Schwarzenegger Cites Fiscal Emergency, Orders Special Session

[Purveyor]

Source: Bloomberg

Dec. 1 (Bloomberg) -- California Governor Arnold Schwarzenegger, saying his state is going broke, declared a fiscal emergency and ordered the incoming class of lawmakers into a special session to fix a widening $11 billion deficit.

Schwarzenegger, a 61-year-old Republican, wants lawmakers to raise taxes and cut spending to narrow the gap that is projected to swell to $28 billion over the next 18 months. He invoked powers granted him in 2004 to declare a fiscal emergency, which gives the Legislature 45 days to plug the shortfall. If they fail to find a solution in that time, they are barred from doing any other legislative work until they do.

“Without immediate action, our state is heading for fiscal disaster,” Schwarzenegger told reporters today in Los Angeles.

Lawmakers were unable to agree on a plan to close the gap during a three-week special session that expired yesterday. Schwarzenegger has warned that the state will run out of cash in February and can’t borrow money from Wall Street to pay bills such as payroll until lawmakers trim the gap. The state’s finances are reeling from declines in stock markets that have sapped tax revenue from income and capital gains.

Nationally, more than half of U.S. states are facing deficits for the fiscal year that began five months ago. California, whose escalating income taxes make it dependent on capital gains, is contending with the largest budget shortfalls. California accounts for nearly half of the $24 billion gap faced by a total of 31 states this year, according to the Center on Budget and Policy Priorities.

Read more: http://www.bloomberg.com/apps/news?pid=20601087&sid=aqVCjxJnPH38&refer=home

[Cleita]

1. Wasn't his campaign slogan to end the fiscal mess that Grey Davis

purportedly did? (He didn't, Pete Wilson, Grey's predecessor, made the mess.) So what's taking him so long? He was going to open the books and find all the wasted spending and he hired Pete Wilson as a consultant. :rofl: So really, the special session should be to dump him and appoint an interim Governor who is competent. I think Jerry Brown could be pursuaded to do that until a new Governor is elected. Remember, Jerry Brown left California with a surplus.

[crikkett]

15. The first thing he did was cut the vehicle tax, and now he'll

have to reinstate it. Dumbass.

[ItNerd4life]

18. Please don't apply logic and sound reasoning

to this debate. This is California we're talking about. :P

You are very correct, he was supposed to clean up the fiscal mess.

[TomInTib]

2. Why doesn't he simply go with the plan he campaigned on?

He claimed to be such an astute businessman that he merely needed "to open the books, have a good hard look at them. The money is dere."

C'mon Ahhnnie.

[zbdent]

5. and he was personally going to "terminate" the deficit

[pinto]

3. Calif. budget deficit turns spotlight on Prop. 13

Let's re-look at the Prop 13 loopholes...

Calif. budget deficit turns spotlight on Prop. 13
By Steve Lawrence
ASSOCIATED PRESS

1:15 p.m. July 2, 2008

SACRAMENTO – When winemaking giant E&J Gallo bought the Louis M. Martini Winery in 2002, it got a prestigious label, 1,735 acres of some of the best vineyards in Napa and Sonoma counties and a sweet tax break.

Critics cite that break as a prime example of one of the shortcomings of Proposition 13, the tax-cutting initiative approved by California voters in 1978.

The proposition rolled back property tax assessments to 1975 levels and limited annual increases to 2 percent or the change in the cost of living, whichever is less. It allows assessments to be brought up to market value when there is new construction or a change in ownership.

What Proposition 13 failed to do was clearly define what constitutes an ownership change for businesses, leaving an inviting loophole for those trying to lessen their tax burden.

The issue has resurfaced this year because California is facing a $15.2 billion budget deficit, and lawmakers are debating whether the shortfall should be closed by cuts, tax increases or a combination.

Lawmakers who favor new revenue say closing some tax loopholes should be an obvious first step.

Raising property assessments on businesses that change hands would generate additional local money for schools, allowing them to make up for cuts in state aid brought on by the state's persistent budget problems, said Lenny Goldberg, president of the union-financed California Tax Reform Association.

http://signonsandiego.printthis.clickability.com/pt/cpt?action=cpt&title=SignOnSanDiego.com+%3E+News+%3E+State+--+Calif.+budget+deficit+turns+spotlight+on+Prop.+13&expire=&urlID=29520520&fb=Y&url=http%3A%2F%2Fwww.signonsandiego.com%2Fnews%2Fstate%2F20080702-1315-ca-statebudget-corporatetaxes.html&partnerID=621

[truedelphi]

8. Exactly. Why should "persons" such as Disney Corp. gain from Prop 13??

The measure was passed without any cap on it. Presumably so that little ol ladies would not be living in a cardboard box under the freeway should their home zoom in value from 70 K to 200 K?

It should have been capped so that once your house was over a certain limit, you paid property taxes
on the amount over the cap.

This law has rewarded people for nothing more than the fact that they came into the house buying market a generation before others did. They became wealthy, while everyone else had to make up the difference.

And there is no need for Corporations to benefit but they certainly do.

[mike_c]

4. this is probably going to get ugly-- the radical republican fringe...

...holds a lot of power in the California legislature. Arnold isn't the real problem here, IMO. I doubt that he has any really good solutions, but his biggest opponents in the legislature will likely be republicans rather than dems. There's a certain delicious irony in that-- but there'll be little opportunity to savor it while the state sinks into budget hell.

[Tempest]

6. The radical Repug fringe?

In reality, it's all but a couple of Repugs in the legislature who are holding things up by insisting on no new taxes.

They only want budget cuts, except within their own districts.

They are putting politics ahead of what is needed in the state to stop the bleeding.

[mike_c]

7. yup-- that's precisely what I meant....

They're right wing ideologues who "put politics ahead of the state." Interestingly, THEY seem to be the biggest impediment to Schwarzenegger actually doing something about the state's budget woes, at least at the moment. That could change, of course. And just wait to hear them scream as folks begin to look critically at Prop 13!

[Greyskye]

9. Best summation of the situation in this thread.

The Republicans only wants cuts in programs, and are absolutely opposed to any form of tax or fee increases.

The Democrats want some cuts, but know that you have to raise some taxes to meet the shortfall.

They've even voted down a fractional sales tax increase with a built in expiration date. My take on it is that no Republican is willing to vote for anything that would mean that they would then be open to an attack ad claiming that they voted to raise taxes. It's all politics, all the time. :puke:

[pinto]

11. I agree. A handful of (R) ideologue obstructionists hijack the budget every year.

[Politicalboi]

10. Time to tax the

Smokers again. I say tax booze. Put a 50 cent tax on each bottle of beer. Half goes to deficit the other to abused children of drunks or victims of auto accidents that involved drunks. Better yet just legalize pot and sell them like cigs. Only $30.00 a pack. I would pay it. That's deal these days.

[bluesmail]

12. The irony. RECALL

[KakistocracyHater]

13. those businesses who haven't paid taxes from 02

& on, they ought to cough up the dough they owe. Cuts to seniors, our veterans, poor children, our most vulnerable Americans, would only increase our rush to the bottom. Cut what doesn't matter, not the "orphans & widows" sop of the Right. Wholesale medicines, quit reimbursing County Supervisors' meals out, cut also State travel reimbursements, no pay raises for the top in government.

[bemildred]

14. No taxes == no money.

And "fees" will not do the the job, because "fees" will be avoided. And regressive taxes like sales tax will not do the job because people will avoid them too, if they get high enough to solve the problem. You have to go where the money is, and you have to be fair, honest, and unavoidable. It they are willing to move to avoid the taxes, then we don't need them.

[Cleita]

16. I haven't been down south to LA for about fifteen years, but

when I talk to people who do go there, I hear of a glut of rich people on the Westside with fancy homes and fancy cars like Ferraris and Lamborghinis parked in the drives of those fancy homes. The Marina is still full of well kept yachts. The expensive restaurants are doing well and the high end stores that cater to those people. I understand that it's the same north of here in the Bay area.

California is full of this demographic who are really doing well, many of them from foreign countries doing business here. There is a reason we are the sixth largest economy in the world.

WE CAN TAX THESE PEOPLE. ARNOLD WON'T BECAUSE THEY ARE THE ONES WHO PUT HIM IN POWER AND KEEP HIM THERE.

[bemildred]

17. Arnold IS those people. nt