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Dems want tax increases to avoid service cuts

May 25, 2010 12:00:00 AM PDT
The battle of the state budget is intensifying as Democrats come out with new tax-increase proposals to avoid cuts to vital services. They are running into strong opposition from Republicans and the governor.Governor Arnold Schwarzenegger likes to call this time of year "the annual Kabuki theater," when the budget drama heats up and lawmakers start offering alternatives to the governor's plan.

Refusing to stomach another round of deep cuts or elimination of California's social programs, California Senate Democrats are proposing nearly $5 billion in additional taxes to save some of them.

One by one, interest groups testified at a budget hearing about how the poor, disabled and elderly will suffer without government services.

"That's just not the California that I grew up in and I don't think it's the one we want to see in the future," said state Sen. Denise Ducheny (D-San Diego).

Democrats want to suspend $2 billion in corporate tax breaks that could help companies create jobs.

The higher vehicle-license fees and income-tax surcharge that were supposed to be temporary would be extended, adding about a billion dollars each to the state budget every year for the next two years.

The proposal also includes an alcohol tax that adds up to 2 cents per drink.

Republican votes are needed for tax increases, and they say they're tired of Democrats trying the same thing year after year, especially since $12.5 billion in higher taxes were already approved last year.

"People just can't afford legislators reaching in their pocket and treating them like an ATM machine," said state Sen. Tony Strickland (R-Thousand Oaks).

"We are not imposing any broad-based tax increases," said state Assembly Speaker John Perez (D-Los Angeles).

Assembly Democrats are trying a different tactic. They want to avoid the some of the budget cuts mostly by borrowing nearly $9 billion, using the California Beverage Container Recycling Fund as collateral, a proposal that doesn't need GOP votes.

"While it won't solve the long-term problems, it will get us through a difficult year and set us on the pathway to economic recovery," said Perez.

"It's just absolutely funding the broken budget. It is not fixing anything in the budget," said state Assm. Jim Nielsen (R-Gerber).

Assembly Democrats plan to pay back that $9 billion with an extraction tax on oil companies that drill off the California coast. But it doesn't matter: Gov. Schwarzenegger says he will not sign a spending plan unless it includes budget and pension reform, without raising taxes.


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