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Schwarzenegger Attempts to Fix State Budget, Round 4

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Gov. Arnold Schwarzenegger may be out of state vacationing, but his people proposed yet another solution--their fourth--to the state budget problem, expected to reach a $40 billion deficit if nothing is done in upcoming months. Today's proposal combines a previous ones with more new ideas, the Sacramento Bee finds:

That plan called for a temporary increase in the state sales tax, expanding the sales tax to cover some services, a nickel-a-drink alcohol tax, a new tax on oil production and a $12 hike on vehicle registration fees. It also called for $15.4 billion in spending cuts, including requiring state employees to take two-days-a-month unpaid furloughs through June 30, 2010 and give up two paid holidays each year.
The new elements include reducing the dependent care exemption on state income tax returns from the current $309 per dependent to $103; carrying over some of the deficit into the 2010-11 fiscal year; borrowing funds from voter-created programs that service the mentally ill and pre-kindergarten children's health services; changing the operating rules for the state lottery in an effort to make it more profitable, and borrowing $4.7 billion from the private sector.

The plan will also allow school districts to reduce the 2009-10 school year by five days which could save the state $1.1 billion.