California Faces Massive Deficit, Likely to Raise Taxes

I’m guessing that Gov. Schwarzenegger thinks something very different when he sees this slogan these days: The thing that won’t die, in the nightmare that won’t end.

It’s not the Terminator but rather, the budget.

The state of California is facing a $21.3 billion shortfall. Billion.

And the measures that Schwarzenegger hoped would be a step towards resolving those issues failed – and failed miserably. Voters in California voted down five of six proposals on Tuesday with more than 60% of voters issuing a resounding “no.”

The one proposal that did pass prevents certain state officials from receiving pay raises when California has a budget deficit. But other measures failed. The controversial proposals included shortening the school year by a week and a-half, cutting education jobs, eliminating health insurance for nearly 250,000 children, laying off state firefighters and limiting funds paid to local governments.

Cuts are inevitable now. So are higher taxes. Just months after California cut billions in spending, raised the state sales tax by a penny, borrowed and yes, begged, from the federal government, the state is expected to once again raise taxes. This time, income taxes are the likely target.

But wait… Before you start writing those “what did you expect from California?” comments, consider this statistic: 33 of 50 states have either already raised taxes or are considering raising sales, income and/or excise taxes to make up shortfalls in their budgets. My own state, Pennsylvania, is one of them.