California’s budget deficit this year has ballooned to nearly $15 billion, Gov. Arnold Schwarzenegger said Wednesday, warning that the state faces “financial Armageddon” unless lawmakers take decisive action.
The projection of a $14.8 billion gap at the end of the fiscal year in June surfaced just a month after the governor announced an $11.2 billion shortfall, and the deteriorating economy is likely to make the problem even worse next year, Schwarzenegger said.
Without action this year, the state could be staring at a deficit as great as $40 billion by June 2010, an administration official said. Schwarzenegger is expected to share the bad news with legislative leaders in a budget negotiating meeting today.
“If we don’t put aside our ideological differences and negotiate to solve this problem, we’ll be heading toward our financial Armageddon,” Schwarzenegger said at a hastily called news conference at the state Capitol.
Schwarzenegger said he’s frustrated by the Legislature’s inability to find a compromise solution, and he singled out the Republicans for being “very vague and never specific” about what they want in negotiating the budget.
Republicans have been standing firm on their promise not to support new taxes, while Democrats have argued that spending cuts and taxes should be considered. Although Democrats hold a large majority in the Assembly and the Senate, they need Republican support to reach the required two-thirds majority to approve taxes and pass a budget.
Lawmakers blast governor
GOP leaders on Wednesday took exception to the governor’s criticism.
“Republicans have always entered budget negotiations with Democrats and the governor fully prepared and fully engaged,” Assembly Republican leader Mike Villines of Clovis (Fresno County) said in a written statement. “For more than a year, we have offered countless proposals both publicly and privately.”
Senate Republican leader Dave Cogdill of Modesto said “bullying the Legislature to adopt tax hikes” will only hurt the state’s finances.
“Raising taxes doesn’t solve the underlying problem of California’s budget, which is the state spends more than it takes in,” he said in a written statement.
Democratic lawmakers also blamed Republicans for the impasse.
“The logjam rests with the Republicans,” Assembly Speaker Karen Bass, D-Baldwin Vista (Los Angeles County), said in an interview.
However, Bass added that the governor’s public criticism of legislators doesn’t help, either.
“It is not helpful for the governor to have a press conference and put the responsibility on both the Democrats and the Republicans,” she said. “What would be helpful is for the governor to get some Republican votes.”
But the Legislature needs to act quickly, Schwarzenegger said.
The governor unveiled a large poster board, titled “Legislature’s Failure to Act,” with a digital clock that calculates the state’s increasing budget hole by the second.
“Every second, the state is losing $470, every minute $28,000, and every hour $1.7 million and every day $40 million,” Schwarzenegger said. “That is approximately more than $1 billion a month if legislators don’t act.”
During Wednesday’s news conference just before noon, the clock showed the deficit at more than $6.6 billion. The board was later installed in a glass case in the hallway of the Capitol outside Schwarzenegger’s office on the first floor.
Special session failed
Last month, Schwarzenegger called on lawmakers to convene a special legislative session to tackle the budget crisis, but the Legislature failed to find a compromise before the session ended Nov. 30.
“They met, they debated, they postured, and they did nothing,” Schwarzenegger said Wednesday. “If that isn’t a shameful performance, I don’t know what is.”
Schwarzenegger called another special session on Dec. 1, declaring a state fiscal emergency on the first day of the new legislative session with newly elected lawmakers. The Legislature on Monday held an unprecedented joint session to hear from leading finance officials on the state’s fiscal picture, which was grim at best.
State Treasurer Bill Lockyer warned that the state will have to halt or delay financing for nearly $5 billion worth of public works projects as a cash-saving measure, including work on the fourth bore of the Caldecott Tunnel in the East Bay and carpool lanes on Highway 101 in Sonoma County.
The bad news continued Tuesday, when state Controller John Chiang announced that the state could run out of cash in February after revenues the state collected in November were $1.3 billion less than expected.
Hearings, meetings
The state Senate began holding committee hearings Wednesday on the budget crisis, and the Assembly is expected to begin today.
“Legislators had an earful from our finance experts … and it’s the same sad news that I’ve been saying for months now,” the governor told reporters Wednesday.
Schwarzenegger said he will ask legislative leaders to meet with him today to restart negotiations, but not everyone will be attending in person. Villines is in Washington, D.C., to meet with Republican members of Congress from California to discuss issues including the state’s budget, his spokeswoman Jennifer Gibbons said.
Villines is scheduled to return Friday. He will participate by telephone in today’s planned meeting with the governor and other legislative leaders, as “other leaders have done previously,” Gibbons said.
E-mail Matthew Yi at [email protected].
Source: The San Francisco Chronicle