Gov. Arnold Schwarzenegger & the California Budget

In raising taxes, the Govenator made my job tougher... thanks!

My job will be directly impacted by Arnold Schwarzenegger’s signing of a bill that will raise the sales tax by 1% in California and raise the Vehicle License Fee (ironically what got Gray Davis tossed out).  Being a concerned voter, I wrote Gov. Schwarzenegger.  I did receive a thoughtful reply although he never answered my question as to why he didn’t rein in spending.  At any rate, this is his response:

Thank you for writing about tax increases included in the budget I recently signed.  I value your input about this important issue during this challenging time.

As you know, our nation is facing an economic crisis, and California is no exception.  In fact, California has been hit the hardest of all states – to the point that we faced a $42-billion shortfall if nothing was done.  Think about that: this deficit is almost half of our annual budget.  Rather than approaching this unprecedented crisis with gimmicks and temporary solutions, we took the difficult but responsible steps to address our $42-billion budget deficit and pass historic bipartisan reform measures.

I did not run for office to increase taxes on Californians or cut funding for crucial state programs.  I hate taxes and while I am fundamentally opposed raising them, I have reluctantly concluded that you cannot erase a $42-billion deficit by cuts alone.  To get us through this economic down-turn, we are temporarily increasing the state sales tax, the vehicle license fee and income tax.   These increases are tied to budget reform, which will go before the voters in a special election.  If the reform passes, the tax increases would sunset in no more than 4 years; however, if the reform fails, the tax increases sunset in 2 years.   To help lessen any negative impact these increases may have on our economy, the budget includes an economic stimulus package that, among other provisions, will help small businesses hire new employees and speed up crucial infrastructure projects to get shovels in the ground and get people back to work.

Just as tax increases were necessary to balance the budget, so were spending cuts.  In fact, the budget makes $14.9 billion in cuts to state programs.  In my office alone, we have reduced costs by more than $700,000, and we will continue to reduce by another 10 percent.  We are also working to make government more efficient by eliminating waste and redundancy in state agencies and departments.

This was a very difficult budget that forced us to make decisions we didn’t want to make, but we have turned this crisis into an opportunity to make real, lasting reforms for California.

Sincerely,

Arnold Schwarzenegger