Experts: California budget's higher taxes 'ugly' but necessary

By delivering billions in higher taxes, the new state budget will bring more hardship to an economy already staggered by the recession.

Within hours of the early morning vote in the Legislature, merchants across California were toting up potential losses from the 1-cent increase in the state sales tax. Meanwhile, the higher personal income taxes could prompt some wealthy Californians — who account for a huge share of tax payments — to flee the state.

But even some economists upset about the higher taxes said the Legislature averted financial disaster Thursday by approving the new budget. The state was in danger of going broke. Thousands of state workers faced layoffs, and billions of dollars in public-works projects could have been shelved.

"As ugly as it is, we'll take it," said Jack Kyser, chief economist at the Los Angeles County Economic Development Corp. "The alternative was really bad."

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