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'Nothing to celebrate'

California residents are now highest taxed in nation with approval of 2009-10 budget

Posted: February 20, 2009 1:01 a.m.
Updated: February 19, 2009 4:55 a.m.
The California Legislature passed a budget early Thursday in hopes of closing a $42 billion deficit through a combination of spending cuts, tax increases and borrowing.

"People are relieved that there's a state budget," said state Sen. George Runner, whose district includes parts of Santa Clarita Valley. "This is just the beginning of a bigger problem. The budget we passed last night is nothing to celebrate."

The budget proposed a $70 billion tax increase on California families and small businesses over the next five years, increasing state sales tax by 1 cent on the dollar, raising the fee for licensing vehicles and boosting the state personal income tax rate by 0.25 percent.

"Certainly I strongly oppose any tax increase," said Assemblyman Cameron Smyth, R-Santa Clarita.

"However, within the budget we did contain an economic stimulus package, including a $100 million tax credit for the film industry, the number-one employer in my district. I've been fighting for the last several years to keep the industry here."

The budget will reduce California's current fiscal-year spending by nearly $13 billion from $103 billion to $90.7 billion and set a spending plan of $96.3 billion for the 2009-10 bookkeeping year, which begins July 1.

"Come May, people of California will have an opportunity to really reform California's budget situation by voting on a spending cap, which we are in desperate need of," Smyth said.

The current budget now places California as the highest taxed state in the nation by increasing personal income tax by 0.25 percent, by doubling the car tax, by increasing sales tax by 1 percent and by reducing the dependent credit from $299 to $99.

Runner posted a tax calculator so taxpayers can figure their additional tax under the new budget.

"We've gone back to hard-working California families and asked them to bail out the state's overspending," Runner said. "And this does not solve the problem and continues a tradition of overspending and even in the budget that was passed we have deficits."

Runner said the budget-crafters calculated for a $10 billion deficit in three years.

"And that's if all the taxes they hope for come in," he said.

On the spending side, education funding would be cut $8.6 billion over two years, likely forcing schools to lay off teachers, slash salaries and postpone spending on construction and textbook purchases.

"I'm very cautious going into this," said Judy Umeck, Saugus Union School District board president. "I know a lot of the districts are coming up with their strategies. We, too, will have some difficult decisions to make."

The state budget calls for higher taxes, which might not benefit school districts.

"We're paying higher taxes, yet paying that tax is simply going to address the (state) deficit," Umeck said.

"It's not going to address the fact that they still have to cut our budget."

College of the Canyons officials plan to address the budget's impact during its Wednesday board meeting, COC Board President Joan MacGregor said.

"We were concerned about the length of time it took to pass a state budget because it reflects our budget as well," MacGregor said. "We're concerned that there's not enough money for community colleges. We feel that we are going to be the engine that drives the economy in recovering."

The Associated Press contributed to this report.


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