Schwarzenegger tries to force budget compromise

August 20, 2008 12:00:00 AM PDT
Gov. Arnold Schwarzenegger is moving to end the stalemate over a state budget by offering a compromise spending plan that calls for additional cuts and a 1 percent sales tax increase. In the past, the governor has said he is against raising taxes.

But with the budget two months overdue, he now says it's time to move beyond partisan ideology. He says Republicans and Democrats must find a middle ground between taxes and cuts to state programs.

California was supposed to have a budget in place by July 1, the start of the fiscal year, but lawmakers differ over how to close the $15.2 billion deficit.

Republicans have been adamant about not raising taxes, while Democrats proposed a combination of cuts and tax increases.

Schwarzenegger's latest proposal, released Wednesday, seeks an additional $2 billion in cuts and a temporary sales tax increase. The state sales tax would be reduced to something below its current level after three years.

The governor's plan also includes a formula for a rainy day fund to smooth out state spending when the economy declines.
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