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Unless budget corrections are made quickly, the state is likely to run out of cash in February and see its revenue gap widen to $28 billion over the next 19 months.
"Without immediate action, our state is headed for a fiscal disaster, and that is why with more than two dozen new legislators sworn in today, I am wasting no time in calling a fiscal emergency special session," Schwarzenegger said in prepared remarks.
The Republican governor and Democrats in the Legislature have proposed a combination of tax hikes and spending cuts, but Republican lawmakers have remained steadfast in their refusal to raise taxes.
Lawmakers failed to reach a compromise during the special session Schwarzenegger declared last month, pushing the problem to the new Legislature that was sworn in Monday.
There appeared to be little reason to believe that Republican lawmakers are any more likely to support Schwarzenegger's compromise appeal for program cuts and tax increases than they were when they rejected a Democratic proposal to do that last week.
"If anything, I think our resolve (against raising taxes) is deeper than it has ever been because of the economic realities," Senate Minority Leader Dave Cogdill, R-Modesto, said Monday.
In other news, confirmation that the nation is in a recession and signs pointing to a prolonged downturn sent Wall Street plunging once again Monday, hurtling the Dow Jones industrials down more than 600 points and erasing a huge chunk of last week's big gains. All the major indexes fell more than 7 percent.
The market began the day sliding on initial reports that the holiday shopping season, while better than some retailers and analysts feared, was mixed, a sign that Americans are very reluctant to spend. That has Wall Street concerned about the impact of a continuing drop in consumer spending on the sagging economy.
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