Even some Republicans are now saying there's no way to balance the budget without raising taxes.
We have a much better idea of just how much those tax increases would cost you. We've been digging into the numbers to see how you would be affected.
Shopping is where Californians will really feel the hit, especially in counties where the sales tax would go over 10 percent. But brace your wallet for more pain.
Lori Sablan and her husband are expecting their second child in a month. Like most families of four, surviving in this economy means having to tighten their belts.
"Definitely, we don't go anywhere unless they're free, like the park or the library," said Sablan.
Most families agree they can't afford the new taxes state leaders are talking about. The biggest proposals on the table include:
If passed, these taxes alone would cost the average family more than $1,000 a year. The money will help keep government services like schools, healthcare and public safety running. But some wonder how they can afford paying Sacramento another $1,000 a year.
"I think they're going to have to come up with a different plan. It has to be less," said concerned mother Desalene Jones.
Many lawmakers don't want to raise taxes in this economy, but the state finances are so bad, they say they really have little choice.
"Our challenge then is how do we raise revenue? How do we raise taxes in a way that cause the least amount of damage to people," said Incoming Senate President Senator Darrell Steinberg (D) Sacramento.
Lori says every tax is painful.
"With the foreclosures going on, you're concerned even about keeping a job, increasing taxes is definitely one more thing that's going to keep you up at night," said Sablan.
The average income and the cost of living are higher in the Bay Area, so that tax bill will be even bigger.