Here's a look at the spending plan the Assembly and Senate were considering Friday. It would plug a $15.2 billion deficit without borrowing or new taxes. Instead, the budget would:
— Cut $7.1 billion in state spending, including reductions in public transit and human service programs; includes lower-than-projected education funding, although schools will be fully funded under Proposition 98's minimum funding guarantee.
— Collect $2.3 billion through “accelerations” in revenue by requiring corporations and upper-income taxpayers to pay 30 percent of their estimated taxes in each of the first two quarters of the fiscal year instead of 25 percent.
— Double the penalties on corporations that are late in paying more than $1 million in taxes from 10 percent to 20 percent.
— Collect $1.9 billion by adopting a two-year temporary suspension on deductions for business losses, known as net operating losses, and limiting other incentive credits.
— Close the infamous “yacht tax” loophole that allows people to avoid paying state sales tax on boats, RVs, airplanes and other luxury goods if they take possession out of state and keep the items there for more than 90 days; estimated to raise $21 million annually.
— Change state law to exempt the high-tech industry from paying overtime to highly skilled employees. The industry has balked at lawsuits claiming it has improperly withheld overtime from some workers.
— Borrow against future lottery revenue to secure $10 billion over the next two fiscal years, starting in July 2009. The money would be deposited into a new fund dedicated to retiring debt. Prize payouts would be increased, but no new games or technologies are envisioned.
— Increases the state's rainy day fund to 12.5 percent of the general fund budget, as Schwarzenegger wanted. Each year, 3 percent of general fund revenue will be dedicated to the fund until it hits the limit.
— Restricts spending from the rainy day fund so it can be tapped only when revenues fall below a specified amount. Democrats initially rejected this proposal, seeking more flexibility to draw from the fund, but ceded to Schwarzenegger's demand.
— Grant the governor authority to cut up to 7 percent from state operations when revenues fall below expectations. The governor would not be able to cut from the largest areas of the budget — education and health and human services.
— Seek voter approval to change the rainy day formula and lottery securitization plan.
— Remove a previous provision the Legislature approved to take an extra 10 percent in state income taxes from working Californians and repay it later.