Budget gap may scuttle health plan - With the state facing a projected $14-billion shortfall, lawmakers say tax hikes, program cuts must be considered.

Assembly Speaker Fabian Nunez (D-Los Angeles) said lawmakers would have to consider raising a host of taxes, including those on Internet purchases and on foreign companies that do business in California.

"We've got to close those tax loopholes," Nunez told reporters at a news conference. "We can generate billions by doing that."

Senate President Pro Tem Don Perata (D-Oakland) said some sort of tax increase would be necessary, mostly likely in a ballot measure for the public to consider. He said he doubted Republicans would provide the votes necessary for the Legislature to raise taxes.

"I think at the very minimum, temporary tax increases are going to be necessary," Perata said in an interview.

The state's mounting fiscal problems must be addressed before lawmakers can fix its broken healthcare system, Perata said; lawmakers may now be compelled to make cuts in existing healthcare services.

Nunez and Schwarzenegger have been negotiating intensely on a healthcare plan, and the speaker told reporters Thursday that they were so close to an agreement that he would call the Assembly to the Capitol on Monday in hopes of holding a vote.

But Perata has told Democratic senators that they will not be returning to Sacramento before the new year.

"It would be imprudent and impolitic to support an expansion of healthcare coverage without knowing how we're going to pay for vital health programs the state now provides for poor children, their families and the aged, blind and disabled," Perata said in a statement Thursday.

"The real issue now is the deficit and how this squares with everything else that we are going to do," he said.

The healthcare plan being negotiated has a $14-billion price tag, coincidentally the same amount as the projected budget gap. It would rely on a requirement that employers spend on healthcare up to 6% of the amount they spend on payroll, plus a mandate that all Californians obtain insurance.

A tobacco tax of $1.50 a pack would be needed to help subsidize those without an employer-provided plan who are too poor to afford insurance on their own.