Democratic lawmakers this week unveiled a new proposal for California’s overdue budget, which did not garner any of the Republican support that would be needed for the spending plan to pass.
The centerpiece of the plan involves cutting the state sales tax while increasing income tax rates for most brackets and hiking the vehicle license fee, which is a property tax.
That would generate $1.8 billion this year for the general fund, but because state income taxes and local property taxes are deductible from federal taxes, the Democrats say most taxpayers would see “net tax relief.”
The Democrats also proposed an oil severance tax that would generate $600 million, and want to postpone two business tax breaks, to save about $2 billion this year.
Those funds would be applied to avoid or reduce cuts in Gov. Arnold Schwarzenegger’s budget proposal, primarily for schools and social services.
“This is not a budget to celebrate, it is a budget of necessity,” Senate President pro tempore Darrell Steinberg said Tuesday. “This is a responsible, balanced, and fair proposal that should be implemented, and quickly.”
Democrats have majorities in the Legislature, but it takes two-thirds of votes in each house to adopt a budget, giving the GOP minority leverage.
Republican leaders called the new Democratic proposal dead on arrival.
They support Schwarzenegger’s budget, which has no tax increases and many more cuts than Democrats want.
“We need to reduce spending so that we can balance the budget without raising taxes,” said Senate Republican Leader Dennis Hollingsworth.
Schwarzenegger has said he won’t sign a budget unless it is packaged with reforms to state employee pensions and a bigger rainy-day fund.
