Schwarzenegger calls for sales tax hike, cuts in services
The governor's plan to deal with a budget shortfall would raise the tax by 1 1/2 cents on the dollar. He also wants a 5-cent-per-drink tax on alcohol, a $12 increase in vehicle registration fees and a
By Evan Halper and Jordan Rau
11:06 AM PST, November 6, 2008
Reporting from Sacramento — Gov. Arnold Schwarzenegger unveiled a plan today for a steep sales tax increase and deep cuts in services to wipe out a budget shortfall that is expected to swell to more than $24 billion by the middle of 2010.
The linchpin of the plan is the sales tax increase of 1 1/2 cents on the dollar, which could raise more than $10 billion through fiscal 2009-10. Such a tax is likely to face resistance from Republicans, who blocked a smaller increase proposed by the governor last summer and have vowed to continue to do so.
Schwarzenegger also proposed extending the sales tax to appliance and furniture repair, vehicle repair, golf fees, veterinarian services, amusement parks and sporting events. He proposed a 9.9% tax on the extraction of oil from California ground, the expansion of sales tax to some services, and a 5-cent-per-drink tax on alcohol. His plan also includes a $12 increase in annual vehicle registration fees.
The governor also wants a number of significant spending reductions, including cuts of $2.5 billion from schools and community colleges. And he proposed eliminating dental insurance for poor adults on the state's MediCal program and lowering subsidies to the aged, blind and disabled. California's welfare subsidies would also be reduced.
Sales tax in Los Angeles would shoot up to 10.25% if the governor's newest plan were to be approved. That would include a half-cent sales tax hike that Los Angeles voters apparently passed on Tuesday to fund transit projects. The statewide sales tax rate is 7.25%.
The governor said "drastic measures" are needed because the state has lost so much money in tax revenue since the Legislature passed the state budget in September.
"We are living in a different world now," Schwarzenegger told reporters this morning.
Schwarzenegger today opened an emergency session of the sitting Legislature to deal with the budget shortfall. Lawmakers will have until the end of the month to take action.
The new class of lawmakers, elected Tuesday, takes office Dec. 1. |
