Governor Schwarzenegger is proposing a series of tax increases to fill an eleven billion dollar hole in the state budget. The Governor called lawmakers back for a special session to address the shortfall today. The centerpiece of his plan is a temporary one-and-a-half percent hike in the sales tax. He also wants to permanently expand the sales tax to services like car repair, veterinary care and sporting events.
In addition, he wants to tax oil pumped in the state and increase taxes on alcohol. Schwarzenegger says the decision was a tough one:
Schwarzenegger: I am not a believer in taxes, I am not a believer in increasing fees - it's just under these circumstances, it's necessary to do. I also don't believe to take a penny away from the programs, but it is necessary to do that to live within our means.
His plan calls for about $4.5 billion in cuts, too. That includes $2.5 billion to schools, and millions more to Medi-cal and other social service programs. Schwarzenegger says the housing slump, the dip in the stock market and higher unemployment have left the state with few choices.
