Bustamante Says California Should Raise Taxes $8 Bln (Update2)
Aug. 19 (Bloomberg) -- California Lieutenant Governor Cruz Bustamante said he would propose to raise taxes by $8 billion if he wins the governor's office in the Oct. 7 recall election, a plan he called ``tough love'' to fix the state's fiscal woes.
Bustamante, a Democrat, would raise income taxes on the wealthiest Californians to 11 percent from 9.3 percent, increase the state's taxes on alcohol and cigarettes and more frequently assess the value of commercial property for tax purposes, a measure that would require an amendment to the state constitution.
``I know this is a tough proposal. I call it `tough love,''' Bustamante said at a press conference outside his home in Elk Grove, California, a suburb south of Sacramento. ``But we've tried all the easy ways. There aren't any left and we can't borrow any more money.''
Bustamante is the top Latino officeholder in a state where almost a third of the population is Hispanic. A poll released Saturday by the Field Research Corp. shows that Bustamante and Republican actor Arnold Schwarzenegger are the two most popular choices to replace Governor Gray Davis should a majority choose to ousted him in the Oct. 7 election. Twenty-five percent of likely voters favored Bustamante and 22 percent backed Schwarzenegger, according to the poll.
``The simple truth is, we all got into this mess together. And we're all going to have to get out the same way: together,'' Bustamante said.
California is the most populous U.S. state and has an economy that generates more than $1.3 trillion a year, rivaling France in size. California has the lowest credit rating of any U.S. state and pays more than any other to borrow money because of the size of its budget deficit.
Record Deficit
Davis, whose popularity has sunk to a record low, earlier this month signed a $99.1 billion budget that deals with the state's budget deficit by cutting $11 billion in spending, borrowing $14 billion and pushing $8 billion of the shortfall into next fiscal year. The budget was signed 33 days after it was due because California Republicans vowed not to use tax increases to solve the state's financial problems.
Bill Simon, a Republican contender in the Oct. 7 election, has said he wouldn't raise taxes if he wins the state's top elective office. Schwarzenegger, who recruited billionaire investor Warren Buffett and former Secretary of State George Shultz as his top economic advisers, has said he would boost revenue by luring business to the state. He hasn't detailed how he would do that.
`On the Ballot'
Bustamante said he would raise the tax on cigarettes by $1.50 from the current 87 cents per pack, increase the levy on alcoholic beverages by 25 cents a gallon, and close loopholes that allow banks to use mutual funds to reduce the taxes they pay on investment income.
He also would roll back a controversial increase in the cost to register a car in California, a fee that was tripled in June to help fill the deficit. Under Bustamante's plan, the fee would only rise for automobiles worth more than $20,000.
Bustamante would cut $4.5 billion from state spending, including $2 billion in cuts he would let the legislature choose; and $2 billion saved by requiring companies to pay for health care coverage for all their workers.
In the California legislature, members of the Republican Party, while in the minority, hold enough seats to prevent a budget from passing. Bustamante said he would take the tax increases straight to the state's voters if the legislature refused to enact them.
``We'll put it - all of it - on the ballot all at once,'' Bustamante told reporters. ``And once and for all, we'll either get out of this mess together or we'll have no one else to blame but ourselves.''
Last Updated: August 19, 2003 15:20 EDT |
