GOVERNOR DECLARES FISCAL EMERGENCY

SACRAMENTO —  Gov. Arnold Schwarzenegger ordered the new Legislature in to work on its first day, declaring a fiscal emergency Monday in response to the state’s deteriorating finances and urging lawmakers to “get off of their rigid ideologies.”

But even as Schwarzenegger warned that California could run out of cash within two months, there was little indication that the Capitol’s partisan gridlock has waned enough to allow for an easy resolution to the state’s $28-billion budget gap.

Republican lawmakers, who last week blocked a Democratic proposal to cut billions of dollars from schools, healthcare and welfare programs while tripling the vehicle license fee, quickly reiterated their opposition to any new taxes, which both Schwarzenegger and Democrats say are indispensable. Democratic legislators again dismissed some of Schwarzenegger’s proposals to ease labor rules on business in order to boost the economy.

“Now, I compare the situation that we are in right now to finding an accident victim on the side of the road that is bleeding to death,” Schwarzenegger said at a news conference at his Los Angeles office. “We wouldn’t spend hours debating over which ambulance we should use, or which hospital we would use, or which treatment the patient needs. No, we would first stop the bleeding, and that’s exactly the same thing we have to do here.”

Schwarzenegger said immediate action is essential because although the state projects a $28-billion deficit by mid-2010, California is on track to run out of cash by February or March. He said that if lawmakers fail to act within 45 days as required under his declaration of a fiscal emergency, they will have to find an additional $1.5 billion to $2 billion in savings or new revenue above what is needed right now. He said the administration is already drawing up plans to lay off state workers.

“It’s like an avalanche, that it gains momentum,” he said.

The November elections changed little in the partisan standoff. Democrats picked up three seats in the 80-member Assembly, bringing their majority to 51, still three short of the two-thirds needed to pass fiscal measures.

No seats changed hands in the 40-member Senate, where there are only 24 sitting Democrats because Mark Ridley-Thomas was elected to the Los Angeles County Board of Supervisors, leaving a vacancy. That means Senate Democrats will now have to win over three Republicans -- one more than before -- to pass a budget.

Of the 120 legislators, 28 are new and several have served in the Legislature before.

Assembly Republican leader Michael Villines (R-Clovis) rebutted Schwarzenegger’s criticism that lawmakers are too rigid, saying in a statement that his party’s anti-tax stance “is not blind ideology on the part of Republicans, but our sincere belief that higher taxes will hurt the economy and lead to more uncontrolled spending.”

Darrell Steinberg, the new Senate president pro tem, challenged the governor’s insistence that tax increases be coupled with economic stimulus measures.

“Economic stimulus won’t matter if we don’t make the necessary cuts and raise sufficient revenue to give bond-holders the confidence that California’s credit is good,” said Steinberg (D-Sacramento).

Both Steinberg and Assembly Speaker Karen Bass (D-Los Angeles) dismissed Schwarzenegger’s proposals to help businesses by giving employers more leeway in setting workers’ hours and lunch breaks.

“I am open to some of what he is proposing, but what I have major problems about is dismantling labor laws, dismantling environmental laws,” Bass said.

She also indicated that the onus was on Schwarzenegger to negotiate a solution that Republicans could sign on to, saying that “one way that it would be very helpful for him to participate would be in getting to know the members of his party and persuading members of his party to vote on the budget.”

For his part, Schwarzenegger implied that legislators were resisting his compromises not out of political courage but from fear. He told reporters that in his attempts to end the impasse, “I even proposed to them that they should pass a law to give me all the power for one hour, I’d make all the decisions so that they don’t have to be blamed for anything.”

Lawmakers turned him down, he said.

Schwarzenegger had to declare the fiscal emergency in Los Angeles instead of in Sacramento as planned because the fog in the capital was too dense to allow planes to land.

He quickly departed for Philadelphia, where most of the governors will meet today with President-elect Obama. In a tacit rebuke to Democrats such as Bass who have emphasized seeking federal aid to help the state out of its financial plight, Schwarzenegger told reporters: “The federal government shouldn’t give us a penny until we straighten out our mess and we can live within our means.”

--

[email protected]

[email protected]

--

Times staff writer Kate Linthicum contributed to this report.