Harman says budget solution without new taxes is possible

Local lawmakers said they aren’t happy about the newest proposal to balance California’s budget, and will almost certainly vote against it on the grounds that it contains new taxes, but some say the writing is on the wall and it may go through whether they like it or not.

The framework for a compromise forged by Gov. Arnold Schwarzenegger and leaders from each party in each house in closed-door meetings proposes to deal with the projected $42 billion budget deficit by the middle of next year with roughly $15 billion in spending cuts, $14 billion in taxes, and the rest in borrowing and other accounting maneuvers.

The new taxes include a 1% increase in sales tax, a 12-cent-per-gallon tax on gasoline, a doubling of vehicle license fees and a one-time surcharge of up to 5% on people who owe income tax in 2009. Besides the income tax surcharge, the other taxes would last for at least two years.

Assemblyman Chuck DeVore said that he’s not surprised that the compromise designed by Democratic and Republican leaders includes some new taxes – he expressed fear that such a proposal might be on the horizon weeks ago – but he was surprised by the types of taxes proposed.

He and Assemblyman Van Tran said they will not vote for a proposal with any new taxes regardless of types, but they would not be surprised if other Republicans did.

Senator Tom Harman said he is waiting for the full proposal to come out with specifics before deciding one way or another, but he still thinks a solution without new taxes is possible.

All three men sat down with their respective caucuses Wednesday to hear an overview of the proposal. Tran said the assembly is scheduled to vote on it Saturday, while Harman said the senate will probably tackle it today.

Another facet of the plan is a cap on government spending, which is a big deal for Republicans. The spending cap would be put before voters and if it were approved it would extend the time the taxes are in effect from two years to five years in exchange for mandating that any excess revenue from taxes and other sources is off limits to the legislature to spend and must be saved for future years.

Tran thinks the legislature should decide on the spending cap as part of the budget deal instead of putting it before voters and doesn’t like that the approval of the cap would extend the duration of taxes.

DeVore also has some problems with the cap. Because it is based on the amount of revenue the state receives and not on population growth and inflation, there’s more opportunity for it to grow in boom times, DeVore said.

Harman has a few things he would like to see changed in the proposal, too.

“I’d like to see more job stimulus stuff put into this package,” he said.

There are plenty of projects to build and repair highways, roads and schools on hold right now that have the potential to create jobs, Harman said.

Reporter ALAN BLANK may be reached at (714) 966-4623 or at alan.blank@latimes.com.