Stakes High in Last Ditch Effort To Find Budget

If no compromise reached, back to square one on Monday

California legislators have one last chance to strike a budget deal before going home empty-handed for the holidays.

The State Assembly and Senate considered a painful budget package Tuesday that promised to cut $8 billion from popular programs including education as well as raise taxes by $8 billion, including an unpopular adjustment in the personal income tax.

The measures are designed to bring in more revenues to a state that is bleeding red ink.

Gov. Arnold Schwarzenegger came to Sacramento to urge immediate action on the record deficit. He said Democrats and republicans need to compromise now, or the state will fall even deeper into debt.

"We have $11.2 Billion and the state of California will run out of cash by the end of February," said Schwarzenegger. "So therefore tough decisions have to be made and this is the time to make them so I urge Democrats and Republicans to make the tough decisions."

The entire Republican assembly caucus held a news conference on the north steps of the capitol Tuesday afternoon and reiterated their opposition to any new taxes.

In order to gain the super-majority needed to pass a budget plan, Democrats would need to convert six Assembly Republicans and two Senate Republicans to their cause.

Many observers and experts have said the most likely outcome is that legislators will fail to reach a compromise plan. On Monday they must start the budget process all over again with about two dozen new lawmakers who have recently won seats.

That puts the whole process back to square one, since lawmakers must fill open budget chair positions as well as strike new deals and compromises. Meanwhile, the budget deficit continues to grow daily.

The Democrats'  plan includes several tough decisions, including a tripling of the state car tax, something that has been proven very unpopular with the public over the years. Schwarzenegger has not come out in opposition to that idea, even though he has opposed it in the past.

The plan would also cut education in grades kindergarten through twelve and slash money for California's public colleges and universities.

There had also been talk about a one-and-a-half cent increase in the sales tax, which is now off the table.

Democrats conceded there was just too much opposition to the idea.

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