Gov. Arnold Schwarzenegger on Thursday proposed a temporary 1.5-cent sales tax increase and new levies on everything from sporting events to alcohol, as well as deep cuts in education and social services, to help close an estimated $24.2 billion state budget deficit through June 2010.

In a move that would especially hit the Sacramento region, Schwarzenegger also proposed that state workers take one monthly unpaid day off and lose two of their 13 paid holidays.

The Republican governor now enters the most challenging budget negotiations of his five-year tenure. His plan relies on GOP legislators voting for $4.7 billion in taxes less palatable than those they rejected this summer during a record 85-day budget stalemate. It also asks Democrats to accept a $4.5 billion round of cuts in education and social services.

Even then, the plan falls $2 billion short of closing the entire projected $11.2 billion gap through June 2009, said Department of Finance Director Michael Genest.

Schwarzenegger warned that absent immediate action, the state will run out of cash by February. He called a special legislative session, asking lawmakers to approve changes before Nov. 30. The governor blamed California's sudden shortfall on Wall Street's collapse and a continued decline in the economy.

"We are living in a different world now," he said. "I think that everyone here has gotten a wake-up call. This is not just (a situation) where we can debate something. We are running out of money."

The November legislative session will involve 34 lame-duck legislators who will be termed out Nov. 30. The next class, elected Tuesday, will arrive Dec. 1. Under current vote tallies, Schwarzenegger in December will need a minimum of four GOP votes in the Assembly and one in the Senate, fewer than he currently does.

Dan Schnur, a former GOP strategist who now directs the Jesse M. Unruh Institute of Politics at the University of Southern California, said the governor is unlikely to see changes enacted this month.

"If anything, the governor's best bet might be laying down a marker right now and then working with the new Legislature to move something forward," Schnur said.

Schwarzenegger proposed an economic stimulus package that relies on spending bond money for road projects to create new construction jobs. He also wants to relax labor regulations for businesses and waive environmental restrictions on some public works projects.

He asked lawmakers to shore up the state's unemployment insurance fund by increasing employer contributions and lowering benefits for those out of work. Without changes, the fund could face a $2.4 billion shortfall next year.

After campaigning on an anti-tax message in 2003 and 2006, Schwarzenegger advocated Thursday for more taxes than ever before as governor.

"We say many times that we have a spending problem, not a revenue problem," he said. "Because of this tremendous drop in revenues, it is now a revenue problem rather than a spending problem."

The governor's words immediately met opposition from Republicans, whose votes are required to pass budget changes. Assembly Republican leader Mike Villines vowed to oppose any new taxes and questioned the accuracy of Schwarzenegger's $11.2 billion shortfall estimate.

"I'm saying that number has changed every time I've had a conversation with somebody," the Clovis Republican said. "I believe the number is used oftentimes for all kinds of different agendas than reality."

Villines, re-elected Thursday during a caucus luncheon as Assembly Republican leader, said lawmakers should agree to spending cuts first,then consider other options to raise money. But he said his caucus will stand firm against the governor's tax proposals.

"They all seem like a bad idea, in general," Villines said. "In an economy where people are struggling, how do you tell a senior on a fixed income, we need more money from you?"

Schwarzenegger asked lawmakers to apply the state sales tax to auto repair, furniture repair, golf and veterinarian services starting in February. He also wants to impose taxes on amusement parks and sporting events starting in March.

His 1.5-cent sales tax increase would begin Jan. 1 and would last three years. He wants to increase alcohol taxes by 5 cents per drink and raise vehicle license registration fees by $12.

Schwarzenegger also proposed a new 9.9 percent tax on oil production in California. The governor had opposed an oil tax on fiscal grounds in 2006 when it was part of an alternative energy initiative.

Assembly Speaker Karen Bass, D-Los Angeles, applauded several of Schwarzenegger's tax proposals but called his cuts "devastating."

The governor called for $4.5 billion in spending cuts, including a $2.5 billion slice from elementary and high schools.

His plan also would reduce public assistance payments to elderly and disabled residents to the federal minimum. It would cut Medi-Cal coverage of adult dentistry, optometry, podiatry and psychology services, among others. Bass called the health and human service cuts "a non-starter."

"We have a situation now where the state's safety net is what people use as a last resort," Bass said. "Well, given that we have escalating unemployment, you're actually going to have more people that need that safety net than less."

Rather than taxes, Villines said lawmakers should find new sources of revenue from selling state assets, generating royalties by allowing offshore oil drilling or from new efficiencies in schools. But he acknowledged that he did not yet have a specific plan.

"You're going to have to have $4 billion to $5 billion in cuts, there's no doubt about that," Villines said. "Then we'll have to find out how we do the other half. I don't have the answer to that yet."

Call Kevin Yamamura, Bee Capitol Bureau, (916) 326-5548.