State cannot afford to roll back tax hikes
SACRAMENTO -- With the state’s finances already reeling deeper into the red, officials declared this morning that California has fallen short of the federal stimulus money needed to avoid the full brunt of tax hikes and spending cuts lawmakers approved last month.
The joint announcement by state Treasurer Bill Lockyer and Finance Director Mike Genest means California residents will be hit by the full force of a $1.8-billion personal income tax boost and $1 billion in slashed spending.
After an emotional hearing this month and weeks of number crunching, the pair determined that about $8.17 billion of the needed $10 billion in federal revenue for budget relief will be available through 2010.
California’s personal income tax rate now will rise by a full 0.25%, boosting to 9.55% the current maximum of 9.3%.
The increase would have been half that had enough federal stimulus money been available to offset the state’s budget problems.
The news comes as tax revenue flowing to the state continues to plunge.
Just a month after they reached an agreement to end a protracted partisan stalemate and balance the budget, lawmakers now face the prospect of a new and even deeper deficit of $8 billion or more.
That deficit could continue to grow if the state economy slumps further and if voters reject half a dozen budget measures on a May 19 special election ballot.
Ed Update: Interested in seeing how the tax changes will affect you? Try the tax calculator.
-- Eric Bailey