Gov. Brown asks Calif to dream big, approve taxes

SACRAMENTO, Calif. — Gov. Jerry Brown outlined his plan Wednesday to raise taxes to pull the state out of its financial malaise, casting his proposals as an investment in the future of California like those of the visionaries and achievers whose big dreams made the state the envy of the nation during economic boom times.

The State of the State speech served as a launching pad for his campaign for the November ballot initiative to raise taxes. He has said that if voters don't support his plan there would be drastic cuts to public education.

"Putting our fiscal house in order is good stewardship and helps us regain the trust of the people. It also builds confidence in California as a place to invest and to realize one's dreams," Brown said. "Contrary to those critics who fantasize that California is a failed state, I see unspent potential and incredible opportunity."

Brown's proposal aims to raise income taxes on individuals who make $250,000 a year or more and boost the state sales tax by half a cent. The governor also said the state needs massive investments in mega-projects such as renewable energy, education, high-speed rail and water — all of which are exceedingly expensive.

But the theme of the speech was the tax plan, a budget approach that differs widely from that of many other governors who continue to scale back spending and downsize government amid falling revenues.

Within hours of his speech, Brown's proposal was cleared to begin gathering signatures, and the governor hit the road for two days of appearances to sell the plan to teachers, business executives and civic leaders in Southern California.

Republicans who last year blocked a similar effort by Brown to put taxes before voters, said they remain deeply critical of his approach, which calls for $5.4 billion in cuts, mostly to schools, if voters reject the taxes. They said California's economy is already improving, and with tax receipts rebounding, the state can avoid such tax increases.

"If we don't get in the way of it, the state will turn around," said Senate Minority Leader Bob Huff, a Republican from Diamond Bar.

Brown said his push for temporary increases on income taxes for the wealthy and the state sales tax are the best options to end California's cycle of budget deficits and cutbacks to teachers, social service programs and health care services for the poor. He noted that his budget for the coming fiscal year closes a $9.2 billion deficit with a roughly equal proportion of spending cuts and tax increases.

Only a handful have embraced taxes to help stave off deeper cuts, including New York, where lawmakers last month approved a millionaire's tax that will also allow Gov. Andrew Cuomo, a Democrat, to pay for a middle-class tax break.

In Maryland, Democratic Gov. Martin O'Malley on Wednesday floated a sales tax increase as one option for raising hundreds of millions of dollars, in addition to a potential gas tax increase and a hike in the state's "flush" tax on sewers. He told reporters "no one in our state lost a house, lost a job or lost a business because of the additional penny on the sales tax, and that these bridges don't build themselves."

Washington Gov. Chris Gregoire and other Democrats there want voters to approve a temporary half-cent increase in the state sales tax, which they hope the Legislature will put on the ballot in time for a spring vote, and in Idaho, Democrats are considering hiking the cigarette tax by $1.25 a pack, to $1.82, although they face stiff opposition from Republicans who dominate the state Legislature.

New Jersey Gov. Chris Christie on Tuesday used his State of the State address to cast his home as the anti-tax state, taking a swipe at California and others where taxes are on the table.