State leaders reportedly near budget deal, taxes could rise

Berdoo isn't alone in its budget problems.

A Los Angeles Times article had more information about the potential tax hikes. The Times reports that Sacto officials are talking about doubling the car tax, raising sales and gasoline taxes and even creating a tax on paying tax, as "Californians would pay a new surcharge on their personal income taxes, amounting to 2.5% of their total tax bills."

By JUDY LI
Associated Press Writer
SACRAMENTO (AP) -- Gov. Arnold Schwarzenegger and legislative leaders were scheduled to resume talks Wednesday on a fix to California's massive budget deficit, as Democrats said they wanted to vote on a proposal by week's end.

Democrats and Republicans indicated they were close to a compromise but noted that a few key details had to be worked out before they could agree on the plan to deal with a shortfall pegged at $42 billion through June 2010.

"They're closing on a few key details. There is not an agreement at this point," said Schwarzenegger's spokesman, Aaron McLear.

The state Senate leader characterized the negotiations in much the same way.

"There is no deal, but there is a common framework," Senate President Pro Tem Darrell Steinberg, D-Sacramento, said Wednesday before a luncheon address to the Sacramento Press Club.

Friday will mark the 100th day since the governor called a special session to deal with the state's fiscal crisis. California has halted thousands of infrastructure projects, put a hold on tax refund checks and delayed payments to state contractors.

The Schwarzenegger administration also has instituted twice-a-month furloughs for some 200,000 state employees and has said it will begin the layoff process if no deal is reached by the end of the week.

Lawmakers have been at odds over how to close the gap. Democrats want tax increases with minimal cuts to social services while Republicans want a spending cap and business-friendly provisions in exchange for tax increases.

While few details are available about the points being negotiated, tax increases are expected to be part of the mix.

Elements of a potential budget package call for temporarily increasing the state sales tax by 1 percent, raising the fee for licensing vehicles to 1.15 percent and raising the personal income tax across the board. In exchange, a Republican-sought spending cap would limit the amount the state can spend each year based on a predetermined formula.

The Democratic leaders, Steinberg and Assembly Speaker Karen Bass, have said they hope to bring a budget plan to a vote this week.

"While Speaker Bass is pleased that enormous strides have been made toward finalizing a budget agreement, the fact that staff continue to work out language and details on several different items means that from her perspective there is not yet a final deal," Bass' spokesman, Shannon Murphy, said in a statement.

The Democratic and Republican legislative leaders met with Schwarzenegger Tuesday night and were schedule to meet with him again later Wednesday.

"When all four leaders left last night, they said they're getting closer but there's still more work to do," said Sabrina Lockhart, spokeswoman for the Republican caucus in the Senate. "Nothing has changed this morning."

Associated Press Writer Juliet Williams contributed to this report.