Schwarzenegger says raising taxes may be unavoidable

The Associated Press
March 31

SACRAMENTO Gov. Arnold Schwarzenegger hinted that raising taxes may be unavoidable, acknowledging he is under extreme pressure to increase the state's revenue to offset a $14 billion budget shortfall.

Schwarzenegger, who has opposed new taxes, said on Tuesday it would be "wishful thinking" to assume the state would not increase taxes.

"I'm going through wishful thinking that I'll never have to go there," Schwarzenegger said. "Because I just don't like it. I try to work around and find ways so we don't have to do that. So that's the stage I'm in right now."

He said increasing taxes would punish ordinary Californians for the state's mistake of overspending.

Though Schwarzenegger didn't rule out a tax hike, he said he needs to further review budget forecasts in the next weeks to decide whether to raise taxes. "When I look at the numbers, I can make up my mind about what that means," he said.

Schwarzenegger's communications director, Rob Stutzman, said the governor was not changing his opposition on taxes but "expressing his optimism for a solution without taxes."

Stutzman added, "Once he is set on a direction, he's relentless, and he is set on solving the budget without tax increases."

In an interview with The Oakland Tribune, Schwarzenegger said his political advisers were doing extensive polling on workers' compensation insurance reform and may also be asking voters for their opinions on possible tax increases.

"It could easily be that my campaign staff, that is dealing with workers' compensation, that they're throwing that in," Schwarzenegger said.

Some lawmakers said Tuesday they have not been notified the governor intends to raise taxes, nor did they suspect he was sending out feelers to gauge reactions.

"We've never had that discussion," said Assembly Minority Leader Kevin McCarthy, a Republican from Bakersfield.


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