Gov. releases latest budget fix

December 31, 2008 10:15:44 PM PST
Wednesday, the governor's finance team released his plan to solve the deficit problem.

"The governor doesn't feel it's appropriate when you have a problem of this size to wait for an arbitrary deadline," state finance director Mike Genest said.

With that, Genst unveiled Gov. Arnold Schwarzenegger's seventh budget proposal, aimed at closing a projected $41 billion deficit.

"We have people working day and night, weekends, the only day they got off was Christmas and some of them didn't even get that off; we have gone as fast as we can to get these solutions out there," Genest said.

The plan borrows heavily from Schwarzenegger's previous proposals, all of which have been rejected by lawmakers.

"We can't cut our way out of this problem, we have to look at a way to raise revenue and to unfortunately impose deeper cuts, but we need a 50-50 split," Assembly Speaker Karen Bass said.

Schwarzenegger's plan calls for $14.3 billion in tax increases and other revenue generators and $17.4 billion in budget cuts over the next 18 months.

Education faces $2.1 billion in cuts this year, less than earlier projections, but the governor proposed an additional $3.1 billion in education reductions next year.

Part of that could be accomplished with a proposal to reduce the K-12 school year by one week.

Schwarzenegger's plan would raise the state sales tax from 5 to 6.5 percent and expand sales taxes to veterinary services and car and appliance repairs.

The proposal would also decrease the dependent income tax credit from $309 per child to $103 and increase vehicle registration fees.

"Since the legislature didn't act in November, we lost $3 billion in solutions," Schwarzenegger's spokesperson Matt David said.


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