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Schwarzenegger Declares Calif. Fiscal Emergency

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Jul 1, 2009 4:33 pm US/Pacific

Schwarzenegger Declares Calif. Fiscal Emergency

SACRAMENTO (AP) ― Gov. Arnold Schwarzenegger has declared a fiscal emergency to address California's deficit and has ordered state offices closed three days a month to save cash.

The third furlough day will affect 235,000 state employees, bringing their total pay cut to about 14 percent.

The Legislature will have 45 days to send him a plan to balance the state's budget, which ended the fiscal year with a $24.3 billion deficit. The shortfall is expected to grow by $7 billion because the Legislature did not enact several stopgap measures on Tuesday.

If lawmakers fail to act within the 45 days, they cannot adjourn or act on other bills until they solve the crisis.

The new fiscal year started Wednesday without a balanced spending plan, which will force the State Controller John Chiang to issue IOUs.

Chiang said he will now begin issuing IOUs to contractors, college students, welfare recipients, low-income seniors and the disabled.

Senate President Pro Tem Darrell, a Sacramento Democrat, called Republicans' refusal to vote for the measures "an irresponsible position to take."

At least two Republican votes were needed to put together the two-thirds majorities required to approve the legislation, which passed the Assembly last week with bipartisan support.

(© 2010 CBS Broadcasting Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)

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