Schwarzenegger Declares Fiscal Crisis
40 minutes ago
By TOM CHORNEAU, Associated Press Writer
SACRAMENTO, Calif. - Gov. Arnold Schwarzenegger declared California in a fiscal crisis Thursday and invoked emergency powers so he could impose $150 million in spending cuts without the Legislature's approval.
"I had to do this," Schwarzenegger said at a news conference Thursday.
The move comes as local governments in the state edged closer to financial meltdown following the loss of millions of dollars a day in revenue resulting from Schwarzenegger's decision to cut a car tax.
"My reaction, like a lot of my colleagues, was one of surprise," said Democratic Assemblyman Joe Nation. "I think a lot of us are worried about where he's going to get the money from. I've said it before, I don't think you get yourself out of a hole by digging deeper _ his action just means that there will be more devastating cuts down the road."
Since Schwarzenegger cut the car tax, cities and counties have lost more than $300 million collectively. The money pays for a variety of services but especially for police and fire services.
To make the move without the Legislature, Schwarzenegger is relying on new powers granted the governor in this year's budget _ an agreement struck between lawmakers and former Gov. Gray Davis.
Although some Democratic leaders have questioned the legality of Schwarzenegger's move, state Controller Steve Westly _ who will be the one to issue the checks to local officials _ said he supports the idea and believes it is legal.
"Our police officers and firefighters must not be held hostage," Westly said. "This is an appropriate but temporary solution. The governor and the Legislature now have six months to cut waste and solve California's fiscal crisis."
Schwarzenegger had promised during the campaign to recall Davis that, if elected, he would eliminate the car tax increase Davis had imposed.
While the new governor had the authority to repeal the higher tax, he cut it without a plan in place for replacing the funds. Schwarzenegger has since sponsored legislation to repay cities and counties with reserve funds, but Democrats _ who form the majority in both houses _ say the state can't afford the expense without imposing deep cuts that they won't do.
The governor's move Thursday comes only a week after a much celebrated bipartisan agreement struck last week between the new Republican governor and Democrats to place a $15 billion bond and new spending limits on the March ballot.
