California Fiscal Emergency Declared
A state of emergency was declared by California Governor Arnold Schwarzenegger regarding the state’s finances, raising pressure on lawmakers to negotiate a state budget that is more than a month overdue and with a $19 billion shortfall.
Schwarzenegger ordered three days off without pay every month starting in August for tens of thousands of state employees to preserve the state’s cash for essential services and to service its debt.
California’s budget is five weeks overdue and Schwarzenegger and top lawmakers are still unsure over how to balance the state’s books.
Analysts claim it could be a further several weeks before an agreement is decided, a delay which threatens to lower the state’s already weak credit rating.
“Without a budget in place that addresses our $19 billion budget deficit, every day of delay brings California closer to a fiscal meltdown,” said Schwarzenegger in a statement.
“Our cash situation leaves me no choice but to once again furlough state workers until the legislature produces a budget I can sign”.
If the budget stalemate persists, the state’s government is projected to run out of cash no later than October.
One idea rejected by Democratic lawmakers was Schwarzenegger proposal to slash spending to balance the state’s books. Their leaders in the state Senate and Assembly are attempting to create a joint plan which is likely to rival the governor’s budget plan and include proposals for an increase in taxes.
Pete Peterson, executive director at the Davenport Institute at Pepperdine University’s School of Public Policy said Schwarzenegger has no qualms about pressuring lawmakers through the wallets of one their top constituencies during his final months in charge.
“It’s an indirect play,” he said. “these past few months there has been a much more confrontational relationship between the governor and the unions”.
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Posted by Jason
on Jul 29 2010. Filed under Featured News, Finance.
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