SACRAMENTO — The state budget approved only weeks ago is already falling into the red, and lawmakers may be forced to return to Sacramento this month to make emergency spending cuts and take other measures to keep California from running out of cash.
The financial pressures on the state are numerous. Revenue is dropping precipitously as the economy falters. The global credit crunch may make it impossible for officials to obtain billions of dollars in short-term loans that they typically rely on at this time of year.
And a federal judge on Monday put the state on notice that it may need to spend as much as $3.5 billion more on prison healthcare in this fiscal year than lawmakers had planned.
Assembly Speaker Karen Bass (D-Los Angeles) said Monday that an emergency legislative session within weeks is "a big possibility."
She and other leaders will meet Wednesday with Gov. Arnold Schwarzenegger to consider whether to call the Legislature into action.
"The governor is watching the financial condition of the state very closely," administration press secretary Aaron McLear said. "With revenue coming in lower than expected, a special session is something he will discuss with the leaders."
Legislative staffers who are tracking the state's cash flow say that in the month of September, revenue was about $1 billion below the amount projected in the budget that was just enacted. They expect the trend to continue, as the economy shows no sign of recovering.
The administration and state Controller John Chiang will issue official revenue numbers in coming days.
Chiang said the news will be bad. He said California is suffering from soaring unemployment and the evaporation of wealth caused by the stock market's downward spiral. He called on lawmakers to return to Sacramento quickly.
"We need to act immediately," he said.
Finding savings could prove challenging for lawmakers. The Legislature recently wrapped up one of the most contentious budget fights in state history, marked by an impasse that dragged on for a record 85 days.
Democrats insisted throughout the standoff that the state must raise taxes to balance the budget responsibly, and the governor ultimately joined the effort. But GOP lawmakers -- almost all of whom signed an oath never to increase taxes -- said such a move would be disastrous for the state's already struggling economy. The Republican legislators ultimately prevailed.
