Governor Schwarzenegger has pledged to veto the latest budget measure passed by Democrats in the California Assembly. According to the LA Times, the plan would balance the state budget with $2 billion in new taxes on smokers, oil companies, drivers and homeowners. While California requires a two-thirds vote for budgets and tax increases, Democrats employed a series of legal maneuvers that would require only a simple majority for the plan. Unless a budget agreement is reached by July 1, the state may have to start issuing IOUs for its bills. Larry Mantle gets an update on the latest budget developments.

John Meyers, Sacramento bureau chief for KQED's California Report

Bob Stern, President, Center for Governmental Studies