CA may see more taxes, drastic cuts


Every estimate that has come in the last few weeks show that the budget deficit is worsening. There are very few places left for California to turn to for money that would ensure government services keep running.

Instead of feeling honored on this Veterans Day, some of California's disabled war heroes are worried.

Under Governor Schwarzenegger's budget cuts their caretakers would make minimum wage, opening the door for them to quit.

"My war is over. The Korean War is behind us," said war veteran Herb Meyer. "But now my war, my battle is here with the budget, with the Senate, the Assembly, with the Governor."

But California's budget situation isn't likely to change soon during this global financial crisis.

A new report out by the non-partisan Legislative Analyst says it's going to get worse, with the state deficit growing to $28 billion over the next year-and-a-half.

California Legislative Analyst Mac Taylor told ABC7, "We are in such severe fiscal straights that there are no good options left."

Taylor said the Governor's proposal of $4.5 billion in budget cuts, and roughly the same amount of new taxes and fees, is a good start.

The Governor's Press Secretary Aaron McLear pointed out some success but acknowledged the challenge saying, "When we first came in from the previous administration, the first deficit we saw was larger than what we're looking at now. But that doesn't make it any easier. This is still difficult and is going to require bold leadership and difficult choices."

Legislative Analyst Mac Taylor says more is needed. He suggests revenue boosters like nearly doubling the Vehicle License Fee to 1% and adding a 5% surcharge to the income tax.

He also thinks the state can cut expenses by raising the minimum grade point average for Cal Grants from 2.0 to 2.5, and letting non-lifer inmates out 30 days early.

With no quick end in sight to the economic mess, the leader of the Assembly thinks it's time to ask Washington for a bailout.

Democratic Assembly Speaker Karen Bass of Los Angeles says, "States need to be raised to the level of AIG, to the level of the banks, to the level of the auto industry. We can't let one of the world's largest economies go over the cliff."

Even if state leaders solve the $28 billion dollar shortfall, there will be a $22 billion dollar deficit projected every year until 2014.

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