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Lawmakers from both sides criticize plan Confronting a budget deficit he now estimates at $38.2 billion through June 2004, Davis presented a plan that includes deep cuts in programs while still protecting schools and health care more than his original January proposal. The governor's strategy relies heavily on borrowing $10.7 billion and a rebounding economy, but he warned that if spending continues on pace -- and the economy doesn't pick up -- the state could be confronted with a $7.9 billion hole this time next year. Davis stressed that lawmakers need to come up with a longer-term solution in the summer. ``This is something we must do if we want to right the state's financial ship,'' Davis said. The loan strategy enabled Davis to offer less severe cuts to education, especially basic aid districts and community colleges, but it still will reach into the pockets of Californians to the tune of $8.3 billion in tax and fee increases -- slightly more than he pitched in January. More than half of that total -- $4.2 billion -- would result from a tripling of the vehicle registration fee, which he presumes will be automatically raised by July 1 under provisions of an existing state law. Smokers would be hit with a 23-cent-a-pack cigarette tax; the wealthiest would be hit with a higher income tax; and consumers would be hit with a half-cent sales tax increase that will pay off the $10.7 billion loan. Changes plan Confronted with a growing threat of recall, the governor retreated from much of the plan he put forth in January and designed a new proposal to appeal to his political base. Among other things, it drastically reduces cuts to typically wealthy basic aid school districts, many in the Bay Area; scales back the amount of money sought from Indian casinos; restores some of the Medi-Cal cuts; adds money to the prison system whose guards have backed Davis; and protects child care for needy mothers as sought by Democratic women. At a Capitol news conference, a surprisingly upbeat Davis said he is providing a road map to protect vital programs that was shaped after listening to lawmakers' objections to his January proposal. He was flanked by two-dozen supporters, including police, teachers and environmentalists. Economic experts see the budget plan as a plausible way for California to get back on its financial feet but caution it's not a long-term fix. ``Deficit financing doesn't do anything to balance the budget or address the structural imbalance,'' said Raymond Murphy, the chief California analyst with Moody's Investors Service. ``What it does is provide time to address the changes you need to make to get back to structural budget balance.'' Start of bargaining The budget revision signals the start of the hard bargaining on the spending plan and typically reflects modest tinkering with the budget, based on the latest spending and revenue estimates. But Davis offered a vastly overhauled plan, saying that he had no choice because his original plan -- to solve the budget shortfall in one year -- was resisted by lawmakers of both parties. Assembly Speaker Herb Wesson, D-Los Angeles, gave a cool reception to the governor's latest proposal to roll over the $10.7 billion deficit. He said it would be better to solve the structural deficit this year with new taxes than to paper it over with a loan.
``It doesn't make sense to sign a document that automatically puts you in a
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