California hasn't been able to borrow money for months, and according to the state's treasurer, it will run out of money in February or March if it doesn't pass a budget and get some income flowing. The majority Democratic legislature has sent Governor Schwarzenegger a budget that contains a suite of "revenue enhancements" that the Democrats call fees, not taxes. In addition to a jump in the state sales tax and personal income tax, there's also a provision to apply a per gallon gas "fee" of 39 cents.
The biggest problem with the proposed budget is the way in which it was passed, which relies on the definition of the word "tax". Democrats used a simple majority vote to pass the proposed budget, instead of the mandatory 2/3 majority needed to pass new taxes, because they say "it does not technically increase the amount of taxes on Californians." For instance, because the gas "fee" would be set aside for transportation projects only, it isn't a tax, it's a user fee, and so it doesn't require a 2/3 majority vote.

Call it what you want, Californians would be paying more money, so Republicans have vowed not to support what they call increased taxes. Citizen's groups have also promised to sue the state if Schwarzenegger signs the proposed budget as is. The other problem is that Schwarzenegger has already vowed to veto it, but not over the tax vs. fee issue. He said he'll let other people sort that out – what he really wants are bigger cuts in spending before he'll approve anything. The budget discussions resume on Friday as lawmakers work to have something done by year's end. Thanks for the tip, Fed!

[Source: Yahoo!]

I'm reporting this comment as:

Reported comments and users are reviewed by Autoblog staff 24 hours a day, seven days a week to determine whether they violate Community Guideline. Accounts are penalized for Community Guidelines violations and serious or repeated violations can lead to account termination.

    • 1 Second Ago
  • 2015 Toyota Highlander
    MSRP: $29,765 - $44,140
    2015 Jeep Grand Cherokee
    MSRP: $29,995 - $64,895
    2015 Honda Accord
    MSRP: $22,105 - $33,630
    2015 Honda Civic
    MSRP: $18,290 - $26,740
    2015 Mazda Mazda3
    MSRP: $16,945 - $25,545
    Share This Photo X