Thursday, January 15, 2009
Gov. Arnold Schwarzenegger on Thursday called California's massive deficit a "rock upon our chest" and said the state can address no other policy issues until the fiscal crisis is resolved.
The Republican governor delivered his sixth State of the State address amid a grim political backdrop.
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 on the rise.
As a result, revenue from property, sales and capital gains taxes has plunged, leading California to the brink of fiscal calamity.
"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," he said during a relatively brief address to 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."
Schwarzenegger warned that California, the world's eighth largest economy, faces insolvency within weeks if lawmakers fail to close the widening deficit.
State financial officials said California will run out of cash in February. If that happens, it will have to send IOUs to state contractors and taxpayers expecting refunds.
Schwarzenegger said the state's financial problems are so pressing that no other issue - including education, water policy or health care - can be addressed until the state's budget problems are resolved.
"Let me tell you, I have big plans for this state. They include action on the economy, on water, environment, education, and health care reform, government efficiency and reform, job creation, and the list goes on and on," Schwarzenegger said. "But our first order of business is to solve the budget crisis."