Tax Breaks are Latest Card Played in Sacramento

California lawmakers scheduled votes Monday on two bills that would provide tax breaks to home buyers and companies that buy alternative technologies.
     
Passing that legislation is intended to buy favor with Gov. Arnold Schwarzenegger in hopes that the governor will sign a budget bill Democrats sent to him earlier this month. That bill involves a complicated swap of the state sales tax on gasoline for a gasoline excise tax that would send more money to the cash-starved general fund.

The Senate and Assembly were expected to pass a bill that would extend a $10,000 tax credit to first-time homebuyers who purchased a new or existing home. A second tax break would exempt green-technology manufacturing equipment from the sales tax.

Both proposals were part of the governor's job-creation package.

Monday marked the last day for the governor to sign or veto the gas-tax proposal, which is the centerpiece of a $4 billion Democratic budget package. The legislative package is intended to start closing California's $20 billion deficit through mid-2011.

The proposal was passed by majority Democrats and sent to the governor March 4. It would end the state's 6 percent sales tax on gasoline and replace it with a 17.3 cent per gallon excise tax on gas. Consumers would not see a difference at the pump.

The change would allow the state to use the excise tax to pay off transit bond debt, which would free up more general fund money for core state services. The Democrats' plan provides more public transit funding than under a similar plan proposed in January by the governor.

Schwarzenegger has said he disagrees with elements of the Democrats' proposal and sent a letter last week to legislative leaders calling for fixes.

He also proposed giving consumers a tax break at the pump but Democrats prefer maintaining the same level of taxes so they can preserve public transit funding.

"Right now, we're working with the legislature to address the governor's concerns with the gas tax bill and pass measures that will create jobs," said the governor's spokesman, Aaron McLear.