Lawmakers Agree on Borrowing, Disagree on Taxes

Lawmakers seem to agree that borrowing money to pay off the state´s growing defict is a good idea. How to pay back the money has emerged as a key issue as the Legislature faces a June 15th deadline for adopting an on-time budget.

Democrats say the state needs a half cent sales tax. Assembly Republicans say they are more convinced than ever that the state´s fiscal crisis can be solved without new taxes. That message came after the lawmakers had a closed door meeting with Wall Street bankers on budget issues.

The meeting came at the urging of Governor Davis who has said that investors would not agree to lend California the substantial sums needed to finance a growing $10.7 billion deficit without new taxes.

But Republican lawmakers said bankers could not produce any legal or economic reasons why existing state revenues could not be used to pay off the shortfall.