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California Governor Unveils Revised Budget

1 min readBy: Joseph Bishop-Henchman

This week, California Governor Arnold Schwarzenegger (R) unveiled a revised budget to reduce the state’s estimated $19 billion budget gap. From the Christian Science Monitor:

Governor Schwarzenegger’s proposed cuts are spread over many public programs, but the largest would eliminate the CalWORKS welfare program and do away with child care funding except for preschool and after-school programs, saving the state $1 billion and $1.2 billion, respectively.

State Democrats decried the plan, and promised another fight in the state’s legislature this summer. “The governor’s suggestions are clearly more reflective of a hyper-partisan political agenda than in finding real solutions to our problems,” said Assembly Speaker John A. Pérez in a statement. Democrats pointed out that Schwarzenegger’s plan doesn’t propose any taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. hikes, and leaves in place $2 billion in planned corporate tax breaks.

Here’s the breakout of the state’s $122 billion budget. In his announcement, Schwarzenegger argued again for tax reform:

We can’t continue on like we have here, with the income tax and capital gains taxA capital gains tax is levied on the profit made from selling an asset and is often in addition to corporate income taxes, frequently resulting in double taxation. These taxes create a bias against saving, leading to a lower level of national income by encouraging present consumption over investment. that shoots up and down. Over 50 percent of our revenues come from income and capital gains tax and that is very, very volatile.

So as long as we don’t fix that we can never promise the people certain things. And we should be able to go and look at the people and say, you will have from now on your increase of education funding every year. We should be able to go and say this to the state employees. We should be able to say this for the in-home services, for everybody, if we start creating a straight line based on inflationInflation is when the general price of goods and services increases across the economy, reducing the purchasing power of a currency and the value of certain assets. The same paycheck covers less goods, services, and bills. It is sometimes referred to as a “hidden tax,” as it leaves taxpayers less well-off due to higher costs and “bracket creep,” while increasing the government’s spending power. and population increase, then we will be safe and we will always see increases.

The San Jose Mercury-News has a timeline of California budget actions since 2003.

More on California here.