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Governor Releases Budget Proposal Early

Audio

Aired 4/19/09

Governor Schwarzenegger's Administration has released a budget proposal that aims to eliminate the state's $40 billion shortfall. It includes billions in cuts and tax hikes. It's an unusual move. The Governor was expected to release the plan himself next week, but instead his Finance Director rolled it out Wednesday. Marianne Russ reports.

Schwarzenegger's Finance Director, Mike Genest didn't mince words when he laid out the spending plan for reporters.

Genest:  "This is probably the worst budget situation he state has ever faced. We're going to have to cut programs, raise taxes and borrow to the tune of 41.6 billion dollars to bring the state back into balance."

The Governor's plan covers the next 18 months, rather than one fiscal year as budgets typically do.

It includes much of what he's already called for: billions in cuts to education and social services; a temporary hike in the state sales tax, expanding the sales tax to services; a nickel-a-drink tax on alcohol; and a tax on oil production. And it includes one new one: A reduction in the tax credit for dependents.

Another key difference: It calls for an expensive kind of borrowing that state officials usually try to avoid. Governor Schwarzenegger wasn't there for the rollout. It's believed he was vacationing out of state.

Democratic leaders say a major problem with the Governor's plan is that it has no Republican support. GOP lawmakers have pledged not to raise taxes. And so far, this new plan doesn't seem likely to change their minds.
 

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