Could California Go Bankrupt???

(12-01) 16:38 PST Sacramento, CA (AP) —

Gov. Arnold Schwarzenegger declared a fiscal emergency on Monday and called lawmakers into a special budget session, warning that California was in danger of running out of daily operating cash within two months.

Schwarzenegger said legislators so far have failed to grasp the seriousness of the crisis, which is growing worse by the day.

“Without immediate action, our state is headed for a fiscal disaster where everyone will be hurt,” Schwarzenegger said during a news conference in Los Angeles, where he signed three budget-related orders.

He warned of deep cuts that would have a “tremendously horrible effect on our school system” if the state were to run out of cash.

The Republican governor and Democrats in the Legislature have proposed a combination of tax hikes and spending cuts. Republican lawmakers have remained steadfast in their refusal to raise taxes but so far have not released an alternate proposal to close the $11.2 billion shortfall.

Lawmakers failed to reach a compromise during the special session Schwarzenegger declared last month, pushing the problem to the new Legislature that was sworn in Monday.

Schwarzenegger said their failure to act has cost California an additional $1.5 billion to $2 billion because the state continues to spend at the same rate even as revenue declines.

His projection assumes lawmakers act on the final day of the new session and implement all the governor’s recommendations. The figure could be lower if they act quickly, said his spokesman, Aaron McLear.

Assembly Speaker Karen Bass, in accepting her nomination to remain head of the Assembly, told her fellow lawmakers to put party ideology aside and help Californians.

“These are not ordinary times,” said the Los Angeles Democrat. “Our state continues to be rocked by the deepening national recession. Our projected deficit is growing, and the cash we need on hand is disappearing.”

Schwarzenegger enacted the fiscal emergency under Proposition 58, the initiative approved by voters the year after he took office. It forces the Legislature to address the current-year budget deficit within 45 days or they would be prevented from acting on any other bills until the problem is solved.

Read the whole story here.


2 thoughts on “Could California Go Bankrupt???

  1. It’s truly scary what’s happening in this country. We’re on a fiscal meltdown.

    They finally announced today the U.S. is officially in a recession…. and have been in one for 1 year. Not a big surprise. The problem is, how long will it last and what will it really take to turn it around?


  2. I could have told you that we’ve been in a recession for over a year. When they stopped lending money back in, I believe, September 2007 we were already in tailspin.


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