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Schwarzenegger Invokes Emergency Powers to Cope With California Financial Crisis - 2003-12-19

California Governor Arnold Schwarzenegger has invoked emergency powers to address a fiscal crisis. The move restores full funding for police and fire departments in local communities.

The declaration of a fiscal emergency allows the new governor to release payments that cities and counties use for essential services. The payments are funded by California's annual car tax, and were held up last month when Mr. Schwarzenegger reversed an unpopular hike in the tax.

Since then, local communities have lost more than $300 million.

Following pleas from local officials, the governor said Thursday he will restore the funding, although he has failed to reach an agreement with state legislators.

"Since the leadership has not acted, I will act without them. I'm invoking a mid-year budget authority granted to the governor by the legislature," he said. "Section 27 of the budget act permits me to shift approximately $2.7 billion from the state's general fund to local government."

Mr. Schwarzenegger also ordered $150 million in state spending cuts, which he also imposed without legislative approval. His aides say the cuts are likely to come from social service programs.

Both moves by the Republican governor have reportedly surprised and angered some of the Democratic majority in the state legislature. However, California's Democratic controller, Steve Westly, supports the governor's move, as do the Democratic mayors of Los Angeles and Oakland.

Mr. Schwarzenegger's announcement follows a bipartisan agreement last week, celebrated by both sides, that marked the first joint action on the state's budget problems.