Calif. May Give You a Budget Package for V-Day

Bass says package has "something for everybody to hate"

SACRAMENTO -- -- Will there be love between Democrats and Republicans this Valentine's Day?

Both houses of the state Legislature are scheduled to vote Saturday on a budget package to address California's $42 billion shortfall.

Gov. Arnold Schwarzenegger says he's optimistic the compromise plan will succeed. But Republicans are still refusing to commit until they see all the details.

The state is running dangerously low on cash and has already halted road projects and delayed some payments as legislative leaders and the governor have been locked in a battle for 100 days.

The proposal calls for roughly $14 billion in tax increases, $15 billion in cuts and $11 billion in borrowing. Voters would have to approve several elements of the proposed budget fix, include a state spending cap and selling bonds based on the projected future value of the state lottery.

The proposal also contains tax credits for businesses and relaxes environmental rules for transportation projects.

"What I do think it represents is a true compromise. I say it's a package that has something for everybody to hate," said Assembly Speaker Karen Bass on Thursday.

The Republican governor praised lawmakers for recognizing that the deficit cannot be closed solely through spending cuts.

"I think the important thing is that we go and create extra revenues so we don't have to make the kind of cuts, the draconian cuts, that we normally would have to make when we have a $42 billion deficit," Schwarzenegger said. "We are working now on the final details."

The proposed tax increases, which include raising the sales tax by 1 cent, as well as a higher gas tax and vehicle license fee, drew criticism Thursday from a fellow Republican, former eBay executive Meg Whitman.

In an interview with The Associated Press, Whitman, who is exploring a run for governor next year, said the tax hikes would hit working Californians the hardest.

"What is wrong about it in my view is that the state has done virtually nothing to cut costs in the bureaucracy," she said.

Schwarzenegger spokesman Aaron McLear responded to Whitman's comments by saying anyone considering a run for governor is likely to criticize the budget proposal as a way to appeal to key special interests.

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