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Published on Wednesday, May 14, 2008
By Harrison Sheppard
Faced with a faltering economy and a worsening budget deficit, California Gov. Arnold Schwarzenegger, for the first time in his five-year tenure, opened the door Wednesday to a potential tax increase in his proposed 2008-09 budget.
Schwarzenegger said he will ask lawmakers and voters to authorize the state to borrow up to $15 billion against future state lottery earnings over three years - but if that fails on the November ballot it would trigger an automatic 1 percent increase in the statewide sales tax for at least three years.
The proposal contrasts with promises Schwarzenegger has made from the beginning of his term to refuse to raise taxes, while also ending borrowing for normal government operations.
"The (deficit) problem we face today is still $17.2 billion, so our crisis is real and it is very serious," Schwarzenegger said at a press conference in Sacramento
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