The Sacramento Bee reports Governor Arnold Schwarzenegger and the states four legislative leaders (the Big Five) have reach a tentative budget agreement that will close the projected $42 billion budget gap through the end of the 2009-10 fiscal year.
The Bee says:
The plan includes $15.8 billion in spending cuts, $14.3 billion in taxes and $10.9 billion in borrowing, according to a budget outline obtained by The Bee.
Leaders are counting on federal stimulus money as the package approaches closure in Washington. If California receives at least $10 billion, more than half of that money -- $5.5 billion -- would eliminate the need for a short-term loan, while $1.8 billion would eliminate taxes and $1.2 billion would eliminate spending cuts.
The plan would raise sales taxes by 1 cent on the dollar, increase income taxes across the board and hike the vehicle license fee from the current 0.65 percent of the vehicle's value to 1.15 percent. The taxes would last a minimum of two years. If the federal stimulus money arrives, the income tax increase would be reduced.
The proposal would cut the state's dependent credit in half, raising taxes for parents and those who take care of elders.
According to the Bee, the state legislature will vote on the agreement Friday, though a few details have yet to be worked out. The Bee's article also states that the deal will rely on $10.9 billion in more borrowing, this time against future state lottery revenues. The borrowing will have to be approved by California voters.
There will also be a $8.9 billion cut in state education spending, though Sacramento will ask voters to change state law to allow the cuts in education to be restored at a later date. $5 billion of education cuts will come from K-12 spending (Claremont Unified better batten down the hatches). The state will also completely cut funding for local transit agencies - this means you, Foothill Transit.
In addition, Schwazenegger would get some of the changes in state environmental laws he has sought to spur construction. Another concession to Republicans is the institution of a state spending cap and the creation of a rainy-day fund.
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