Politics

SACRAMENTO (AP) ― Gov. Arnold Schwarzenegger on Thursday proposed billions in spending cuts and a temporary 1.5 percent sales tax increase to close a worsening state budget deficit, a plan that will leave Californians paying more to buy a car, take their children to Disneyland or attend a Dodgers game next season.

His proposal represents a widening of California's sales tax, matching tax structures in effect in New York, Texas and Florida and other states.

For the first time, it will be applied to services such as vehicle repairs, appliance and furniture repairs, veterinarian services and even greens fees for playing golf. The first wave will take effect Jan. 1. By spring, the state will begin collecting sales tax on tickets to amusement parks and sporting events.

Reaction was swift from interests groups fearing they will be hurt by a sharp rise in the sales tax.

''It is patently unfair to single out California's golfers, who already pay a fair share of taxes, and expect them to assume a disproportionate share of the revenue needed to close the state's budget deficit,'' Bob Bouchier, ex the year and may have to resort to borrowing so it can balance its books.

California's deficit is now 11 percent of general fund spending and could double by next fiscal year if not addressed immediately, Controller John Chiang said. But even borrowing has been made more difficult by the uncertainty in the nation's economy and tightened credit market.

California typically borrows money to pay its daily expenses until the bulk of its tax revenue arrives in the spring. The state had scheduled to take out $2 billion in notes the week of Nov. 17 but has delayed that sale.

State Treasurer Bill Lockyer cited unfavorable market conditions in postponing the issue of the short-term loans.

''Investors will want to see how the state addresses the budget imbalance before lending to us at reasonable rates,'' Lockyer said in a statement.

The financial crisis is spreading throughout state government. California's unemployment insurance fund, which helps those tossed out of work pay their bills, is expected to be out of money by January. With the state's unemployment rate at 7.7 percent and likely to grow, the fund is projected to be $2.4 billion in the red by the end of 2009. That would force the state to borrow from the federal government.

Schwarzenegger said he wants employers to pay more into the unemployment insurance pool while laid-off workers would get less to help the fund avoid insolvency. Schwarzenegger also said he will consider tightening eligibility rules.

The plan Schwarzenegger outlined Thursday will serve as the starting point in negotiations with the Democratic and Republican leaders of the state Legislature.

Democrats already have called for tax increases, while Republicans have rejected them. That complicates efforts to get a deal because some Republican votes are needed in the Senate and Assembly to reach the two-thirds majority required to pass spending plans and tax increases.

Assembly Speaker Karen Bass said it was up to the governor to deliver GOP votes. State Sen. George Runner, the Senate's GOP caucus chairman, flatly said Republicans will not support a general tax increase.

''The fact is that during this time of economic challenges is not the time to go back to California taxpayers and ask for more money from them,'' said Runner, of Lancaster.

He said Republicans would be open to considering other ways to generate revenue for the state. That could include licensing more offshore oil drilling to collect fees and considering selling what Runner said are ''billions of dollars of surplus properties.''

The Legislature has until Nov. 30 to act on the governor's proposals. A new class of lawmakers will be sworn in Dec. 1.

The ideological clash is likely to set up another showdown between Schwarzenegger and members of his own party. The governor often has characterized California's budget problems as being caused by runaway spending, rather than a lack of tax revenue, but he now says the severe financial crisis has flipped that.

''It is now a revenue problem rather than a spending problem,'' Schwarzenegger said.

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