California: “terrible cuts”

Schwarzenegger Preps ‘Terrible Cuts’ to Close Deficit

Excerpt:

California Governor Arnold Schwarzenegger will seek “terrible cuts” to eliminate an $18.6 billion budget deficit facing the most-populous U.S. state through June 2011, his spokesman said.

Schwarzenegger, 62, who will introduce his revised budget plans on May 14, has said he won’t seek tax increases to bolster California’s finances. The Republican’s forecast for the budget gap may rise after revenue fell short of his targets last month.

“We can’t get through this deficit without very terrible cuts,” Schwarzenegger spokesman Aaron McLear told reporters in Sacramento. “We don’t believe that raising taxes right now is the right thing to do.”

California’s revenue in April, when income-tax payments are due, trailed the governor’s estimates by $3.6 billion, or 26 percent. The gap wiped out gains from the previous four months, leaving collections $1.3 billion behind projections for the budget year that ends in June.

Schwarzenegger’s newest plan will revise the proposals introduced in January to account for the tax-collection shortages. In January, the governor said California may have to eliminate entire welfare programs, including the main one that provides cash and job assistance to families below the poverty line, without an influx of cash from the federal government.

Comment: Coming soon to Minnesota

Gov. Tim Pawlenty quickly vetoed a DFL balanced-budget proposal Tuesday that included a $435 million income tax increases for the state's highest earners. The veto came barely 12 hours after the House granted final passage to a budget package designed to eliminate an estimated $3 billion budget deficit. Pawlenty's veto letter was not immediately available.

With less than a week to go in the legislative session, the Republican governor and DFL-controlled House and Senate are no closer to balancing the state's budget. Pawlenty remains unwaveringly opposed to higher taxes.