Gov. Arnold Schwarzenegger called today for a temporary 1.5-cent increase in the state sales tax to help close an $11.2 billion deficit in the state budget, as well as new taxes on liquor and oil production.

Schwarzenegger also proposed one-day-a-month unpaid furloughs for state workers for the next 19 months, as well as rescinding two of the workers' 13 paid holidays

In calling the Legislature into special session to deal with the deficit, Schwarzenegger said it was vital for legislators to act swiftly.

"In the six weeks since I signed our last budget, the mortgage crisis has deepened, unemployment has increased and the stock market has lost almost 20 percent of its value," Schwarzenegger told a news conference. "We have drastic problems that require drastic and immediate action - we must stop the bleeding right now."

Other elements of the governor's sweeping plan include:

• Cutting spending on programs in the current budget by $4.5 billion, $2.5 billion of it from elementary and high schools.

• Revamping the state's cash-strapped unemployment insurance system by gradually increasing the rates charged to employers and lowering benefits while tightening eligibility requirements.

• Relaxing some state labor regulations dealing with meal and rest periods, overtime exemptions and work schedules.

• Speeding up public works projects, especially hospital construction, to inject life into the state economy. That would require modifying some environmental regulations.

Administration officials said the three-year sales tax increase would boost state revenues by $3.5 billion in the current fiscal year. The proposal would also extend the sales tax to certain services, including appliance and furniture repair, vehicle repair, veterinarian services, amusement parks and golf courses.

The oil severance tax, which would be imposed on oil produced within the state, would raise an estimated $528 million. A bill to impose the tax died in the Legislature earlier this year, and voters have rejected an initiative that would have created the tax. California is the only oil-producing state that does not have such a tax.

The alcohol tax would raise $293 million. The tax was last raised in 1991.

On the spending cuts side, state workers would be required to take a one-day unpaid furlough each month. Columbus Day and Lincoln's Birthday would be eliminated from the 13 paid holidays state employees get each year, and premium pay for working a holiday would be dropped. In addition, state agencies would be given the option of establishing 10-hour, four-day work weeks, and employees would no longer be allowed to count leave time as hours worked while computing overtime pay.

In addition to the cuts in schools, state payments to the elderly, blind and disabled would be cut to federal minimum levels, welfare and Medi-Cal spending would be trimmed, and parole policies would be "reformed" to ease prison overcrowding.

The governor also called for an ambitious mortgage-relief plan that would impose a 90-day stay of the foreclosure process on lenders unless they demonstrated they were already taking steps to help people stay in their homes while finding ways to pay for them.

"If we take this action and do all the things we've proposed," Schwarzenegger said, "we will solve our revenue shortfall, get the people back to work, keep people in their homes and keep our unemployment insurance fund solvent."

Reversing himself from previous pronouncements that the state had an overspending problem, the governor said that the state's budget woes were not due to spending too much, but to not taking in enough.

"Because of the tremendous drop in revenues, it is now a revenue problem," he said.

State finance director Mike Genest told reporters the problem was severe enough that without action, the state could run out of money by February. Genest said that didn't mean the state would not pay for vital services or renege on bond debt.

"But if we do nothing," he said, "there are going to be people who are owed money by the state who are not going to get paid."

Schwarzenegger's broad array of proposals was headed toward a legislative reception that was likely to be somewhat less than warm and fuzzy. The Republican governor was unable to get a single Republican legislator to vote for a temporary 1-cent sales tax increase he proposed in August.

But Schwarzenegger said today he thinks he'll have better luck now that the election is over.

"We are in a profession here where getting elected sometimes is more important than doing what is right," he said. "That's just the way it works in politics ... I think that after the election there is more will there, and therefore we have a much better shot of getting things done."

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