The Legislature this week is considering a package of Democrat-backed proposals that would cut the $20 billion deficit by $5 billion through fund shifts and tax hikes.
Some of the largest proposals include tax increases on property insurance and fund shifting on fuel taxes, which are undergoing heavy debate from lawmakers on both sides.
"These mid-year budget actions ensure we will not have a cash crisis this fiscal year and makes a sizable dent in the 18-month budget deficit," said Senate President Pro Tem Darrell Steinberg, D-Sacramento. "We will continue to work with the Administration, Republicans, and the Assembly this week to achieve $5 billion in solutions."
Democrats acknowledged that their plan does not achieve the savings sought by Gov. Arnold Schwarzenegger when he called lawmakers into an emergency legislative session to tackle the state's fiscal crisis.
Schwarzenegger asked lawmakers to start cutting education and social service programs, which make up the bulk of state spending. Democrats are waiting to see if tax revenues continue to come in ahead of projections and if federal aid increases, as they have requested.
"The budget solutions proposed by the Democrats this week are a dangerous game of fund shifting, privacy invasion, tax increases and job destruction," said Assemblyman Curt Hagman, R-Chino Hills.
A fuel tax swap would seek to change the tax structure on gasoline and diesel fuels from a sales tax
to a excise tax, which is expected to add $1.8 billion to the general fund. This would alter the 2002 Proposition 42,
