CALIFORNIA BUDGET PROPOSAL RAISES INCOME, SALES, GAS TAXES AND CAR FEES

BY JIM SANDERS, JON ORTIZ and KEVIN YAMAMURA

Californians’ pocketbooks would be hit in at least four ways under a wide-ranging budget proposal that is being pushed toward a floor vote within days in the Senate and Assembly.

Senate President Pro Tem Darrell Steinberg and Assembly Speaker Karen Bass declined to comment on the measure Tuesday, and they noted that they had yet to strike a final deal with Republicans. The plan remains in flux, but both leaders said they would hold floor votes this week.

The proposal is designed to help ease the state’s projected revenue shortfall of about $40 billion over the next 17 months and includes spending cuts and higher taxes.

Multiple legislative sources said Tuesday that it would raise revenues temporarily by these means:

• Increasing the state’s sales tax by 1 cent on the dollar.

• Increasing gasoline taxes by 12 cents per gallon.

• Raising the state’s vehicle license fee from the current 0.65 percent of a vehicle’s value to 1.15 percent, with 1 percent going to the general fund and local law enforcement getting 0.15 percent.

• Increasing the personal income tax across the board, either by assessing a surcharge on tax liability or increasing the tax rate.

The sales tax, personal income tax and vehicle license fee components would be in effect for either two years or five years, depending upon the fate of a ballot measure to restrict spending.

If voters approve the spending limit, the three revenue-raising components would be in effect for five years. If they reject the measure, the revenue would die after two years.

It was not clear Tuesday whether the proposed gasoline tax increase also would be tied to the ballot measure or how long it would remain in effect.

The spending restrictions would require the state to place money into a rainy-day fund after reaching a limit determined by state revenues over a 10-year period.

Gov. Arnold Schwarzenegger and legislative Republicans want business-friendly changes that make it easier for private contractors to bid on certain public projects, provide more leniency in how employers offer meal breaks and reduce overtime pay requirements.

Steinberg, D-Sacramento, briefed his caucus on the proposal Monday night, and Bass, D-Los Angeles, briefed her Democratic colleagues Tuesday.

“I don’t want to make any sort of prediction,” Steinberg said. “I just know this: that successfully solving the budget deficit will go a long way toward resolving the issues related to state employees, will begin resolving a number of the issues relating to construction and private-sector employment.”

Schwarzenegger is ready to send layoff warnings to at least 20,000 state workers if he and the Legislature can’t reach a budget deal this week, his office said Tuesday.

The Republican governor wants to cut 10,000 full-time positions to save $750 million from the state’s general fund in the 2009-10 fiscal year. The layoffs would be part of a cost-cutting mix that would include attrition or transfers to jobs funded by special revenues such as federal money and targeted taxes, spokesman Aaron McLear said.

If the Legislature can produce a budget by Friday that saves $750 million without job reductions, Schwarzenegger will not send the letters.

“Because we don’t have a budget, and we’re into February, he needs to look at ways in which he can unilaterally save the state money, cut back on government spending, and this is one of the few options that he has,” McLear said.

Tuesday’s layoff announcement shocked many workers who were still adjusting to the state’s first so-called “Furlough Friday” last week. That policy mandates that 238,000 state employees take off an unpaid first and third Friday every month. Furloughs will save the state about $1.3 billion through the next fiscal year and cost state workers roughly 10 percent of their pay.

“The rank-and-file workers at our office were already down. This just adds to it,” said Aneta Glen, a Water Resources employee in Glendale who has worked for the state for 20 years. “Some people have been here less than three years. I’m really worried about (them).”

The layoff announcement came while the administration and unions representing state employees have been bargaining over contracts that expired last summer. The state’s finances and the recent furlough order have made the tough talks tougher.

President Yvonne Walker of Service Employees International Union Local 1000 called Schwarzenegger’s layoff plan “just another mechanism to instill fear and uncertainty in our membership so he can get in secret what he can’t get in an open public forum.”

The layoff warnings could go out as soon as Friday to 20 percent of the least senior workers in each department. Schwarzenegger plans to issue notices to twice as many workers as those who will be terminated because some will receive exemptions or cannot legally be laid off.

The governor aims to finish the job cuts by July 1. He could rescind the layoff notices if he and lawmakers reach a compromise after Friday that saves money through other means, McLear said.

The state warns workers of impending layoffs and then allows them to look for other state government jobs. Those with more tenure can bump those with less. The process would probably set off a chain reaction of thousands of transfers that would eventually push the newest workers out the door.

Budget analyst Jason Dickerson of the state’s nonpartisan Legislative Analyst’s Office said the state has never laid off so many workers before.

“It might be possible to lay off 1,000 to 2,000 people, but laying off 10,000 or more employees would be next to impossible without gutting core services,” Dickerson said. “So I think it is next to impossible that layoffs could reach 10,000 unless the budget impasse drags on for many more months.”

See Related: CALIFORNIA BUDGET TALKS MARKED BY SECRECY

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