Radio New Zealand - Te Reo Irirangi o Aotearoa

New fiscal emergency declared in California

Updated at 9:03 am on 30 July 2010

Governor Arnold Schwarzenegger of California has declared another fiscal state of emergency.

California's economy, which is the eighth largest in the world, faces a budget deficit of $US19 billion.

Mr Schwarzenegger said that without a budget in place, the state government will run out of cash by October.

He also ordered most state employees to take three days unpaid leave per month. "Furlough Friday" will start in August.

Earlier this month, the governor ordered 200,000 state employees to be paid the minimum wage because no budget had been passed.

Mr Schwarzenegger previously declared a fiscal emergency in July 2009, to address the state's deficit. That also included "Furlough Friday", which ran until June 2010.

The BBC reports employees in agencies involving public safety, including the California Highway Patrol and the Department of Fire & Forestry Protection, and in revenue generation, such as the Franchise Tax Board, are exempt.

Analysts say it could be several more weeks until a budget is agreed.

There have also been some more unusual suggestions to help balance the books.

The city of Oakland has approved four large-scale marijuana factories where the drug can be processed on an industrial scale. California will vote on legalising the drug later this year.

Harvard Business School senior economics lecturer Jeffrey Miron says it could be a good way to boost the state's public funds.

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