Desperate Times, Drastic Measures

Governor to intervene with veto; lawmakers test limits of tax laws

 California's financial crisis now threatens to dig deeper into our pockets, if Thursday's high-stakes political showdown in Sacramento is a reflection of what's called 'legislative intent'.  

Democrats in both houses of the Legislature passed a controversial budget full of tax increases on simple-majority votes that critics say illegally circumvented state law requiring two-thirds approval.

A threatened court challenge soon became moot when Governor Arnold Schwarzenegger said he'll veto the budget package on grounds it doesn't jump-start California's failing economy or close projected budget shortfalls.

Meantime, Sacramento's emergency plans could eliminate hundreds of thousands of jobs while putting vital public works projects on hold.

That's because the state's money faucet is about to be turned off to thousands of  voter-approved transportation, education and housing projects whose pricetags add up to about $4 billion.

The lack of a balanced budget -- and, as a result, bond financing -- is behind all that.

 And close to many lawmakers' hearts: hikes in state gasoline, sales and personal income taxes.

 "I've never seen that happen -- where we're going to literally just take contracts that are on their way and have to stop them because there's no money," said Gary Gallegos, executive director of the San Diego Association of Governments.

Gallegos estimates that upwards of $700 million worth of transportation projects in San Diego County stand to go unfunded for several months -- costing the region a projected 1,600 construction jobs and up to 8,000 jobs in other trades and professions.

"The key here is, the state needs to pass a budget," Gallegos said in an interview.

The biggest-ticket local item at risk -- construction of 'managed lanes' along a 20-mile stretch of Interstate 15.

Contractors are partway through a $290 million budget which, if suspended would leave motorists who use the often high-density freeway 'slowing and going' for miles on end.

Projects on I-905 and SR 52 could screech to a halt as well.

School construction plans also would be frozen for lack of bond funds. Ditto for public housing projects.

Lawmakers have been looking at restructuring the taxes on gas into a fee scheme that could be increased with the cost of living or simple majority votes.

Best estimates projected an extra 13 cents a gallon by February, assuming the Democrats' budget measures prevail.  

The plan targeted for the governor's veto also called for higher personal income taxes, subject to a 2.5 percent surcharge, and a 3-quarter-cent hike in the state sales tax.

All this, at a time when pump prices have been falling to manageable levels. 

"It's opportunistic, without a doubt," said Jamul resident Larry Visconti. "If they're going to do it, this is the time to hit people up."

 "I don't think it's fair to tie it to the gas if people have to drive super-long distances," said Mary Christian, a Coronado resident. "I'm lucky because I don't have to drive very far, but I don't think it should be tied to the gas tax."

East Village resident Jennifer Belleville said higher gas levies may be in order if lawmakers can make a convincing case that vital projects will get funding.  

 "But if they're going to keep changing it or adding to it, calling it 'a fee' one week and next week it's 'a tax'," Belleville said, "then give us another option." 

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