Fiscal Emergency: What Does It Mean?

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(Sacramento, CA)
Friday, January 11, 2008
Back in 2004, voters passed proposition 58. That’s what gave the Governor the power to declare a fiscal emergency. This is the first time he’s used that power. The law also says lawmakers must pass and send the Governor legislation to “address the fiscal emergency.” And that’s where it gets tricky. “It only requires the legislature to address the problem. The word in the law is address.” Tom Campbell is former Finance Director for the Schwarzenegger Administration and current Dean of the Haas School of Business at UC Berkeley. Cut “Though I’m sure the legislature won’t act in this manner, they could conceivably address it without solving it.” Hmm. Let’s ask some lawmakers. Here’s Republican Assemblyman and budget vice-chair Roger Niello: “In my opinion, addressing the issue means passing legislation that brings the current year spending in line with the revenue and the resources we have for the current year.” But Democratic Assemblyman and Budget Chair John Laird says lawmakers are simply required to adopt something that addresses the general subject. “When the Governor signs something, that probably meets the legal test that addressed it.” If lawmakers haven’t passed anything after 45 days, they’re not allowed to do any other legislative business until they deal with the budget deficit. But who decides whether any legislation that is passed has addressed the problem? Current State Finance Director Mike Genest weighs in: “Of course, the governor has the ability to veto any plan that they send him if he doesn’t think it meets the target. The legislature has the ability to say that it has met the target. And I think ultimately the people are the court of last resort.” If that’s the case, UC Berkeley’s Tom Campbell says it’ll be very obvious: “The real test will be in late May and June where if the numbers are accurate, and I think they are, the state will run out of money”