California Faces Battle Over Budget

A budgetary showdown is looming in California over taxes 2010 as a constitutional deadline approaches. California which is the eighth largest economy in the world, faces running out of money if no budget is approved by the first of July. This would force California to issue IOUs as was done in 2009. The California constitution requires any tax increase to be approved by two thirds of the legislators. At the present time the Democrats need four more votes to pass the budget but the Republicans are vowing they will block its passage.

Top ranked Republican Jim Neilsen of the Assembly Budget Committee says there is nothing in the framework of the current budget that deserves his support.

Brown who is now 73, took over the position of governor of California in January of this year. He had pledged to repair fiscal problems in California that give it the worst credit rating of all the states according to Standar & Poor’s. At the beginning of the year California had a deficit of $26 billion. Recent government spending cuts and increased revenue have lowered the gap to $10 billion.

The plan for taxes 2010 that Brown is proposing includes keeping a one percent boost in retail sales tax to 8 and a quarter percent. There is also a proposal to raise the fee to register a car to 1.15 percent of the value of the vehicle. The plan extends the reduction of the annual child tax credit to $99 from the previous amount of $309.