CDCAN REPORT #018-2011: Governor Brown issues "fiscal emergency" proclamation

• Governor Brown Issues New Proclamation Declaring Fiscal Emergency Under State Constitution
• Replaces Earlier Proclamation by Schwarzenegger Issued December 6th and Resets 45 Day Time Deadline For Legislature to Respond To Budget Crisis From January 21st to March 5th

SACRAMENTO, CALIF  (CDCAN) [Updated 01/20/2011  07:55 PM  (Pacific Time)]   - As expected, Governor Jerry Brown today issued a proclamation that replaces and extends the proclamation by Governor Arnold Schwarzenegger issued December 6th that declared a “fiscal emergency” under the State Constitution and re-sets the 45 day time deadline for the Legislature to pass a bill or bills in response.  The Governor’s proclamation underscores not only the dimensions of the enormous state budget crisis but the urgency in taking action within a few weeks rather than the normal six months or more budget process.

California faces of a shortfall of over $25 billion by the end on the 2011-2012 State budget year June 30, 2012, and  on-going project budget deficits of over $20 billion every year through at least 2016 unless permanent actions are taken regarding revenues and spending by the Legislature and Governor.

Proclamation Largely A Formality – But Does Extend Time Deadline to 3/5

• Governor Brown’s proclamation, while largely a formality, has the practical effect of extending the original time deadline from Schwarzenegger’s earlier proclamation from January 21 by another 45 days – to March 5th.
• If the Legislature does not pass a bill or bills in response to the Governor’s declaration of a “fiscal emergency”, it cannot adjourn or take action on any other bills – though the Legislature technically can still find ways to recess and also hold hearings on other bills even after the deadline passes. 
• The Legislature also can simply pass a bill or bill that simply includes a sentence that indicates the legislation is in response to the Governor’s fiscal emergency proclamation – though it is clear both the Senate and Assembly are moving quickly to take final action on the Governor’s proposals by March.

Legislature and Governor Will React to Special Election Deadline

The Legislature and Governor however are more likely to react to the another more critical deadline in early March to place at least two issues – including one proposed constitutional amendment – on a special election ballot in June for voters to consider approving.

One of the key foundations of the Governor’s budget plan is to place a proposal to extend for five years temporary tax increases enacted as part of the 2009-2010 State Budget in February 2009 that are set to expire June 30, 2011.  If passed, that $11 billion or so in revenues would prevent deep cuts to K-12 education and also certain reductions to local government. 

Budget Plan On Fast Track – Hearings Scheduled

• The Assembly and State Senate have scheduled several budget subcommittee hearings beginning next week and at least through February 10th to consider the Governor’s proposals – including over $12.5 billion in spending reductions to the State general fund (that includes some shifting of funds).
• The bulk of the proposed reductions are outright spending cuts to programs including developmental services, In-Home Supportive Services, Medi-Cal, elimination of Adult Day Health Care and the Multipurpose Senior Services Program, cuts to CalWORKS, reductions to SSI/SSP individual grants,  cuts to Healthy Families, and higher education and more).  See CDCAN Report #17-2011 and CDCAN Action Alert #001-2011 for details. 
• The bulk of the actual spending cut proposals center on health and human service programs impacting children and adults with disabilities, mental health needs, the blind, seniors, low income families and workers, community organizations, facilities, and workers who provide supports and services including Medi-Cal providers.

TEXT OF GOVERNOR BROWN’S PROCLAMATION:

FISCAL EMERGENCY PROCLAMATION
BY THE GOVERNOR OF THE STATE OF CALIFORNIA

WHEREAS on the 6th of December, 2010, pursuant to Section 10(f) of Article IV of the Constitution of the State of California, Governor Arnold Schwarzenegger; proclaimed a fiscal emergency; and

WHEREAS that proclamation contained certain findings supporting the declaration of a fiscal emergency; and,

WHEREAS on January 10, 2011, I released my proposed budget for the State of California and that budget reflected current economic, budgetary, and cash information; and

WHEREAS without corrective action the combined operating deficit for Fiscal Year 2010-11 and Fiscal Year 2011-12 is $25.4 billion; and

WHEREAS revenues are $3.1 billion lower than were projected at the time of the 2010 Budget Act; and

WHEREAS the passage, in November 2010, of Proposition 22 created an additional budget shortfall of $1.6 billion; and

WHEREAS decisive action is required to solve the State’s persistent and severe budget problems, continue economic recovery, promote job growth, and preserve public education and the quality of life for all Californians.

NOW, THEREFORE, I, EDMUND G. BROWN JR, Governor of the State of California, in accordance with Section 10(f) of Article IV of the Constitution of the State of California, HEREBY DETERMINE that General Fund revenues for Fiscal Year 2010-11 will decline substantially below the estimate of General Fund revenues upon which the Budget was based, and General Fund expenditures will increase substantially above the estimate of General Fund revenues, and further, that this will create a carry-over deficit affecting the cash reserves and the budget for Fiscal Year 2011-12.

I, EDMUND G. BROWN JR, Governor of the State of California, HEREBY DECLARE and REAFFIRM that a fiscal emergency exists.

I, EDMUND G. BROWN JR, Governor of the State of California, HEREBY IDENTIFY THE NATURE OF THIS FISCAL EMERGENCY to be the projected budget imbalance for Fiscal Year 2010-11, which is causing budgetary and cash deficits in Fiscal Year 2011-12.

I, EDMUND G. BROWN JR, Governor of the State of California, further determine, in accordance with the findings set forth herein, and the legislation that I am proposing to the Legislature in connection with this proclamation, that this proclamation dated January 20, 2011, supersedes the proclamations issued on December 6, 2010, for the purposes of Section 10(f) of Article IV of the Constitution.

IN WITNESS WHEREOF I have hereunto set my hand and caused the Great Seal of the State of California to be affixed this 20th day of January 2011.

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EDMUND G. BROWN JR.
Governor of California

ATTEST:

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DEBRA BOWEN
California Secretary of State