Gov. Arnold Schwarzenegger, butting heads with his own Republican Party, has proposed a temporary 1-cent sales tax increase that would generate billions to help end a bitter budget standoff.
Schwarzenegger made it clear in making the proposal to legislative leaders over the weekend that he also wants long-term fixes to the state's chronic budget woes, several legislative sources from both parties said Monday.
The governor basically framed his sales tax hike – expected to raise about $6 billion annually – as a temporary sacrifice to be recouped by Californians in years to come, the sources said.
Aaron McLear, Schwarzenegger's spokesman, declined to confirm or deny the report , in keeping with his practice not to discuss closed-door negotiations.
"The governor has been pushing for a compromise between legislative leaders, and budget reform must be part of any agreement," McLear said.
Specifically, Schwarzenegger's proposal would hike the sales tax rate by 1 cent for three or four years, then drop the rate even lower than consumers pay now – perhaps by a quarter cent – for enough years that Californians could recover their losses, legislative sources said.
California's current sales tax rate is 6.25 percent, but all counties charge at least an additional 1 percent, many even more than that.
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