Borrowing Billions From Pop Bottle Returns - Democrats Latest Scheme to Avoid Balancing California's Budget

Folks you just cannot make this stuff up. To "balance" the California budget Democrats call for new oil tax, borrowing from Wall Street, raiding pop bottle revenues.

State Assembly Speaker John A. Perez on Tuesday outlined an alternative path to balancing California's budget that would raise oil taxes, delay corporate tax breaks and borrow billions from the nickel-and-dime deposits consumers make on recyclable bottles -- and would not require any Republican support.

At the heart of the proposal is the idea of raiding the state's bottle deposits for the next 20 years and then getting an $8.7-billion loan from Wall Street. The programs currently funded by bottle deposits would be reimbursed by a new tax on oil production.

Perez (D-Los Angeles) called his budget plan a "unique and creative approach." A spokesman for Gov. Arnold Schwarzenegger called it "legal gymnastics."

Under his plan, the speaker would cast aside almost all the budget cuts Schwarzenegger proposed earlier this month. The state would use the borrowed money from the bottle deposits to fund programs this year.

To pay back the loan in the future years, the state would then levy a nearly 10% oil severance tax.

Perez calls his plan "unique and creative approach." Governor Schwarzenegger called it "legal gymnastics." I call it "fiscal insanity".

How does California keep electing these fiscal morons?

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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