By Jim Christie, Reuters
SACRAMENTO, California–Outgoing California Governor Arnold Schwarzenegger declared a fiscal emergency on Monday, unveiling a package of proposals of mostly spending cuts aimed at closing the state’s current-year shortfall of US$6 billion. The Republican governor also called lawmakers into a special session on the budget, but Democrats who control the Legislature have signaled they are likely to ignore his plan, as Democratic Governor-elect Jerry Brown will assume office next month and present his own budget. Brown plans to meet with lawmakers and state finance officials on Wednesday to discuss the budget situation. Schwarzenegger’s package includes proposals for US$9.9 billion of budget-gap solutions, including US$7.4 billion in spending cuts and US$1.6 billion of funding shifts and miscellaneous revenue. “If there is one thing we have learned over these past few years, it is that the longer we wait to tackle the problem, the larger and more difficult it is to solve,” he said in a statement. “That is why I have called a special session today, so the legislature can get a head start on the problem.” Schwarzenegger then told a news conference that most of the cuts would come from health and human services, adding: “I always said that I would go and charge through the finish line.” After taking office, Brown must also deal with a projected US$19.3 billion shortfall for the next fiscal year beginning in July, the same size deficit that Schwarzenegger and lawmakers closed in October after a record impasse over a spending plan. That represents a massive shortfall given the state’s current general fund budget is US$86.6 billion, adding to concerns in financial markets about the financial health of the state, which is the largest U.S. municipal debt issuer. California is also the most populous U.S. state and would have the world’s eighth-largest economy if it were a country. The ability to spend as much as its leaders and voters would like on popular programs, such as public schools, higher education and roads, has been battered in recent years.