Governor Davis has unveiled a new budget calling for $8.3 billion dollars in tax hikes and big cuts to state programs. The governor´s plan will tax shoppers, smokers and the wealthy to help fill a 34.8 billion dollar budget deficit. The plan also hikes fees and proposes a massive shift of state health and welfare programs to local governments. The governor´s long-awaited announcement now sets the stage for a major political battle over raising taxes to erase red ink.

One of his most controversial ideas: a one-cent sales tax increase that could cost the typical family more than $200 a year. Another would add $1.10 to the price of a pack of cigarettes. Davis is also calling for higher income taxes for the state´s top earners.