Governor Schwarzenegger’s plan would raise the state sales tax by one cent for three years—then reduce it by one and a quarter cents.  He estimates it will generate 4-to-5-billion dollars each year.  It also calls for more spending cuts and a bigger state savings account.  Schwarzenegger says this plan shows he’s willing to compromise. 

 “Republicans must step out of their ideological corner on the right, and Democrats must step out of their ideological corner on the left. We must meet in the middle…” 

Assembly Republican Leader Mike Villines says -- overdue budget or not-- taxes are not the way to go.  “We have voted no, we have said no. And we will continue to. And the Speaker and I will continue to work toward that resolution.”

In a statement Assembly Speaker Karen Bass said the Governor should have proposed this back in May.  Democrats favor tax increases as a way to address the fifteen billion dollar budget shortfall.