GOP hangs tight on taxes as red ink rises in California

California is bleeding Republican red as the state's minority party tries to squeeze a spending cap and pro-business policies from fiscal chaos.

Badly outnumbered and often ignored by the Democratic-dominated Legislature, the GOP is not getting sand kicked in its face these days.

California is hurtling toward a financial abyss, projecting a $40 billion shortfall by July 2010, and no deal can be struck without at least three Republican votes in both the Assembly and Senate.

GOP officials clutch that trump card with relish as the state braces to pull the plug on $5 billion in public works projects and warns it won't be able to pay all its bills by February or March.

Democrats and Republican Gov. Arnold Schwarzenegger want to shrink the gap through a combination of program cuts and tax increases – but Republican lawmakers adamantly oppose raising taxes and nearly all have signed national pledges to hold firm.

Democrats say the GOP is holding California coffers hostage.

But Jon Fleischman of the state GOP's board of directors said time is on their side.

"At some point, I have to think (Democratic leaders) are going to say, 'OK, the Republicans are serious,' " Fleischman said.

"If nothing happens, then government spending is going to stop because they're going to run out of money, so really, the Democrats need to step forward."

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