Gov. Arnold is expected to declare a state of emergency under never-before-used rules that would force lawmakers into a special session. Under the action, the Legislature would have 45 days to find ways to plug an estimated $14 billion budget shortfall. If they can't, they'll be prohibited from doing any other legislative work or adjourn until they do. Big-time budget cuts are a certainty, though higher taxes will be a tougher sell. Here's more from the San Jose Mercury News:

Voters gave California's governor the power to declare a fiscal emergency when they passed Proposition 58 three years ago. Today's announcement marks the first time Schwarzenegger has exercised the authority. The proposition permits the governor to declare an emergency when revenues are substantially below what was anticipated upon signing of the budget. The state spending plan for the 2007-08 fiscal year that began July was signed in August. But since that time, the economy has softened, due largely to a downturn in the housing market.