Schwarzenegger Considers New Taxes To Solve Budget Deficit

Sacramento, CA (AHN) - As California's budget impasse stretches to almost two months overdue, Gov. Arnold Schwarzenegger is reconsidering his options to address the huge budget deficit.

The governor said he is now contemplating raising taxes despite a campaign promise not to hike levies, but it would be a long-term prospect.

The state has a $102 billion deficit on its general fund, but Schwarzenegger himself admits he could not reduce it by having major cuts into education, healthcare and prison expenditures.

Schwarzenegger told the LA Times columnist George Skelton, "I just think the wisest thing to do is to go to the people and say, 'Look, I know I said no taxes. But now we are in a situation where we had to do that temporarily... I need you help."

Meanwhile, state workers whose salaries may be reduced if the court favors Schwarzenegger's temporary solution to the budget problem, may have their state-issued American Express credits cut off because of its effect on the card company's finances.

According to Eric Lamoureux, spokesman of California's Department of General Services, the state has $10.4 million in unpaid charges by employees and agencies since July 1. Amex has written California of the credit cut-off unless it solves its budget impasse soon.