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Impeach Bush

Schwarzenegger's tax cut causes fiscal crisis
CNN
Friday, December 19, 2003 Posted: 9:21 AM EST (1421 GMT)

SACRAMENTO, California (AP) -- Saying California's legislative leadership "refuses to act," Gov. Arnold Schwarzenegger declared California in a fiscal crisis, invoking one-time emergency powers to impose $150 million in spending cuts -- largely in social service programs -- without lawmakers' approval.

The cuts free up money lost when the Republican governor kept a campaign promise by rolling back an unpopular tripling of the state's car tax. The funds will be used for city and county governments that have lost more than $300 million since.

"I was elected by the people of this state to lead. Since the legislative leadership refuses to act, I will act without them," Schwarzenegger said in announcing the decision Thursday.

Democrats say the move could spoil some of the bipartisan good will generated by a separate spending and bond accord forged last week.

Schwarzenegger's proclamation will pay for only a small portion of the $2.6 billion cost of cutting the car tax for the balance of the fiscal year, but also calls on lawmakers to make up the rest of the lost revenue by March 1. He has requested about $1.9 billion in additional cuts, but Democrats, who control the Legislature, said they're wary of cutting public health and welfare programs.

Schwarzenegger had proposed suspending a civil rights measure that guarantees care for the disabled to save money but changed his mind.

In all, he plans to cut about $150 million in spending by the time the emergency powers expire on June 30, the end of the fiscal year.

That's still small change in the context of California's budget woes.

The state's total budget for this fiscal year is $99 billion. If current spending and revenues don't change, the state could face between a $12 billion and $24 billion deficit by the middle of 2005.

California got more bad news from Wall Street on Thursday, when another agency lowered the state's bond rating -- already the lowest of the 50 states -- to just above junk bond status. Schwarzenegger said he was not concerned and expects the rating to rise as his budget plan develops.

Repealing the car tax increase was Schwarzenegger's first official act as governor after voters ousted Democrat Gray Davis in a recall election, but the actor-turned-governor has yet to replace the billions of dollars the tax would have generated for local government services, particularly police and fire services.

The same budget agreement between Davis and the Legislature that increased the car tax gave the governor the one-time power to cut any line item in this year's budget by up to 5 percent without legislative approval.

Democratic leaders said Schwarzenegger's move caught them off guard and may generate hard feelings given the bipartisan accord reached just last week on a plan to place a $15 billion bond and new spending limits on the March ballot.

"The way this was handled didn't help," said Democratic Senate President Pro Tem John Burton. "If a Democratic governor had tried to do this, the Republicans would be screaming off the charts."

Although some Democrats have questioned the legality of Schwarzenegger's move, Democratic state Controller Steve Westly -- who will be the one to issue the checks to local officials -- said he supports the idea and believes it is legal. Burton said that although his attorneys are reviewing the move, he doesn't expect any legal action.

Many big-city mayors, dependent on the state money, applauded Schwarzenegger's move. Oakland Mayor Jerry Brown, California's governor from 1975 until 1983, stood prominently behind the governor during Thursday's announcement.

"The Legislature gave the governor the power to make the cuts and he made the move," Brown said. "The risk to police and fire is not a joke, it is deadly serious."

Thursday's cuts include a half-percent decrease in funding for the University of California and California State University systems, closing a migrant farmworker housing center, less money for the Department of Motor Vehicles and a $91 million cut to programs aimed at helping welfare recipients return to the work force.

Copyright 2003 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed

Commentary:
How is it possible that this moron is governor? Well, it's because the media was asleep at their jobs again. They were too busy lying about Davis to ask "the pig" what he was going to do. Had they asked "the pig" how he was going to fix the fiscal mess in Calif. he would have had to say something along the lines of "cut taxes, cut programs for the poor and borrow tons of money." But if he told the truth, NO ONE would have voted for him, so the media remains as quiet as they did after Bush did the same thing. Bush and Arnold are borrowing tons of money and cutting taxes. In their little world making the next generation pay for what they're spending is "feel good fiscal policy." If you still think borrowing tons of money and giving it away is defensible I'd like to talk to you about getting on some meds.