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Sales tax to solve budget crisis?

August 4, 2008 12:00:00 AM PDT
Governor Arnold Schwarzenegger (R-Calif.) is pitching an immediate sales tax increase to solve the state's $15-billion budget deficit.This is the second month the state has been operating without a budget, so Governor Schwarzenegger is proposing a temporary one-cent sales tax increase. Governor Schwarzenegger's office has not commented on any specifics, but a spokesperson told Eyewitness News that any agreement must include budget reform.

Governor Schwarzenegger recently cut employee salaries and laid off thousands of part-time employees in lieu of a budget.

There are reports that the sales tax hike was discussed in private negotiations with legislative leaders. If it is approved, with spending restraints, it could take effect immediately.

The governor has consistently opposed any tax increase. However, in negotiations with legislative leaders, Schwarzenegger discussed raising up to $5 billion a year with the increase.

California is now 35 days into the fiscal year with no approved budget.

State employees and the State Controller are fighting the governor's plan to cut salaries until there is a budget in place.

The sales tax hike would remain in effect for several years, gradually decreasing until the increase terminates.

The proposal is an apparent attempt to force Democrats and Republicans to move on a budget.

Under Republican Governor Pete Wilson, there was a temporary half-cent sales tax increase to get through another budget crisis. That temporary increase, eventually, became permanent. - Get more L.A. breaking news, weather, traffic and sports
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