As new lawmakers were taking the oath of office, Governor Schwarzenegger was declaring a fiscal emergency. That requires the legislature to go into special session within 45 days to address the eleven billion dollar shortfall this fiscal year:
“We must act fast. Right now we are on a track to run out of cash by the beginning of February or the beginning of March, which means we will not be able to make our payments anymore.”
Schwarzenegger says that would also mean layoffs of government workers. In addition, the Governor’s calling for a separate special session to address the foreclosure crisis and an economic stimulus package. A similar session he called last month ended without a deal. Both Schwarzenegger and the Democrats have proposed a combination of tax hikes and spending cuts to close the gap – which is expected to grow to 28 billion over 19 months. However, GOP lawmakers reject any new taxes.