Following the legislature’s inability to pass a comprehensive solution to solve California’s entire $24.3 billion deficit, Governor Arnold Schwarzenegger today proclaimed a fiscal emergency and called a Proposition 58 legislative special session to address this emergency. Additionally, the Governor exercised his executive authority to save cash for vital state functions and services by ordering three furlough days every month.

“Though the legislature failed to solve our budget problem yesterday, rest assured that solving the entire deficit remains my first and only priority, and I will not rest until we get it done. I will not be a part of pushing this crisis down the road - the road stops here,” said Governor Schwarzenegger.

Yesterday, the Governor followed through on his promise to veto any budget bills sent to him by the legislature that failed to solve for the entire deficit. Furthermore, the Governor today announced that he will not sign any legislation until a solution for the entire budget deficit is in place.

Beginning July 10, DPA will direct state offices to be closed the first, second and third Friday of every month through June 2010. This will require state employees to take unpaid furloughs on those Fridays. For employees who work in critical positions that cannot be furloughed on this schedule, the furlough days can be used at another time. All state hospitals, prisons and other 24-hour care facilities will maintain normal hours of operation, as will the California Highway Patrol and CAL FIRE fire stations. A limited number of state offices also will remain open on these “furlough Fridays.” A list of offices that will remain open is posted on the DPA website.

Under Proposition 58, the legislature has 45 days to pass and send a bill or bills to the Governor’s desk addressing the state’s budget crisis. If the 45 days pass and the legislature has not passed a bill or bills to address the problem, they cannot adjourn or act on other bills until the state’s fiscal emergency is addressed. The Controller has said he will begin issuing IOUs instead of payments to state vendors tomorrow.

Just months after the Governor and state lawmakers came together in a bipartisan effort to solve a $42 billion deficit, the worldwide economic slowdown produced a new multi-billion dollar deficit. To bring the budget back into balance, the Governor unveiled his May Revision budget proposal on May 14, 2009 including a mix of cuts, borrowing and other measures to solve the deficit. He further urged the legislature to take immediate action on the state’s fiscal crisis when he addressed a joint session of the legislature on June 2, 2009, noting that even though the state would be forced to take unprecedented actions to bring the budget back into balance - the deficit would only get larger and the decisions more difficult as more time passed.