US Economy - State of California going Bankrupt by Feb 09? - has 11.2 b deficit
California the world's tenth largest economy could be bankrupt by February next year.Gov. Arnold Schwarzenegger declared a fiscal emergency Monday and called lawmakers into a special session to address California’s $11.2 billion deficit. The state’s revenue gap is expected to hit $28 billion over the next 19 months without bold action. The emergency declaration authorizes the governor and lawmakers to change the existing budget within 45 days.The Republican governor and Democratic lawmakers have proposed a combination of tax increases and spending cuts, but Republican lawmakers steadfastly refuse to raise taxes. No compromise could be reached during a special session last month, which pushed the problem to a new Legislature being sworn in Monday. But there appeared to be little reason to believe that Republican lawmakers would budge. “If anything, I think our resolve (against raising taxes) is deeper than it has ever been because of the economic realities,” Senate Minority Leader Dave Cogdill said Monday.During last month’s session, Democrats proposed $8.2 billion in spending cuts and $8.2 billion in tax increases. Republicans rejected it and instead sought an economic stimulus program. Schwarzenegger asked for both, offering essentially the same plan rejected last month. His proposal includes raising the state sales tax by 1.5 percentage points — or 1 1/2 pennies on the dollar — for three years, generating $3.5 billion in the current fiscal year. He also seeks to increase the annual fee for registering vehicles.
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