Play Live Radio
Next Up:
Available On Air Stations

Schwarzenegger Issues Budget State of Emergency

Governor Schwarzenegger declared a state of emergency Wednesday because of California's massive budget mess. He's also adding a third furlough day for state workers. Meantime, the State Controller is expected to start issuing IOUs today.

Governor Schwarzenegger says now that California has entered a new fiscal year without a balanced budget, the deficit has grown to more than 26 billion dollars:

"Each day we wait the problem is getting bigger," says Schwarzenegger. "The deficit is getting bigger, because right now we are spending money that we don't have.

The Governor's also threatening to veto all bills until a budget deal is reached. A fiscal emergency means lawmakers have to address the problem within 45 days. But by all accounts California doesn't have that long.

Controller John Chiang says the state is so short on cash he'll have to issue more than $3 billion in IOU's this month.

They'll go to students, programs for the poor and disabled, and those due income tax refunds.

Chiang worries about the long-term ramifications:

"IOU's are an indication that the state cannot pay its bills on a timely basis," says Chiang. "When you have fiscal mismanagement it could lead to further downgrades. Today California is the lowest credit-rated state in America."

Governor Schwarzenegger's also ordering state workers to take a third unpaid day off each month.

Combined with the two days they're already taking, that's a roughly 14 percent pay cut:

Several thousand state workers protested outside the Capitol. Shalom Rojas works for the Department of Consumer Affairs.

"I think we've sacrificed enough already for him," says Rojas. "I think for him to ask another day is just absolutely ridiculous."

That means the DMV and most other state agencies will now be closed three Fridays a month, beginning July 10.

The furloughs would run through next summer -- right around the time lawmakers will be once again trying to balance the state's budget.