Declaring a “fiscal emergency” in California – the state facing $11.2 billion budget deficit - Governor Arnold Schwarzenegger on Monday called a special session of the state legislature to deal with the crisis. The session will continue till they agree on a way to trim the alarming budget deficit.

The governor can declare a fiscal emergency if he determines that revenue will not meet budget estimates. Lawmakers then have 45 days to pass legislation dealing with the deficit, and send it to the governor. If that January 15 deadline is missed, then the Legislature has to stay in session, without considering any other bills, until an agreement is reached.

Schwarzenegger’s call for the session comes on the day that an economic panel declared that the US has been in recession since December 2007, and two months after the California budget was approved after 85 days of crisis between him and the state assembly. At that time, an agreement reached seemed to temporarily solve the problem.

At a Los Angeles press conference, Schwarzenegger said that unless an immediate action is taken, the state is headed for a fiscal disaster, in which it could run out of money to pay its bills by late February. He compared the growing deficit, which could reach $28 billion by 2010, to an avalanche gaining momentum, and he slammed the Legislature, Democrats and Republicans both, for not coming up with any solutions during a special session that ended November 25.

Schwarzenegger said: “We must act now to address the current year revenue shortfall of 11.2 billion dollars and we must implement an economic stimulus package to help retain and create jobs, keep Californians in their homes and fix the state’s Unemployment Insurance Fund.”