The Recession

California Budget Deadlock Ends with $12 Billion Tax Hike

| by DeepDiveAdmin

California's longstanding budget deadlock ended well past dawn on Thursday with a single vote from Republican Abel Maldonado, ending a stalemate that had left California without an operational budget for over three months. With a new budget in place, lawmakers are hopeful that they can stave off looming state job layoffs and a potentially crippling $41 billion deficit.

The budget, written primarily by Democrats, included substantial tax increases which Republicans deeply opposed. Without at least three Republican votes the budget remained in limbo until Democrats were able to convince Maldonado to approve more than $12 billion in tax increases in exchange for changing local election rules he believed were unfairly benefiting Democrats.

Governor Schwarzenegger, who was elected in part on a no new taxes platform, was happy to finally see the budget passed and hopeful for California's fiscal and political future.

"This is a very difficult budget, but we have turned this crisis into an
opportunity to make real, lasting reforms for California," Schwarzenegger said
in a statement. "Some special interests may not like this budget
-- but like I always say, what's good for the people is not always good for
special interests."

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It's unknown if Schwarzenegger will still have to follow through on his promise to layoff more than 10,000 state workers. 

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