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Local effects of governor's tax proposal

WOODLAND HILLS - Sandy Stefan sat at the bar of the Pickwick Pub on Friday and raised a pint in defiance.

If there ever was a time to enjoy a libation, it was this moment, a day after Gov. Arnold Schwarzenegger proposed raising taxes on everything from alcohol and golfing to vehicle repair and veterinarian services, and slashing spending by almost the same amount within the next seven months.

"I'm drinking my sorrows away," the West Hills woman said half-jokingly. "I'm trying to feel better about life."

Out of work, but still in high spirits, Stefan and others who joined her for a drink at the pub said Schwarzenegger's sweeping plan to "stop the bleeding" was another attempt to squeeze what little pleasures California's middle-class residents still enjoy. A proposed 10.25percent sales tax in Los Angeles County made no sense, Stefan and others said.

If the governor's plan passes, Los Angeles County would have one of the highest sales-tax rates in the nation.

"My husband and I are out of work, so please don't tax alcohol too," Stefan said. "Let him go after the smokers."

Around the San Fernando Valley, Schwarzenegger's plan to plug up an already gaping $11.2 billion deficit for the 2008-09 fiscal year was still sinking in.

In a week that included the historic election of Barack Obama, and on a day when the U.S. Labor Department reported that the nation lost 240,000 jobs in October, raising taxes didn't quite register among some.


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And the proposal comes days after Los Angeles County voters approved a 0.5 percent increase in the local sales tax for transportation projects. Because California generates much of its revenue from income taxes, the state's feast-or-famine balancing act has landed on famine this year, said Jerry Nickelsburg, senior economist at the UCLA Anderson Forecast.

"Sacramento has three choices: cut spending, raise taxes or borrow," Nickelsburg said.

"It appears there's a little of each."

Economists have found that raising taxes during an economic downturn tends to hurt retail sales further, Nickelsburg said.

But taxpayer advocates say the damage of rising taxes when California's economy is experiencing a steep decline could be devastating.

"Raising taxes at this time is like throwing a drowning person a cinder block instead of a life preserver," said Jon Coupal, president of the Howard Jarvis Taxpayers Association.

"We're entering the holiday season, and I think (the governor) needs to prioritize more cuts in spending," especially among those working for the state, which Coupal said has increased.

"We're not big fans of laying people off, but by the same token government should be held to the same standards as the private sector."

Schwarzenegger has proposed slashing state spending by $4.5 billion for the current fiscal year, including $2.5 billion from education.

He also proposed cuts in the operations of his own office and reducing holidays and working hours for state employees.

At Lake Balboa Park, where people fished, fed mallard ducks or ate sack lunches under the shade of trees, Beverly Hills resident Hayley Kaplan, 43, walked along the water's edge with her friend.

"It's not the right time to do this," Kaplan said. "When I heard about it, I actually thought it wasn't real."

Kaplan said the passing of Proposition 8, which bans marriage for lesbians and gays, hurt the economy too.

"Gay marriage could stimulate the economy, at least here in Los Angeles," so there would be no need to raise taxes, she said.

In Canoga Park, Vince Novak shook his head when he thought of all the business his automotive repair shop has lost since key companies in the Valley, including AIG, have shuttered or laid off his clients.

Schwarzenegger's plan is "just another way to hurt small businesses," Novak of Novak Brothers Automotive said.

"As it is, people don't come in (for tuneups or oil changes) until their front brakes are hitting metal, and even then they'll ask, can it wait for two more weeks until I get my paycheck?" he said.

At the Roswinn Pet Hospital in Canoga Park, visiting veterinarian Dr. Roberta Rolak said pet owners, like car owners, were putting off checkups until a situation became dire.

"If they add a tax, it will be the same or worse," she said.

"People will end up spending more, because their animals will come in sicker and need hospital care."

Golf enthusiasts at the Balboa Park Golf Park said a tax on golfing was like taking a club and driving it through their hearts.

"I can't afford to join a private club," said Sun Valley resident Peter Gulick. He said the park already has increased its fees, from $26 to $30 to hit balls on Fridays.

A self-employed cabinet maker, Gulick also has to cut back on visiting the course.

"My personal belief is whatever they want to do, they are going to do, but to place a tax on municipal golf courses on top of that is just rude," Gulick said.

susan.abram@dailynews.com 818-713-3664