- The Washington Times - Thursday, December 18, 2003

SACRAMENTO, Calif. (AP) — Gov. Arnold Schwarzenegger declared California in a fiscal crisis yesterday and invoked emergency powers so he could impose $150 million in spending cuts without the Legislature’s approval.

“I had to do this,” Mr. Schwarzenegger said at a news conference announcing the move.

The cuts, expected to come from social-service programs, free up money for city and county governments that have lost more than $300 million since the governor voided an unpopular tripling of the state’s car tax.

During his campaign to oust Gov. Gray Davis, Mr. Schwarzenegger promised to eliminate the tax increase Mr. Davis and the Legislature had agreed to in July. He repealed it was his first official act as governor last month.

The same budget agreement that increased the car tax gave the governor the power to cut this year’s budget without legislative approval.

Some legislators said yesterday they were surprised by the emergency declaration and deemed it the wrong way to react to budget problems.

“I think a lot of us are worried about where he’s going to get the money from,” said Democratic Assemblyman Joe Nation. “I don’t think you get yourself out of a hole by digging deeper — his action just means that there will be more devastating cuts down the road.”

Although some Democrats have questioned the legality of Mr. Schwarzenegger’s action, state Controller Steve Westly — who will issue the checks to local officials — said he supports the idea and believes it to be legal.

“Our police officers and firefighters must not be held hostage,” said Mr. Westly, a Democrat. “This is an appropriate but temporary solution. The governor and the Legislature now have six months to cut waste and solve California’s fiscal crisis.”

Mr. Schwarzenegger, Republican, has sponsored legislation to repay cities and counties with reserve funds, but Democrats — who form the majority in both houses — say the state can’t afford the expense without imposing deep cuts, which they won’t do.

Another key issue in the recall of Mr. Davis was the Democratic governor’s handling of the state’s multibillion-dollar-budget deficit. Last week, he reached a bipartisan agreement with Democrats to place a $15 billion bond and new spending limits on the March ballot.

A Wall Street rating agency, Fitch Ratings, lowered the state’s bond rating Thursday to just above junk-bond status. Moody’s Investors Service made a similar decision Dec. 9.

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