Gov's Tax Adds to Local Hikes

Published: Thursday, November 6, 2008 12:21 PM PST

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Gov. Arnold Schwarzenegger this morning unveiled a plan to temporarily raise the statewide sales tax by 1.5 cents on the dollar and called for cuts to schools and some medical and welfare programs to shore up a state budget shortfall that has grown to $11.2 billion.

The move comes after two San Diego County cities just passed sales tax increases Tuesday.

From the LA Times coverage of the announcement:

The governor said "drastic measures" are needed because the state has lost so much money in tax revenue since the Legislature passed the state budget in September.

"We are living in a different world now," Schwarzenegger told reporters this morning.

Schwarzenegger today opened an emergency session of the sitting Legislature to deal with the budget shortfall. Lawmakers will have until the end of the month to take action.

The statewide sales tax increase would come after voters this week in El Cajon and La Mesa passed propositions to raise their cities' sales tax by one-half and three-quarters of a cent, respectively.

The two increases would push El Cajon's sales tax rate to 10.25 percent and La Mesa's to 10 percent. The state currently limits sales taxes to 9.25 percent, but a couple people I've talked to this morning say they think the state might raise that so the local sales taxes aren't pushed over the limit. I've got calls in to the state to find out the answer and I'll, of course, keep you posted.

-- KELLY BENNETT