Sep 15, 2008 11:29 pm US/Pacific
Proposed California Budget Cuts
SACRAMENTO (AP) ―
Here's a look at some of what legislative leaders are proposing to plug a $15.2 billion budget shortfall:
-- Cut $7.1 billion in state spending, including reductions in public transit and human service programs; includes lower-than-projected education funding, although schools will be fully funded under Proposition 98's minimum funding guarantee.
-- Collect $2.3 billion through "accelerations" in revenue by requiring corporations and upper-income taxpayers to pay 30 percent of their estimated taxes in each of the first two quarters of the fiscal year instead of 25 percent.
-- Collect $1.6 billion through a 10 percent increase in state income tax withholdings.
-- Collect $1.9 billion by adopting a two-year temporary suspension on deductions for business losses, known as net operating losses, and limiting other incentive credits.
-- Close the infamous "yacht tax" loophole that allows people to avoid paying state sales tax on boats, RVs, airplanes and other luxury goods if they take possession out of state and keep the items there for more than 90 days.
-- Borrow against future lottery revenue to secure $10 billion over the next two fiscal years, starting in July 2009. The money would be deposited into a new fund dedicated to retiring debt. Prize payouts would be increased, but no new games or technologies are envisioned.
-- Increase the state's rainy day fund from 5 percent to 10 percent of the general fund budget. Schwarzenegger wants 3 percent of general fund revenue dedicated to the rainy day fund each year until it hits a limit of 12.5 percent of the general fund.
-- Grant the governor authority to cut up to 7 percent from state operations when revenues fall below expectations. The governor would not have the ability to cut from the largest areas of the budget -- education and health and human services.
-- Seek voter approval to change the rainy day formula and lottery securitization plan.
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