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California governor calls for higher taxes, 4-day state workweek to fill $16 billion gap

Updated at 4:55 p.m. ET: California Gov. Jerry Brown on Monday asked state employees to work a four-day, 38-hour week as part of a package of massive spending cuts needed to help the state close an unexpected $15.7 billion budget deficit.

In addition to the unusual four-day workweek — part of a mandated reduction in salaries and benefits to state workers of 5 percent — Brown's proposed budget, which would take effect July 1, also would slash $1.2 billion from the state's Medi-Cal program and more than $2 billion from education.

Brown also urged voters to pass an initiative to raise taxes that he is supporting on the November ballot.

"I am a buoyant optimist," Brown said at a news conference, "but this is the best I can do" about the deficit, which is about $7 billion greater than Brown predicted when he proposed his initial budget in January.

He blamed tax collections that hadn't come in as high as had been expected and billions of dollars in state cuts that have been blocked by lawsuits and federal requirements.

"The budget has lots of funds ... and restraints and rules," Brown said. "It's a pretzel palace of incredible complexity, and that's why it isn't straightforward how you balance the budget."

The tax plan Brown is pushing in November would raise the state sales tax to 7.5 percent from 7.25 percent, which is projected to increase sales tax receipts by about 3.5 percent.

The plan would also raise the income tax on residents earning between $250,000 and $300,000 a year to 10.3 percent from 9.71 percent and to 11.3 percent on people with annual incomes between $350,000 and $500,000 — a 17.7 percent increase over the current rate.

Read the full revised budget (.pdf)

Brown said that if voters don't approve the new taxes in November, cuts to social services, state workers' pay and other spending would be larger. Under that scenario, he said, cuts to education would total $6 billion, and services for people with developmental disabilities would be reduced by $50 million.

"I can't convey how difficult it is to make the cuts we are facing," Assemblyman Roger Dickinson, D-Sacramento, said in an interview with NBC station KCRA of Sacramento, adding that it was inevitable that California would have to raise taxes.

"This is a very, very serious situation that can't be solved simply by cuts," Dickinson said. "We've cut the state general fund budget by about 20 percent over the last three years, so it's not a matter of continuing to cut. We're beyond being into the bone at this point."

Jon Streeter, president of the State Bar of California, said the proposals would gut the state's court system.

"The situation is dire and getting worse," Streeter said. "The entire civil justice system as we know it is in peril."

It isn't clear how the proposed cuts would affect municipalities and social services. A spokesman for Los Angeles Mayor Antonio Villaraigosa said city officials were still reviewing the proposals Monday afternoon.

On Saturday, Brown released a YouTube video criticizing previous legislative fixes as "gimmicky."

"We're still recovering from the worst recession since the 1930s," Brown said in the video. "Tax receipts are coming in lower than expected, and the federal government and the courts have blocked us from making billions in necessary budget reductions. This means that we will have to go much further and make cuts far greater than I asked for at the beginning of the year."

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