Schwarzenegger's push to hike sales tax riles GOP

The GOP lawmakers, preferring debt to a tax increase, say Democrats might have agreed to close the $15.2-billion budget gap with loans by now if not for Schwarzenegger.

"The legislative leaders understand we will not support a tax increase," said the leader of the Assembly's Republicans, Mike Villines of Clovis, who stalked out of budget talks in anger Tuesday afternoon. "I don't think the governor understands that. . . . It is so frustrating to sit through these meetings in his office. How many times can we say no to taxes?"

In an interview with The Times on Tuesday afternoon -- 50 days into the new fiscal year -- Schwarzenegger said resistance to tax hikes had led GOP lawmakers down a reckless path. He said they wanted to balance the budget by raiding local governments and public transportation accounts for billions of dollars. That money, under state law, would have to be repaid with steep interest.

The governor, who came to Sacramento promising never to raise taxes, now wants to raise the sales tax temporarily. If Republicans agree, he said, they would get, in return, Democratic support for future spending restraints.

"I think the sweet spot is a sales tax increase," Schwarzenegger said in the interview, "with the Democrats compromising on the budget reform in such a way that we have a real spending limit here. . . . Not everyone sees it that way. That's what I see."

Republicans say the governor's proposed spending controls, which would force lawmakers to put more money into a reserve, are inadequate. They want to prohibit state spending from growing faster than the population and inflation.

One of the governor's first big moves in office was cobbling together a plan to bail the state out of its last budget crisis, with more than $10 billion in borrowing. Despite pledges never to take that path again, the governor agreed this year to borrow $3 billion more. Now, he says, he is closing that door.

"We still haven't paid off the money we borrowed in 2003," Schwarzenegger said. "How can you go and borrow more? It is irresponsible."