Governors New Budget To Be Released Wednesday

Capitol sources say Governor Davis will propose solving California´s budget crisis through a combination of new taxes, program cuts and borrowing. The Governor´s revised May budget, set for release Wednesday, calls for a much anticipated increase in the car tax as well as a half-cent increase in the state sales tax.

The new budget plan, expected to total about $100 billion, is also expected to include billions of dollars in service cuts to eliminate a cash shortfall estimated to grow to $35 billion over the next 15 months.

At the heart of his new budget plan will be a proposal to reduce much of the state debt by borrowing as much as $10 billion. Davis would use money from the higher sales taxes to pay off the note.

The reliance on higher taxes means that Davis will look to protect some services from deeper cuts, especially education.

Steve Maviglio, spokesman for the Governor, said he could not comment on the proposed budget plan until its release.