Plans to deal with homeowners’ and the state’s budget shortfalls

The governor unveiled a foreclosure relief and long-term mortgage reform initiative as part of an economic stimulus package that he plans to put before lawmakers in a special session of the Legislature scheduled to begin today. ‘The single most powerful action our state can take to shore up its economy is to help Californians stay in their homes,’ Schwarzenegger said. ‘Curtailing foreclosures will stop the downward spiral of home prices, free up needed cash for homeowners, help save jobs and make an immediate positive impact on our economy.’ The governor’s effort is meant to slow the pace of foreclosures that hit a record high of nearly 80,000 during the third quarter, according to research firm MDA DataQuick.

Gov. Arnold Schwarzenegger unveiled a plan today for a steep sales tax increase, new levies on alcoholic drinks and the oil industry, and deep cuts in services to wipe out a budget shortfall that is expected to swell to more than $24 billion by the middle of 2010. The linchpin of the plan is the sales tax increase of 1 1/2 cents on the dollar. ... Schwarzenegger also proposed extending the sales tax to appliance and furniture repair, vehicle repair, golf fees, veterinarian services, amusement parks and sporting events. He proposed a 9.9% tax on the extraction of oil from California ground, the expansion of sales tax to some services, and a 5-cent-per-drink tax on alcohol. His plan also includes a $12 increase in annual vehicle registration fees. The governor also wants a number of significant spending reductions, including cuts of $2.5 billion from schools and community colleges. He called for requiring state workers to take a mandatory day off without pay each month and would eliminate two of their state holidays.