Schwarzenegger proposes $4.4B in new taxes

November 6, 2008 6:41:52 PM PST
It's an emergency effort to deal with a new budget crisis. And the clock is ticking to get it done this month. The governor's plan would deal with the state's $11 billion deficit. The lynchpin of his proposal is a 1.5 percent temporary sales tax increase. That would raise the sales tax to over 10 percent for most Bay Area counties.

Lawmakers are back for a special session aimed at tackling the now $11.2 billion dollar budget deficit. They're pouring over the Governor's new proposal that would solve the shortfall by using a 50/50 mixture of cuts and new taxes.

"We have a dramatic situation here, and it takes dramatic solutions and immediate action. We must stop the bleeding," said Gov. Arnold Schwarzenegger (R) of California.

The normally anti-tax Governor will fill state coffers with $4.7 billion in new taxes and fees that'll hit average Californians, including:

  • a temporary 1.5% boost in sales tax
  • a tax on some services never before taxed, like vehicle repairs and veterinary visits
  • a new tax on amusement park and sporting event tickets
  • a 5-cent tax on drinks with alcohol.
  • and $12 more to register your vehicle.

    The Governor also wants to tax oil companies for every barrel they drill in California. Still, just like the last budget battle, Republican votes are needed to add any new taxes, and they are still in no mood to agree in this economy.

    "If the economy had a cold last spring like I do now, it has a full fever and a very bad flu now. Frankly, the worst thing we can do is impose burdens on the productive part of our economy by taxing them," said Assembly Roger Niello (R) of Sacramento.

    While Democrats like most of those ideas because they were originally theirs, they're leery about raising the sales tax, given the election results from Tuesday.

    "I'm from Los Angeles, and we just passed a measure to increase the sales tax as did many cities around the state. So that would give Los Angeles a two-cents sales tax increase which is quite a bit," said Assembly Speaker Karen Bass (D) of Los Angeles.

    The Governor's proposed cuts will hit every department: schools, healthcare programs, public safety, and prisons where he's calling for the early release of certain drug offenders.

    There is no wiggle room this time. They have to solve the budget shortfall by November 30th. If they don't, a crop of newly-elected lawmakers start in December, and it'll take time to bring them up to speed.


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