Governor shares plan for California’s budget crisis

Gas taxes, lottery funds and a possible sales tax increase are a few of the ways Gov. Schwarzenegger plans to address California’s budget crisis after he unveiled his new spending plan Wednesday.

The governor proposed diverting $828 million in gas taxes to relieve budget issues, as well as major cuts to Health and Human Services.

“I know this is going to be very difficult,” Schwarzenegger stated, “but the absolute bottom line is we cannot spend money that we do not have, plain and simple.”

Other parts of the plan included using a modernization of the lottery to generate $15 million. He is calling for a constitutional amendment to establish a rainy day fund and to “securitize” future lottery revenues. If that plan fails or revenues fall short, the governor plans to enact a 1% sales tax increase.

The good news to educators was that the new spending plan announced the governor’s plans to fully fund Proposition 98, a major source of funding for schools, which will also keep state parks open and not release inmates early.

Newport-Mesa Unified School District spokeswoman Laura Boss said the district planned to proceed with the recommendation for budget cuts presented to the school board Tuesday, but officials are “proceeding with caution.”

Local lawmakers were pleased with the parts of the governor’s new spending plan, including reduced cuts to education funding, but there were still concerns.

“Now is not the time for more borrowing, a complicated scheme to sell the state lottery or a dangerous summary parole proposal,” Assemblyman Van Tran said. “As gas prices and grocery prices go up and home values go down, it is also not the time to raise taxes on hard-working families.”

State Sen. Tom Harman, who serves on the Senate Budget Committee, was critical of past spending he said has led to the large deficit.

“While California has continued to enjoy a period of increased revenue growth over the past couple of years, instead of wisely saving and reinvesting the tax revenue we gained over this period, the legislature has frittered it away on new programs and unnecessary expenses,” Harman said in a statement. “California legislators must wise up and understand that the time is now to cut wasteful spending and to enact common-sense reforms.”

Assemblyman Chuck DeVore said he was happy the governor axed plans to let inmates out of prison earlier but worried about rising sales taxes.

“The proposal does not address California’s out-of-control spending habits and it proposes a massive, automatic $6-billion sales tax hike — a kind of doomsday tax bomb on hard-working California families,” DeVore said in a written release.

Assemblyman Van Tran echoed Harman’s and DeVore’s concerns.

“I continue to be concerned that the state’s spending does not match its revenues. Each Californian lives on a budget, not spending more than they earn. The state should be following the examples set by these hard-working citizens and not spend more than we take in,” Tran said in a written statement.

— Brianna Bailey and Daniel Tedford