SACRAMENTO, Calif. — Gov. Arnold Schwarzenegger on Thursday called California’s massive budget deficit a “rock upon our chest” and said the state can address no other policy issues until the crisis is resolved.
“The truth is that California is in a state of emergency. Addressing this emergency is the first and greatest thing we must do for the people,” the governor said in his State of the State address before a joint session of the legislature. “The $42 billion deficit is a rock upon our chest, and we cannot breathe until we get it off.”
California’s budget deficit is expected to soar past $40 billion over the next year and a half, the financial and construction industries have been decimated by the housing collapse and unemployment is rising.
Legislators have been at odds for months over how to close the gap, and state financial officials say California will have to start sending IOUs to state contractors and taxpayers expecting refunds next month if the budget is not fixed.
In that climate, the Republican governor’s annual address was more austere than usual. Such speeches often are lengthy, filled with new policy ideas and held in the evening; this one took less than 20 minutes and was over before 11 a.m.
Schwarzenegger warned that California, which would be the world’s eighth-largest economy if it were a country, faces insolvency within weeks. if lawmakers fail to close the widening deficit.
Closing California’s deficit will require billions in spending cuts. Schwarzenegger has ordered state workers to take two days off a month without pay, starting in February.
The sticking point in budget negotiations has been raising taxes. Schwarzenegger and Democrats have proposed raising a variety of taxes, but have not agreed on the form those should take.
Legislative Republicans — a minority in both houses but powerful enough to block tax hikes — have refused any tax increase but have yet to show how they would close the gap.
