Schwarzenegger Holds To Tax Pledge In Revised Budget Plan

by Leroy Baker, Tax-News.com, New York

17 May 2004

The Governor of California, Arnold Schwarzenegger presented his budget proposals last Thursday which aim to narrow the state’s $14 billion budget deficit without resorting to tax hikes.

Instead, the revised budget relies heavily on a one-off $15 billion bond issue approved by the voters in March, and improving economic fortunes in a state that could claim a place at the G7 table as one of the world’s largest economies.

The governor’s task has also been made somewhat easier by stronger than expected tax revenues this year, and an unexpected windfall from a recently ended tax amnesty that netted the authorities around $1 billion.

However, Schwarzenegger faces tough opposition to his plan from Democrats, especially the state Treasurer Phil Angelides, who believes that the budget plan merely tinkers at the edges of the problem.

He has called for fresh tax-raising measures including higher taxes on the wealthy and the introduction of a new state sales tax to last for three fiscal years.

Angelides, who is expected to run for the governorship, told reporters last week: "There is nothing in this budget that frontally attacks what is a fiscal cancer."

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