After a record 76-day budget standoff, California legislators appear to have reached a compromise
on how to eliminate a projected $15.2 billion deficit. Shockingly, they have decided to rely in large part on spending cuts to get it done. For the fiscal year that began on July 1, they have pledged to trim $9 billion of fat off the $103.4 billion budget. Gov. Schwarzenegger's proposed "temporary" sales tax hike was avoided. The rest of the revenue will be made up by closing loopholes in business tax collection (we'll wait for more details before evaluating these) and accelerated revenue collections of some one-time income originally slated to be garnered at some point in the future.
It's not perfect, but I must say I'm surprised that a solution generally favorable to the taxpayer came out of the California State Legislature. They expect a vote on this today; let's keep our fingers crossed.
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