SACRAMENTO, Calif. - Gov. Arnold Schwarzenegger will propose borrowing against future state lottery revenue to help close a budget shortfall estimated as high as $20 billion, administration officials told The Associated Press.
In a revised budget to be released Wednesday, Schwarzenegger will propose raising $15 billion over three years by selling bonds based on anticipated lottery revenue, then use about $5.1 billion of that for the coming fiscal year to help erase the deficit, the officials said Tuesday.
The other $10 billion would be left in a reserve fund the Republican governor wants to create as part of a budget reform proposal. It would be intended to ease the effect of year-to-year revenue fluctuations.
Both the lottery and budget reform proposals would require approval from voters on the November ballot.
If the lottery plan fails, Schwarzenegger will ask the Legislature to approve a temporary 1 cent increase in the state sales tax to pay for the reserve fund. The increase would last no more than three years.
In California there's no such thing as a "temporary" tax hike. If the 1 cent tax is enacted, it will be permanent because no Dem legislature will dare let it expire. I've seen this done time and time again in CA. As soon as the tax is scheduled to sunset, somebody passes a bill to make it permanent because we just can't afford to cut programs to "pay for it".
While reserve funds are a good idea in theory, in reality the legislature will find a way to spend them and replace them with IOUs against future income.
Why can't the state just cut useless and wasteful social programs to make up the shortfall?
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