AP Associated Press
November 6, 2008 12:30 pm
SACRAMENTO, Calif. - Gov. Arnold Schwarzenegger on Thursday proposed $4.4 billion in new taxes and a similar amount in spending cuts to deal with California's worsening fiscal crisis, saying, "We must stop the bleeding."
Much of the new revenue would come from a 1.5-percentage-point increase in the sales tax; the Republican governor described the hike as temporary but did not say how long it would last.
Just six weeks ago, Schwarzenegger signed an overdue state budget that was intended to close a $15.2 billion deficit. The rapid pace of decline in the national and state economies since then has reopened an $11.2 billion gap that threatens to widen even further.
The governor often has characterized California's budget problems as being caused by runaway spending, rather than a lack of tax revenue, but he said Thursday that the severe financial crisis has flipped that.
"It is now a revenue problem rather than a spending problem," Schwarzenegger said.
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