SACRAMENTO -- — California's budget shortfall has swollen from $14.5 billion to $16 billion, according to the Legislature's chief fiscal analyst, who said the governor's proposal for closing the deficit is so inadequate that her office took the rare step of drafting an alternate plan for lawmakers to consider.
The proposal by Legislative Analyst Elizabeth G. Hill, to whom lawmakers of both parties look for advice on fiscal matters, called on lawmakers to raise taxes by at least $2.7 billion. It urged them to reject Gov. Arnold Schwarzenegger's plans for a 10% across-the-board reduction in spending, saying his approach is short-sighted.
In a report issued Wednesday, Hill identified a dozen tax breaks she said were ripe for modification or elimination. They include tax credits that individuals can claim for dependent children and seniors, and that companies can claim for research and development as well as for hiring low-income workers.
She also suggested eliminating a loophole that allows yacht buyers to avoid sales tax by keeping their newly purchased boats out of California for 90 days. Democrats call it the "sloophole."
Hill took issue with some of the governor's ideas for saving money. His bid to close 48 state parks can be avoided by increasing fees, she said. And he should scale back his plan to save $471 million with welfare cuts, she said, because too many needy children would be cut off from aid.
Democrats embraced Hill's ideas. But the governor and GOP lawmakers said they would continue to block any tax increases.
"While I believe that we should begin negotiations with all ideas on the table," Schwarzenegger said in a statement, "I have been very clear in my position against raising taxes to fix Sacramento's spending problem and our budget."
Hill attributed the increase in the deficit largely to the depressed housing market and high energy prices. It erased most of the effect of emergency spending cuts lawmakers have made so far to bring the budget into balance.
Those actions, approved by the Legislature and governor late last week, amounted to roughly $2 billion in service cuts, largely in school programs and healthcare for the poor.
Lawmakers made an additional dent in the deficit through borrowing, deferrals and other maneuvers that will ultimately require repayment. All of these actions taken together will reduce the deficit by $8 billion but add to the state's long-term fiscal troubles.
