 1, 2008 and ends June 30, 2009 is estimated to be over $11 billion, and that could go grow by another $13 billion more or so for the new budget year that begins July 1, 2009 if there are no changes in what the State brings in as revenues or what it spends. That would mean California would face an overall budget shortfall of nearly $25 billion covering this and the next budget year – a figure that is as huge and daunting as California faced in late 2002 through 2004.

The State budget for 2008-2009 was just approved in mid-September after a nearly three month stand-off in the Legislature – though legislators from both parties said that California faced another shortfall for the next budget. At that time most policymakers felt the deficit would be around $3-4 billion, which exploded to billions more, in large part due to plunging state revenues resulting from the sharp downturn of the state's economy and the national financial crisis.