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More red ink expected from revised state budget Gov. Gray Davis declined late last week to share any details about the new spending plan, which is scheduled to be unveiled Wednesday at noon. The only thing for certain, staff members say, is that a lot more money needs to be trimmed from the near-$100 billion state budget. The Legislature and the governor have approved spending cuts and savings that trimmed about $12 billion from a deficit that could reach $35 billion by next July if aggressive steps are not taken. There are expectations in the coming weeks that a hike in the car tax will be imposed that will bring in another $4 billion next year. But the economy has continued to slide and the fiscal hole has continued to grow. State officials said last week that tax collections during April _ traditionally the highest of the year _ came in only about $100 million below projections made in January. The problem, however, is that spending is more than $2.6 billion greater than January estimates. With such a steep hill still to climb, administration officials say no department or program will be left unscathed. "We're watching along with everyone else, waiting to see what the May revise will show and how they will make the adjustments," said Tim Smith, a Sonoma County supervisor and president of the California Association of Counties. "We know it is coming and we just hope they don't look to us to solve their problems." So far the biggest hits have been applied to education and public health _ two categories of spending that represent 70 percent of the entire budget. Lawmakers say they are resigned to more cuts to both of services as well as reductions in funding for the state prison system, support for local government and transportation programs. Employee layoffs are also part of the equation. "Workers are very anxious about this, the state is in crisis," said Perry Kenny, president of the California State Employees Association, which represents about 100,000 state workers. "At a time like this, the employees are the first one targeted for relief. But really when you look at it, layoffs will only put a dent in things." Kenny's group along with others are negotiating with the state on how to cut costs without layoffs. Davis has already included $855 million in savings from employee costs even though they have not yet been enacted. He has warned the unions that the money will be saved through either joint agreements on deferred raises, furloughs or work force reductions. While spending cuts are key, more attention has been probably been paid in the past weeks on ideas for creating more revenues _ such as higher taxes. Davis proposed in January imposing $8.3 billion in sales tax increases, taxes on tobacco sales and income taxes paid by the state's top earners. Neither Democrats nor Republicans have embraced any of those ideas but leaders of both parties have floated plans of their own. Democrats have backed raising the vehicle license fees paid by car owners. Under a law passed in 1998, state attorneys say the car tax could be raised without a vote of the Legislature if cash grows short _ an action virtually everyone in the Capitol expects to happen in the coming weeks. If so, taxpayer groups have threatened to sue saying the tax hike is unconstitutional.
Some Democrats have also suggested imposing higher taxes on alcohol as well as a plan to apply the sales tax for the first time to thousands of business activities not subject to
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