Confirming what's been discussed inside the state Capitol for the last few weeks, Governor Arnold Schwarzenegger announced today that he will declare a fiscal state of emergency early next month and will call a special session of the Legislature to resolve it.

The low-key announcement via press release this morning sets the stage for what will easily be the most bleak state budget season since the one Schwarzenegger inherited upon taking office in 2003.

"I firmly believe that the way to solve our chronic budget problem is with fiscal restraint," said the governor in a written statement. "We will figure out how to get spending in line with revenue."

Of course, that's easier said than done. Critics have pointed out that none of the budgets the governor has signed in the last four years have had actual revenues (and not borrowing or reserves) match actual expenses.

An interesting nugget inside this morning's announcement: an official projection from the administration that the current year budget shortfall will total $3.3 billion. That's about $1.3 billion more than the shortfall estimated last month by Legislative Analyst Elizabeth Hill. And it makes conservative estimates of the budget problem over the next 18 months now total more than $11 billion... though the governor has reportedly told some groups the problem is closer to $14 billion.

Schwarzenegger said that he will make the formal declaration on January 10, the same day he unveils his proposed 2008-09 budget. This is the first time a fiscal emergency will be declared under the powers given to the governor in 2004's Proposition 58. The governor also said he's now preparing emergency legislation to send to the Legislature once the special session convenes.