Schwarzenegger aides exploring possible tax hikes

Administration officials are soliciting advice from business groups and other special interests on how to propose billions of dollars in tax hikes that could help close a budget shortfall the governor now says is as large as $20 billion.

Schwarzenegger's staff is exploring a range of options, including sales taxes on lawyer and accountant services, on high-end services such as golf lessons and personal-trainer sessions, and on takeout coffee and other prepared foods that are not taxed now.

The administration's goal, participants in the discussions say, is to gather support for new taxes from a broad spectrum of the business lobby, giving the Legislature's Republicans political cover to break their pledges never to vote for them.

Several lobbyists and state officials involved in the meetings agreed to talk about them on condition of anonymity, for fear of antagonizing the administration. They say talks have heated up as the governor prepares his revised budget plan for release May 14.

That plan will reveal how large the deficit has grown in recent months -- a number that state accountants are still calculating as they sort through April tax receipts. Schwarzenegger's staff is advising the interest groups that the governor is prepared to call for a tax increase if California's finances have darkened considerably.

Administration press secretary Aaron McLear would not comment on what had been discussed in the meetings.

"The governor does not support raising taxes," McLear said. "I can't comment on private meetings and who we have talked to internally."

McLear said: "Everybody knows the deficit will be bigger than it was in January. . . . We're preparing for every different scenario."

At the meetings, according to those who have attended, administration officials are asking interest groups which taxes might be acceptable -- and what the administration should demand in return from the Democrats who control the Legislature.

The administration is studying several ways to tax services: narrowly, on luxuries such as personal trainer services and golf lessons, or more broadly.