SACRAMENTO -- Gov. Arnold Schwarzenegger proposed during private budget negotiations over the weekend to close the state's $15.2-billion deficit with a temporary one-cent hike in the state sales tax, to take effect immediately, according to Democratic and Republican legislative sources.
The proposal, floated in meetings with legislative leaders and their staff, hinges on lawmakers agreeing to spending restraints to control the growth of government and give governors authority to cut programs whenever the state falls into the red.
Lawmakers and staffers close to budget negotiations said the governor, who has repeatedly vowed never to raise taxes, would not support the new tax without the spending controls.
The one-cent tax increase would remain in effect for three to four years, after which point the sales tax rate would gradually drop. It would ultimately settle at a rate that is lower than the current rate of 7.25%.
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