SACRAMENTO — Hoping to break a partisan logjam and prevent the Legislature from borrowing its way out of a state spending crisis, Gov. Arnold Schwarzenegger went public Wednesday with his own budget blueprint, the backbone of which is a tax hike and a large rainy-day cushion.
The governor made the unusual move 51 days into the fiscal year, as private talks between him and legislative leaders appeared to be collapsing. Typically, governors do not publicize new spending plans after submitting their revised budgets in May. The governor's May plan included no taxes.
Schwarzenegger is eager to take control of the budget process as lawmakers begin drafting borrowing plans that the governor warns will saddle his administration with a $9-billion shortfall next year. The governor, who prefers the new tax to borrowing, hopes to use his popularity with the public to pressure legislative Republicans to break their vow to never raise taxes. He is lining up business groups to join him.
"This budget will not get done by taking it easy or doing easy things," Schwarzenegger said at a Sacramento news conference. "This budget will only get done by making tough choices we thought we would never make."
The most controversial element of the plan -- the one-cent-on-the-dollar sales tax hike -- would remain in effect for three years. After that time, the tax would be reduced by 1 1/4 cents on the dollar, putting it below the current rate of 7.25%. The temporary increase would not apply to diesel, gasoline or jet fuel. The new tax would raise $4 billion this year.
Schwarzenegger's budget proposal also calls for constitutional spending restraints. The measures would require the state to transfer 3% of revenue to a rainy-day fund every year until the fund grew to 12.5% of the state's general fund budget. The new fund, according to the governor, could be tapped only in the event of a fiscal emergency.
Voters would have to approve any such changes to the Constitution, and administration officials say lawmakers have only a week or so to meet the deadline for getting it on the November ballot. Schwarzenegger said that if the spending restraints had been in effect over the last several years, the rainy-day fund right now would be large enough to erase nearly two-thirds of the current $15.2-billion budget shortfall.
