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Tax debate at heart of Calif. deficit

April 30, 2008 12:00:00 AM PDT
Republicans at the state capitol are calling for no new state taxes as they mark what's called Tax Freedom Day. But with the state facing a now estimated $20 billion budget deficit, some say not raising taxes would be the wrong move.Congratulations, California workers -- starting Wednesday, you're finally working for yourself. Everything you've earned the first four months of this year will only cover your 2008 taxes.

Republicans used Tax Freedom Day to lob another salvo to Democrats about the upcoming negotiations to solve the budget crisis.

"Don't raise taxes on Californians. Enough is enough. Families are struggling as it is," said state Senator George Runner, R-Lancaster.

But the state is struggling, too. Governor Schwarzenegger's bombshell this week that the budget deficit could be as high as $20 billion shows a deepening crisis. He's already proposed 10 percent across-the-board cuts, including education.

The California Faculty Association said on Wednesday cuts to Cal State campuses would diminish the quality, and raising taxes would save them.

"What kind of state do we want to be? What will California be like in the 21st century?" asked Professor Lillian Taiz from the California Faculty Association.

The state Franchise Tax Board is still adding up the revenues from income and corporate taxes filed by the Apr. 15 deadline. The final numbers will say exactly how much money California really has. Given the persistent housing fallout and a slow economy, the news is not expected to be good, setting the stage for a protracted budget battle that could last into the fall.

"Democrats will oppose cuts. Republicans will oppose tax increases. But you can't close a $20 billion gap without significant cuts and significant increases in taxes," said John Syer, Ph.D. and political analyst.

Some political watchers say this budget will be the biggest test of Governor Schwarzenegger's leadership, whether he can get both sides - determined on being stubborn - to give in a little.

 

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