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Davis to seek billions in loans The new proposal would dramatically scale back the tax increases that Davis proposed in January. The plan also is expected to have a better chance of passing the Legislature, where Republicans in particular opposed his earlier tax package. This borrow-and-tax strategy -- the largest of its kind proposed in California -- appears to be the cornerstone of Davis' new nearly $100 billion budget plan that also will include deep spending cuts, legislative sources said. But there's a trade-off: He is proposing, in essence, that the state solve its current financial troubles over a number of years, rather than making the hard choices needed to handle them now. In his earlier proposal, Davis called for shifting as much as $8 billion in programs from state to local government responsibility -- and then paying for those programs with tax increases on cigarettes ($1.10 a pack), sales (one cent) and the personal income of the wealthiest. But even if consumers are going to be hit with a smaller sales tax increase -- and probably a smaller cigarette tax increase -- their pocketbooks will still be pinched. Davis is still likely to target the income of the wealthiest Californians, and motorists can expect to pay three times as much to register their car, an average boost of about $120 a year. With the state confronting a deficit that Davis has previously pegged at $34.6 billion through June 2004, the governor privately told lawmakers last week that the much-debated proposal to raise the car tax is a foregone conclusion. Assemblyman Rudy Bermudez, D-Bellflower, Tuesday said Davis told lawmakers ``unequivocally'' the car tax would rise, ``one way or another. It was only a matter of time.'' Davis also is poised to continue his push for higher fees in the University of California and California State University systems. Education and social services remain the areas most likely targeted for program cuts -- as they were in January. But the governor is expected to underscore his unwavering commitment to the $1.7 billion class size reduction program in public school primary grades. ``Davis has consistently been one of the biggest supporters of class size reduction, and that support will continue,'' said Byron Tucker, a spokesman for the governor. But much of the talk today is likely to be about borrowing billions -- and what that will mean for the state's future. With Davis' shift-and-tax strategy seemingly thwarted -- or at least seriously blunted -- emphasis will shift to Davis' push to adopt a proposal first suggested by Senate Republicans: Roll over billions and effectively push back a portion of the deficit. Davis is expected to pitch a temporary half-cent sales tax increase -- up to 8.75 percent in Santa Clara County -- that would reap an estimated $2.3 billion a year and allow the state to pay off the loan in three to five years. Republicans have balked at using a tax increase to pay off the loan, preferring to use existing tax revenues. And they have leverage. While in the minority, two Republicans in the Senate and six in the Assembly are needed to gain the two-thirds majority required to adopt the budget in the Senate and Assembly.
``We showed the governor how he could balance the budget without raising taxes, but he's chosen to make taxpayers bear the burden,'' said Assemblyman Ray Haynes, R-Temecula. ``This guy walked in with a $12 billion surplus and in his first two years spent money like
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