Taxing Budget Proposals

July 18, 2008 12:00:00 AM PDT
Two proposals by the governor to help balance the state budget could have a taxing impact.The governor is looking at plans which would either raise the state sales tax, or dip into a fund that voters wanted to be untouchable.

Under a complicated plan being devised behind closed doors, the state would borrow $2-1/2 billion from transportation and local government funds to help solve California's budget crisis. The transportation community is especially livid because voters said they don't want that happening anymore.

Mark Watts, Transportation Advocate, says "It would have a devastating effect on highway programs and transit programs across the state. We're just wondering what part of 'NO!' don't they get."

The law requires any borrowing of those funds to be paid back within three years. With the state so broke, Governor Schwarzenegger told the Los Angeles Times raiding those funds is a bad idea because it would probably force them to raise the sales tax. But ... he won't take the idea off the table.

Aaron McLear, Governor's Press Secretary, says "It's not necessarily a sales tax. I'm sure there's a number of bad things that could happen, whether it's a sales tax or some other kind of tax. But regardless, you have to pay that money back. You can't steal that money without paying it back."

The Senate President hates the idea too because it eventually takes away money from other programs if some kind of tax isn't approved to pay back the loan. Republicans have refused to support any tax hikes.

Sen. President Don Perata, D-Oakland, says "Democrats will not stand for more borrowing. We've borrowed and borrowed. What happens is you have to borrow the money and that you have to pay it back with school money, healthcare money and money for our elderly."

With Californians pinching their pennies in this economy, the idea of a higher sales tax makes many roll their eyes.

Abraham Perez, Opposes Higher Taxes, says "People are getting fired. People are losing their homes. It should be a time when the government is helping people. And they want to put more money out of our pockets? How is that fair?"

And stopping or delaying road projects is unpopular too because Californians want better commutes.

Just because so many people are against the borrowing scheme, don't count it out. It's one of the few budget-solving ideas Republicans support. At this point, the Governor and Democrats might be swayed just to get a budget in place, a budget that's now almost a month late.
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