California Governor Arnold Schwarzenegger has proposed a temporary but immediate hike in the state sales tax in order to close the state's 15.2-billion-dollar budget gap, it was reported on Tuesday.
The governor put forward the proposal during private negotiations with the Legislature's leaders and their staff over the weekend, the Los Angeles Times reported.
The proposal hinges on lawmakers agreeing to automatic spending restraints and new powers for governors to cut programs whenever the state falls into the red, said the report.
The increase of one cent per dollar would take effect soon after a budget is signed and last three to four years; after that, the tax rate would gradually drop. It would ultimately settle at a level lower than the current statewide rate of 7.25 percent, according to the paper.
State finance officials have said California could run out of cash sometime next month if a budget is not enacted soon. Without a budget in place, the state may not be able to borrow billions of dollars it needs to cover government expenses until the usual flood of tax receipts arrives in the spring. The new fiscal year began July 1.
"The governor is pushing Republicans and Democrats to come to the table immediately and reach a compromise because of the looming cash crisis we face," said Schwarzenegger spokesman Matt David. "This compromise must include budget reform that prevents our state from being in this position."
It is unclear whether lawmakers will embrace the governor's proposal. His automatic spending restraints would be written into the state Constitution, something Democrats have long resisted, saying they could force steep cuts to schools and other programs and limit the Legislature's flexibility.
Source:Xinhua
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