SFGate: Governor considers special session on deficit

Watch the news on the California deficit carefully...the failure of state and local governments will be the next phase in the meltdown...

http://www.sfgate.com/cgi-bin/article.cgi?file=/c/a/2008/10/22/BA1913LRLM.DTL
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Wednesday, October 22, 2008 (SF Chronicle)
Governor considers special session on deficit
Matthew Yi, Chronicle Sacramento Bureau

(10-22) 04:00 PDT Sacramento --
Gov. Arnold Schwarzenegger will likely call a special legislative session
in November to solve California's ongoing budget woes caused by continuing
economic challenges and deteriorating revenues, his spokesman said
Tuesday.
The move would mean the current group of lawmakers would convene even
though dozens of them, facing term limits, will be leaving office Nov. 30,
when the legislative session officially ends.
"The sooner we take action, the more money we could save," said Aaron
McLear, Schwarzenegger's spokesman.
Schwarzenegger said Tuesday that the state may need a more immediate
fiscal fix.
"We don't want to wait until the new year to fix some of the problems that
we can fix now," he said during a news conference in Southern California
to announce a deal between the California State University system and
SunEdison, a Maryland firm, to install solar panels on college campuses.
The state's finances have been the biggest challenge for Schwarzenegger
and the Legislature this year. The housing market meltdown and the
sluggish economy resulted in less property, corporate and sales taxes for
state coffers, causing a nearly $17 billion gap in the current fiscal
year's budget.
The governor and lawmakers were able to agree on a budget deal to close
the gap, but only after a record-setting impasse that ended when
Schwarzenegger signed the spending plan on Sept. 23, 85 days late.
But within weeks of the budget enactment, state officials warned that tax
receipts are coming in even lower than expected and that California's
revenue could be down by at least $3 billion. And with the more recent
problems on Wall Street and the crisis in worldwide credit markets, the
Golden State's finances are not expected to improve anytime soon.
In order for Schwarzenegger to call a special session, he would have to
first define just how big the deficit is and propose solutions for the
lawmakers to consider.
McLear said the governor's finance staff is gathering data and believes
pertinent information would be ready well before Dec. 1.
While lawmakers agreed on the need for a special session to tackle the
state's budget crisis, at least one questioned whether it's possible to
have one before the end of November.
"To readjust the budget based on one quarter's results when we haven't
even seen Christmas, I'm not sure if we'll have enough information to know
what the scope of the problem is," said Sen. Denise Moreno Ducheny, D-San
Diego, chairwoman of the Senate Budget committee.
Then there is the question of whether Congress will deliver a federal
economic stimulus package either late this year or in early 2009, and how
that could potentially affect California's finances, Ducheny said.
"I understand people's sense of urgency, but we shouldn't be doing
something for the sake of doing something without all of the facts," she
said. Also, if lawmakers can't agree on solutions by the end of November,
the session simply expires and the governor would have to call a new one
with a new class of lawmakers, Ducheny said.
But Schwarzenegger argued Tuesday that there are things he and the
Legislature can tackle quickly, such as new legislation to help homeowners
facing foreclosure keep their homes and immediately dispensing billions of
dollars of voter-approved bond funds for infrastructure projects.
"And I think a special session will be a great tool to getting those
things done," he said.

E-mail Matthew Yi at myi@sfchronicle.com. ----------------------------------------------------------------------
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