preview.tinyurl.com/6gespy -> www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/08/04/BA2212523E.DTL&tsp=1
California Governor Arnold Schwarzenegger signs an execut... The Question Agree with the governor's one-cent sales tax hike proposal? Yes, have to get a budget somehow No, will only make recession worse Isn't "temporary tax hike" an oxymoron?
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Arnold Schwarzenegger has proposed a temporary, one-cent increase in the state sales tax along with long-term budget reforms in an effort to break the stalemate in budget negotiations that have been stalled for more than a month, legislative sources close to the talks said Monday. In San Francisco, for example, sales taxes would increase from 85 percent to 95 percent. The tax increase would require a two-thirds vote in both houses of the Legislature, along with the governor's signature, before it could take effect. Lawmakers reacted to the governor's proposal along party lines. Democrats said they were encouraged by it, while Republicans said they cannot support the tax increase. The increase would bring the state about $4 billion in what's left of the current fiscal year, which began July 1, and as much as $6 billion in each of the next two years, one source said. Sales tax on gasoline would be exempted from the increase, the source added. Schwarzenegger's proposal is a change of heart for the Republican governor, who had opposed raising taxes until recent months, when he said he would consider all ideas to help resolve the budget impasse. Aaron McLear, a spokesman for Schwarzenegger, declined to confirm the governor's tax proposal. "We have been pushing for a compromise between legislative leaders, and we will continue to push for a budget deal that includes budget reform," McLear said. Looking ahead Schwarzenegger has been pushing for long-term changes in the state's budgeting, such as placing limits on spending, setting aside a rainy-day fund, and giving the governor the authority to make midyear cuts when the state faces a fiscal crisis. Assemblyman John Laird, D-Santa Cruz, who is chairman of the Assembly budget committee, said he commends the governor for considering a temporary sales tax increase. "We all along have said everything should be on the table," he said. Assembly Speaker Karen Bass, D-Baldwin Vista (Los Angeles County), echoed the sentiment in a written statement. Senate President Pro Tem Don Perata, D-Oakland, declined comment, a spokeswoman said. But Republican lawmakers said they remain opposed to raising taxes as a way to help close the state's gaping budget hole. "We continue to be opposed to broad-based rate increases, especially in the face of a weak economy. We do not think that's the way to go," said Assemblyman Roger Niello, R-Fair Oaks (Sacramento County), vice chairman of the budget committee. Senate Republican leader Dave Cogdill of Modesto said exchanging budget reform for raising taxes is unacceptable. "We can balance this budget without tax increases, and people should not have to pay dearly with their hard-earned tax dollars to finally make the state implement real budget reform with real spending constraints," he said in a written statement. Bay Area residents were split over whether increasing the sales tax is a good way to help mend the state's fiscal crisis. Increasing the sales tax is "regressive, which is bad, but it's a solution that might do the job," said Joseph Hearst, 73, of Danville. Paul Spiegel, a 52-year-old San Francisco attorney, said he's skeptical that the tax increase would be temporary. "The Golden Gate Bridge toll was supposed to be temporary too, intended to disappear when the bridge was paid off. When was the last time you saw a temporary increase in sales tax?" Lolita Roxas, 52, of Oakland said she would be able to support the tax increase if she had assurances the money "was going to fund good projects. But nobody knows if the money will go to the right place, so I don't know if I can support it." Jonathan Owens, 28, of Berkeley said paying more in sales tax would be better than laying off state workers or cutting their pay to minimum wage, which the governor ordered last week. A state budget for the current fiscal year is 36 days late as of today as a result of the impasse between Schwarzenegger and the Democrat-controlled Legislature. The budget requires a two-thirds majority vote in both houses of the Legislature to pass. But the order faces legal, political and administrative challenges. State Controller John Chiang, who has the responsibility of disbursing paychecks, has promised to challenge the governor's plan, while the largest state employees union, the Service Employees International Union Local 1000, filed a lawsuit against the governor and filed a complaint with the state Public Employment Relations Board. Arnold Schwarzenegger hopes to break the deadlock by raising state sales taxes by 1 cent for three years in exchange for long-term fixes to the state's budget problems. Legislative leaders' reaction: Split along party lines - Democrats open to the tax increase and Republicans opposed. Layoffs, pay cuts: To save the state's dwindling cash supply, Schwarzenegger has ordered layoffs of more than 10,000 temporary workers and pay cuts to federal minimum wage for another 200,000 workers. Chronicle staff writer Erin Allday contributed to this report.
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