Schwarzenegger May Perform U-Turn Over Tax Policy

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

02 April 2004

The Governor of the state of California, Arnold Schwarzenegger, has hinted for the first time that tax hikes may be unavoidable in order to repair the state’s battered fiscal finances.

"I'm going through wishful thinking that I'll never have to go there," Schwarzenegger told the Los Angeles Times on Tuesday. "Because I just don't like it. I try to work around and find ways so we don't have to do that. So that's the stage I'm in right now."

Schwarzenegger ousted the former governor of California, Gray Davies on a manifesto of spending cuts and a bond issue to reduce the state’s budget deficit, estimated at between $10 billion and $14 billion.

Until now, he has steadfastly refused to countenance the prospect of tax hikes, arguing that Californian taxpayers should not be punished for the economic mismanagement of the previous administration.

Schwarzenegger’s communications director was eager to put a different spin on the governor’s words, insisting that he was merely “expressing his optimism for a solution without taxes."

The governor indicated that he intends to review the budget forecasts in the coming weeks before deciding on a course of action. "When I look at the numbers, I can make up my mind about what that means," he explained.

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