California Legislature called into special session on budget deficit

Declaring that California faces a fiscal emergency, lame-duck Gov. Arnold Schwarzenegger said Thursday he would convene a special session of the incoming Legislature to address the state’s massive budget deficit.

The announcement came one day after the state’s chief budget analyst said the fiscal shortfall has grown to $25.4 billion over the next year and a half — far larger than officials had estimated only days earlier.

Legislative Analyst Mac Taylor estimated that the budget which Schwarzenegger had signed 35 days ago already had fallen $6.1 billion into the red because of optimistic assumptions that had proven incorrect.

The goal of the special session would be to address at least the current shortfall, Schwarzenegger spokesman Aaron McLear said.

The special session would convene Dec. 6, the day the incoming class of legislators — including 28 freshmen — is set to be sworn in.

By then, Schwazenegger will have less than a month in office and has not indicated that he has new ideas for addressing the budget problems that stymied negotiators for a record 100 days this summer and fall after the July 1 budget deadline.

“Legislators will have to face the ugly truth that we can only spend the revenues we have,” Schwarzenegger said in a statement. “.... They know it won’t be easy, but they also know they cannot wait to take action.”

McLear said Gov.-elect Jerry Brown’s transition team had been given advance notice of the declaration, but was not asked to approve it. Brown, who is on a post-election vacation, spoke with Schwarzenegger shortly after the announcement, and the governor-elect was supportive, McLear said.

Brown spokesman Evan Westrup said in a statement, “This special session underscores the enormous challenges facing the state.” Brown is scheduled to return to Sacramento on Monday.

Schwarzenegger’s announcement of a special session — the eighth budget special session of his seven years in office — was met with considerable skepticism from key lawmakers.

Neither the substance nor the politics of the state’s budget woes have changed substantially in the five weeks since legislators approved the current budget, which was widely viewed at the time as being balanced only through accounting gimmicks and rosy assumptions.

“Gov. Schwarzenegger’s budget proposals have not helped our economy so I am not sure his calling a special session is a serious solution,” Assembly Speaker John A. Pérez (D- Los Angeles) said in a statement.

Democratic leaders have said their top budgeting priority is to overturn one of Schwarzenegger’s line-item vetoes, a $256-million cut to subsidized day-care for 60,000 working families.

But that would expand the deficit, not close it.

McLear said he “can’t speculate” on whether the governor would be willing to consider that, or any other specific budget changes.

The Department of Finance is forming its own estimate of the shortfall, and the governor will unveil his deficit-reduction package in December. It will not include new taxes, McLear said.

Taylor warned this week that tackling the full $25.4-billion deficit will be “much, much more difficult than last year.” His report described a state beset by a “painfully slow economic recovery,” billions in temporary taxes set to lapse and the federal stimulus that has supported many programs about to expire.

All those fiscal woes — and more — will confront Brown, a Democrat, who is set to be sworn in Jan. 3. Brown must present a budget proposal to the Legislature only a week after his swearing-in.

shane.goldmacher@latimes.com