Gov. Declares State Fiscal Crisis

    Gov. Arnold Schwarzenegger’s plan to balance this year’s state budget includes a $132 million midyear slash in funding for California public universities. (Sacramento Bee/MCT)

    In response to California’s current $11.2 billion revenue shortfall, Gov. Arnold Schwarzenegger declared a fiscal emergency Monday, calling state lawmakers to a special session and pressing them to approve his proposed $4.5 billion in midyear cuts, including $65.5 million from the University of California’s operating budget.

    The state may run out of cash as soon as February, and the state budget deficit could reach $28 billion over the next 18 months, according to the California Legislative Analyst’s Office.

    “Without immediate action, our state is headed for a fiscal disaster,” Schwarzenegger said in a statement.

    Proposition 58, passed in 2004, requires lawmakers to pass legislation addressing a fiscal crisis within 45 days, and prohibits legislators from adjourning their special session or acting on any unrelated bills until they tackle the budget problem.

    H.D. Palmer, deputy director of external affairs with the California Department of Finance, said the proposed cuts will be difficult to make, but that if the Legislature waits longer than 45 days to act, it will face a shortfall $1.5 billion to $2 billion greater than that already in existence.

    “The longer you wait, the tougher the decisions are going to get,” he said. “In this case, time is literally money.”

    In the past month, state and university officials have indicated that California’s deepening financial troubles will have immediate effects on public higher education.

    UC President Mark G. Yudof has repeatedly warned that continuing drops in state financial support will result in larger class sizes and a smaller number of tenured faculty positions, ultimately impacting the quality of education for UC students.

    At the UC Board of Regents meeting Nov. 18 through 20, UCSD Chancellor Marye Anne Fox was one of three chancellors to outline the detrimental impacts the state funding shortfall will have on UC campuses, announcing that the famed Scripps Institution of Oceanography is in a “precarious position.”

    On Nov. 20, the regents approved a proposed 2009-10 budget that relies on a $755 million increase in state funding. They announced plans to curtail freshman enrollment next fall if the state does not meet their request.

    While many regents opposed the budget, assuming it would be rejected by the Legislature, Yudof said the university must present an ambitious initial request that reflects its realistic needs.

    “It’s a reality test,” he said. “It might be pie in the sky, but our job is to forcefully articulate what we need. We’re being honest about what it takes to maintain this great institution.”

    The governor will release his proposed 2009-10 budget in January, and UC spokesman Ricardo Vazquez said the regents will re-evaluate their proposed budget at their February meeting.

    To help compensate for the state budget gap, the governor is also proposing $4.7 billion in revenue increases, including a statewide sales tax hike — from 7.25 to 8.75 percent — that would last three years.

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