Special Report: Global Financial Crisis
LOS ANGELES, Nov. 6 (Xinhua) -- California Governor Arnold Schwarzenegger
unveiled a plan on Thursday for a combination of deep cuts in services and
revenue increases to solve state's budget shortfall which has reached 11.2
billion dollars.
This action plan was designed to "get our budget back on track, invigorate
our economy and generate jobs for the state's unemployed," Schwarzenegger said.
Schwarzenegger's proposal calls for a temporary increase in the state sales
tax, from 5 percent to 6.5 percent, which will generate additional sales tax
revenues of 3.219 billion dollars in2008-09 and 6.606 billion dollars in 2009-10
for the General Fund.
The governor also called for additional revenue increases including
broadening the sales and use tax to include certain services, imposing an oil
severance tax upon any oil producer that extracts oil from the earth or water in
this state and increasing the alcohol excise tax by five cents a drink.
The plan also includes cuts of 2.5 billion dollars from schools and
community colleges, cancellation of dental insurance for poor adults on the
state's MediCal program and reduction in subsidies to the aged, blind and
disabled. California's welfare subsidies would also be reduced.
The action "must be taken up as quickly as possible in order to prevent a
cash crisis that will jeopardize vital state services" and to wipe out a budget
shortfall that is expected to swell to more than 24 billion dollars by the
middle of 2010, he said.
"In the six weeks since I signed our last budget the mortgage crisis has
deepened, unemployment has increased and the stock market has lost almost 20
percent of its value," Schwarzenegger said. "We have drastic problems that
require drastic and immediate action -- we must stop the bleeding right now."
Schwarzenegger on Thursday opened an emergency session of the sitting
Legislature to deal with the budget shortfall. Lawmakers will have until the end
of the month to take action.
