State Democrats Announce Budget Plan
SACRAMENTO, Calif. (KCBS) _ Seven weeks after California's budget deadline came and went, state Democrats have announced that they've reached an agreement within their own party on a budget plan.
Democrats said the plan to close California's $19 billion budget shortfall reflects the difficult economic times.
It includes an income tax increase and the permanent cutting of the sales tax in half.
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Assembly Speaker John Perez said the plan spares the middle class by generating revenue in two ways.
"First, we close the loophole that allows oil companies like BP to drill in California for free," said Perez. "Second, we delay tax breaks for massive corporations that haven't even taken effect yet."
The plan does not include the state pension program overhaul that Governor Schwarzenegger has been demanding.
And Republicans said it rejects nearly all proposed spending restrictions.
"I say no to more borrowing. No to increases in taxes," said Governor Schwarzenegger.
Analysts said the announcement of an agreement isn't a real sign of progress because the two parties are still so far apart.
"Rather than a step toward the end, we have a new phase in the ongoing conflict," said Jack Pitney, a professor of government and politics at Claremont McKenna College.
Pitney said he expects the stalemate to continue into September and that the state will once again begin issuing IOUs.
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