Schwarzenegger declares fiscal emergency
Governor now can bypass legislature to cut spending
SACRAMENTO, California (AP) -- 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 was elected by the people of this state to lead. Since the legislative leadership refuses to act, I will act without them," Schwarzenegger said Thursday in announcing the decision.
The cuts, expected to come largely from social service programs, free up money for city and county governments that have lost more than $300 million since the governor voided an unpopular tripling of the state's car tax.
Among the cuts announced so far are a .5-percent drop in support for the University of California and California State University systems, the closing of a migrant farmworker housing center and decreased funding for the Department of Motor Vehicles. Schwarzenegger had proposed suspending a civil rights measure that guarantees care for the disabled, but administration officials said he changed his mind.
Schwarzenegger said he would cut about $150 million by the time the emergency powers expire on June 30, the end of the fiscal year.
Repealing the car tax increase was Schwarzenegger's first official act as governor after voters ousted Democrat Gray Davis in a recall election and elected Schwarzenegger. The actor-turned-governor has yet to replace the billions of dollars the tax would have generated for local government services, particularly police and fire services.
The same budget agreement between Davis and the legislature that increased the car tax gave the governor the one-time power to cut this year's budget without legislative approval.
Some legislators said Thursday they were surprised by Schwarzenegger's emergency declaration and said it is the wrong way to react to budget problems.
"I think a lot of us are worried about where he's going to get the money from," said Democratic Assemblyman Joe Nation. "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."
Although some Democrats have questioned the legality of Schwarzenegger's move, Democratic 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 has 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.
A key issue in the Davis recall had been the former governor's handling of the state's multibillion-dollar budget deficit.
Last week, Schwarzenegger reached a bipartisan agreement with Democrats to place a $15 billion bond and new spending limits on the March ballot.
However, that move, on top of the state's precarious finances, led to further troubles for California. Wall Street rating agency Fitch Ratings lowered the state's bond rating Thursday to just above junk-bond status. Moody's Investors Service made a similar move December 9.
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