Schwarzenegger declares Calif. fiscal emergency

The Associated Press
12:22 p.m. July 1, 2009

SACRAMENTO — Gov. Arnold Schwarzenegger has declared a fiscal emergency to address California's deficit and has ordered state offices closed three days a month to save cash.

The Legislature will have 45 days to send him a plan to balance the state's budget, which ended the fiscal year with a $24.3 billion deficit. The shortfall is expected to grow by $7 billion because the Legislature did not enact several stopgap measures on Tuesday.

If lawmakers fail to act within the 45 days, they cannot adjourn or act on other bills until they solve the crisis.

The government shutdown will lead to a third furlough day 235,000 state employees, bringing their total pay cut to about 14 percent.

California began its new budget year Wednesday without a balanced spending plan, which will force the controller to issue IOUs.

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