Last week, Assembly Speaker John Perez (D-Los Angeles) and Senate President pro Tem Darrell Steinberg (D-Sacramento) announced an updated budget proposal that includes a new budgetary solution involving increased income taxes and vehicle license fees and decreased sales taxes.

The budget proposal attempts to raise additional revenue in order to reduce the amount of budget cuts.


Republicans and Governor Arnold Schwarzenegger immediately declared that the new Democratic plan would be dead-on-arrival because it included tax increases.

The revenue portions of the Democrats’ proposal includes a delay of $2 billion in business tax incentives set to take effect next year, a new oil severance tax that will generate an estimated $1.2 billion ongoing, and the above-mentioned tax swap that will raise an estimated $1.8 billion.

Democratic leaders assert that taxpayers will be able to offset increases in state income taxes and vehicle license fees through federal tax deductions, along with reductions in state sales taxes.

More information about the proposal can be found on CSDA’s Grassroots Action Center.