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The Legislative Analyst’s Office, with the first publication under new Legislative Analyst Mac Taylor, has released an analysis of, and recommendations on, the governor’s special session package.
* Estimates $27.8 billion twenty-month budget hole
o $2 billion more in revenues in current year (2008-09)
o $2.7 billion less in budget year (2009-10)
* Recommends eliminating tax expenditures (“loopholes”)
* Likes to booze tax
* Proposes limiting the sales tax hike to 1%
* Proposes a 5% personal income surtax for tax year 2009
* Suggests increasing the car tax from 0.65% to 1%
o smaller cut to Proposition 98 of $1 billion rather than $2.5 billion
o increasing community college fees from $20/unit to $26/unit on January 1 and $30 on July 1.
o approving significant cuts for the 2009-10 fiscal year now to health and human services, higher education corrections, resources, and transportation
The governor today addressed California’s emerging budget shortfall by taking a “50/50″ approach of tax hikes and expenditure reductions, sure to make everyone unhappy.
The $4.7 billion in current-year tax increases include:
* temporary, three-year increase in sales tax by 1.5 cents ($3.5 billion for remaining 6 months in the fiscal year)
* 9.9% oil severance tax ($530 million)
* expand sales tax to include some services ($357 million)
* nickel-a-drink tax on alcoholic beverages ($293 million)
The major expenditure reductions (which total $4.5 billion) include:
* K-12 education: $2.168 billion
* SSI/SSP: $391 million
* Community colleges: $332 million
* State employee compensation changes: $320 million
* CalWORKs: $274 million
* Local public safety programs: $250 million
* Local public transit programs: $230 million
* Medi-Cal: $142 million
* UC and CSU: $132 million
* In-home Supportive Services: $118 million