Davis Budget Calls For Tax Hikes, Service Cuts

--Plan Would Borrow More Than $10 Billion Toward Deficit

By the end of the current fiscal year, which ends June 30, the state will have spent about $10.7 billion more than it has collected. If unchecked, that total will reach $38.2 billion by July 2004.

Davis proposes paying off the $10.7 billion deficit by selling bonds to be paid for by a temporary half-cent increase in the state sales tax, which is part of an $8.3 billion package of new taxes in the upcoming 2003-04 fiscal year that starts July 1. That package also includes a hike in the car tax.

Even if his entire plan was adopted, Davis said, California will still have a deficit that would begin growing again next year if more cuts or tax hikes are not undertaken. Analysts say a new deficit could reach $7.9 billion by July 2005.

Teachers Across State Get Pink Slips

Some of the school districts that reported layoffs included:

-- Oakland, 400 of its 3,300 teachers

-- Sacramento, 270 of its 3,000 teachers.

-- San Francisco, 272 of its 4,000 teachers.

-- Pasadena, 78 of its 1,200 teachers.