Schwarzenegger Budget Keeps His Promise Not to Raise Taxes
His budget assumes 5 B in increased tax revenue and borrows a couple billion from a bond fund and the state highway trust fund. In other words, he has a 7 billion dollar deficit.
"He's making certain choices with this budget," Mr. Wright said. "He has made a choice to take taxes and other revenues off the table and has instead chosen to make these cuts. That's a deliberate choice that has real consequences for people."
The governor's budget relies on continued borrowing, using some of the proceeds of a $15 billion bond issue that Mr. Schwarzenegger won voter approval for last year. Although the bond proceeds helped to get the state through a severe fiscal crisis, the borrowing will have long-term consequences, said Fred Silva, a budget expert at the Public Policy Institute of California and a former fiscal aide in the state Legislature.
"The amount of borrowed money is going to be a budget overhang for many years," Mr. Silva said.
In years past, he said, state policy makers tried to keep the cost of debt service below 4 percent of state revenues. "Now it's going to be twice that," Mr. Silva said. "That's real money."