Governor Arnold Schwarzenegger released details of next year’s budget. Full details aren’t available but it appears that this budget would cut the number of state employees, increase the sales tax by 1.5%, add new taxes on alcoholic beverages, and cut by 1/3 the amount of the dependent credit on income tax returns. There are also funding shifts from the new mental services tax and major cuts in spending.
Republican legislators say that this proposal is doa because of the tax increases. State Senate President Darrell Steinberg (D-Sacramento) considers the mental service tax money shift to be a “non-starter.”
Meanwhile, nothing has been done to bridge the current year’s budget gap. There are rumors that legislative leaders will join the parade of state officials seeking a bail-out from Washington. Negotiations will likely resume tomorrow now that the Holidays are over.
As I’ve said before what will be in the agreement is very clear. There are going to be major budget cuts in Sacramento. Some programs/commissions/departments/etc. are going to be eliminated; that’s the only way that the budget can be balanced for real. There are going to be some tax increases, too (probably a 0.75% increase in the sales tax). Then again it’s always possible that our elected representatives will do some more work with smoke and mirrors.