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Legislators May Head Back To Sacramento To Address Budget Shortfall

Governor meeting with legislative leaders to find solutions to shortfall in state income, propose cuts to services.

Legislators may be
called back to Sacramento to make more cuts or
find a solution to the state’s budget shortfalls because of the current
economic climate. Governor Arnold Schwarzenegger is awaiting response to a
letter sent to Treasury Secretary Henry Paulson asking for federal help to the tune
of $7 billion, but even that loan may not be enough to cover a drop in sales
tax and a rising unemployment rate.

Assemblyman Cameron
Smyth said that he expects to be headed north at the beginning of next week to
address the problem, adding that he does not favor a tax increase as a
solution.

“Today there is a
meeting with the Governor and the State Controller, State Treasurer and
legislative leaders to see if there are any actions that need to be taken on
this year’s budget that will help us until the financial situation improves as
we move into next year, he said. “For me, a tax increase continues to be a
non-starter, certainly when you look at all the impacts a tax increase would
have on the costs of goods and people are struggling as it is.”

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According to State
Controller John Chaing, the state has taken in $1.1 billion less this year than
anticipated and deficit estimates are hovering between $3 to 5 billion. Additionally,
the governor’s resolution eliminating overtime and part-time or seasonal
workers’ jobs still stands, leaving many out of work and state agencies
scrambling to make up for the lost labor.

Smyth said that asking
people to pay more could create bigger problems than they hope to solve.

“The tax increase that
the governor floated earlier was a sales tax increase,  however, the revenue projections that the governor
put forth grossly overestimated what is actually coming in so that even a sales
tax would not cover the gap,” he said, adding that he also doesn’t think the
governor could get the two-thirds vote required for a tax increase.

“We are in uncharted
territory,” Smyth said. “In years past, the state was in a position like this
and we were able to obtain a loan from Wall Street to cover us and bridge the
gap, but as everyone is finding out, creditors are just not loaning the money.
With the state looking for a $7 billion loan, we’re having difficulty with
that. Whether the federal government is able to help the state with that, we
just don’t know. This is completely uncharted territory for everybody.”

Legislators May Head Back To Sacramento To Address Budget Shortfall

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