On brink of financial collapse, state lawmakers struggle with budget passage - Los Angeles Times: "The plan would nearly double the vehicle license fees Californians pay, increase sales taxes by 1 cent, increase gasoline taxes by 12 cents per gallon and add a surcharge of as much as 5% to income tax bills. It also would reduce the dependent care credit by about $200 per year. The increased taxes would remain in effect for two to four years. In addition to the tax hikes, the proposal includes $15.1 billion in program cuts and $11.4 billion in borrowing, some of which would be erased by the stimulus package Congress just approved. Sacramento's spending plan would balance the state's books through mid-2010."
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In order to deal with a $41 billion estimated budget deficit, the Democrats who control California insist that there must be a mammoth tax increase in the middle of the worst recession in memory. They can't pass it unless they get one Republican vote at this point--and they may not be able to get it.

We have several states operating at or near this level of insanity--states that are drowning in red ink, but the Democratic legislative majorities are at odds with Republican minorities so they can't agree on a solution. The Democrats want tax increases and hate cutting spending; the Republicans want tax cuts and major spending reduction. California, Illinois, New York, and New Jersey are probably the worst cases. I wonder how long the game of chicken will last?