Gov.'s staff exploring new taxes

A broader levy that might affect all entertainment purchases -- including movie, theater and sporting event tickets, amusement park admissions, ski lift passes and greens fees -- could raise about $1 billion, according to state tax officials. Taxing the services of lawyers, accountants, mechanics, landscapers, hairstylists and every other service professional in the state could generate more than $8 billion, they say.

Other possibilities the administration is studying are a tax on certain prepared foods, such as a cup of coffee to go, and on Internet software purchases. Also on the table are limits on the deductions that businesses can claim on losses.

Before the governor raises taxes, should he go that route, he is expected to demand legislative support for spending restraints that would force the state to create a rainy-day fund with revenue windfalls it receives during good economic times. Business leaders have long pushed for such measures, arguing that they would curb runaway spending and bring some stability to state finances.

Business leaders are also lobbying the administration to use potential tax hikes as leverage for policy changes unrelated to state spending, such as changing workplace rules to allow employers to dictate when workers can take breaks. Political analysts were not surprised to learn that the governor was considering tax hikes.

"He used to say we can have a gold standard of public service without paying more if we just wring the waste out of government," said Bruce Cain, a political science professor at UC Berkeley. "I think he now understands that is a myth."

The budget blueprint the governor presented in January gave a glimpse of how state programs would be affected without new revenues. He proposed school cuts that would result in thousands of teacher layoffs, closing dozens of state parks and substantial cuts in healthcare programs for the poor.

Since that time, tax receipts have plunged by billions more, meaning that the cuts would have to be deeper if the governor and lawmakers did not find new revenue.

The governor continues to say that lawmakers may be able to find alternatives to new taxes, such as leasing the state lottery to a private firm.

The lottery "could bring us in billions and billions of dollars," Schwarzenegger said in a KPCC-FM (89.3) radio interview with Times columnist Patt Morrison, to be broadcast today. "There's areas like that. We just have to get, you know, creative about it."