Lawmakers resume budget battle -- taxes vs. cuts


Refusing to stomach another round of deep cuts or elimination of California's social programs, Senate Democrats are proposing nearly $5 billion in additional taxes to save some of them.

One by one, interest groups testified at a budget hearing about how the poor, disabled and elderly will suffer without government services.

"That's not the California I grew up in and it's not the one we want to see in the future," State Sen. Denise Ducheny, D-San Diego, said.

Democrats want to suspend $2 billion in corporate tax breaks that could help companies create jobs.

The higher vehicle license fees and income tax surcharge that were supposed to be temporary would be extended, adding about $1 billion each to the state budget, every year for the next two years.

The proposal also includes an alcohol tax that adds up to 2 cents per drink.

Republican votes are needed for tax increases, and they say they're tired of Democrats trying the same thing year after year ... especially since $12.5 billion in higher taxes were already approved last year.

"People can't afford Legislators reaching into their pocket and treating them like an ATM," State Sen. Tony Strickland, R-Thousand Oaks, said.

Assembly Democrats are trying a different tactic. They want to avoid the budget cuts mostly by borrowing nearly $9 billion, using the Beverage Recycling Fund as collateral, a proposal that does not need GOP votes.

"While it doesn't solve the long term problems, it will get us through a difficult year and get us on a pathway to economic recovery," Assm. Speaker John Perez, D-Los Angeles, said.

"It's just absolutely funding the broken budget; it's not fixing anything in the budget," Assm. Jim Nielsen, R-Gerber, said.

Assembly Democrats plan on repaying the $9 billion with an extraction tax on oil companies that drill off the California coast but Gov. Arnold Schwarzenegger has said he will not sign a spending plan unless t includes budget and pension reforms without raising taxes.

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