Legislative leaders said Thursday that they have reached a deal on the long overdue state budget that will satisfy demands made by Gov. Arnold Schwarzenegger.
The Republican governor has said he would veto the $104.3 billion plan lawmakers passed this week. He demanded that a proposed rainy day fund to help the state though bad economic times be tightened to prevent its balance from being depleted in good times.
And he said lawmakers must remove a maneuver, worth $1.6 billion, that would have increased the amount of withholding tax paid by personal income taxpayers.
Republican leaders and Senate President Pro Tem Don Perata emerged from a meeting this afternoon saying they had agreed to the governor's demands. They have proposed making up the lost revenue by increasing penalties on corporations that underpay taxes. The leaders also agreed to lower the amount of the state's reserve fund from $1.2 billion to $800 million. Under the proposal, corporations who underpay their taxes by $1 million or more would see penalties rise from 10 percent to 20 percent. The deal also assumes a cancellation of a proposed tax amnesty program.
Read the full story at sacbee.com.