Posted on 05/14/2002 1:06:23 AM PDT by kattracks
SACRAMENTO, Calif., May 14, 2002 (AP Online via COMTEX) -- Two things hang in the balance as Gov. Gray Davis tackles the state's largest-ever budget shortfall: his state's economic health and his political future.
On Tuesday, Davis was to reveal his proposal to attack California's $22 billion budget deficit as he fights for a second term. The plan is expected - at the very least - to contain deep cuts, heavy borrowing and postponed spending.
The looming question is whether he will propose to raise taxes as he still nurses the bruises his popularity took during last year's statewide energy crisis.
California lawmakers already are preparing for a fight. Democratic leaders insist the staggering shortfall can't be papered over without tax hikes while Republicans say they won't support a budget that includes them.
"There's either going to be tax increases or we are going to eliminate programs like shutting down prisons and letting prisoners out," said Senate budget chairman Steve Peace, a Democrat.
Republicans said they will oppose higher taxes, but declined to offer specifics.
"We are not set in stone on any particular set of solutions. We are set in stone on some things that we believe we should not tinker with," said Republican Assemblyman John Campbell, budget committee vice chairman.
Davis proposed a $100 billion budget in January that included an array of budget cutting measures, and lawmakers approved $3 billion in midyear cuts in January. But sagging tax revenues have led the state's accountants to predict a shortfall equaling more than one-fifth of the budget.
California is one of many states running short of money. More than 40 states are facing shortfalls totaling about $40 billion, the National Association of State Budget Officers estimates. Several other governors who face re-election - including Republican Florida Gov. Jeb Bush - are stuck in similar straits. Many have proposed tax increases.
California's Democratic governor, who is up for re-election in November, has repeatedly said he won't increase taxes to balance the budget - even though the gap has nearly doubled from an estimated $12.5 billion in January. Assembly budget chairwoman Jenny Oropeza, a Democrat, said Monday that "the discussion has clearly changed."
Some lawmakers have urged Davis to raise the state's car tax, which has been cut by two-thirds since 1998. Davis likely will propose to widen a plan to borrow from future revenue expected from a 1998 settlement with tobacco companies.
And health care activists said they are bracing for deep cuts in the state's Medi-Cal reimbursements to health care providers and other health and welfare programs. Health care officials also fear Davis will delay a plan until at least January to include parents in the state Healthy Families insurance program.
In the recession of the early 1990s, Republican Gov. Pete Wilson used a combination of spending reductions and tax hikes to attack a $14 billion deficit. But Wilson didn't face voters until two years after the worst of the budget crunch, when the economy had perked up.
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On the Net:
By ALEXA HAUSSLER Associated Press Writer
Copyright 2002 Associated Press, All rights reserved
"There's either going to be tax increases or we are going to eliminate programs like shutting down prisons and letting prisoners out," said Senate budget chairman Steve Peace, a Democrat.
It is so nice to see that responsible people in the budget process are looking out for the public health and safety of the citizens of California. (/sarcasm)
It is going to get ugly.
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