Between the projected two-year, $27.8 billion budget deficit, planned cuts to state-funded programs and services, possible tax increases and endless bickering between Democrats and Republicans, there’s not a whole lot to feel thankful for in Sacramento these days.

As lawmakers attempt to solve California’s budget problem – before Thanksgiving – Gov. Arnold Schwarzenegger met with legislative leaders Monday. The most recent proposal involves raising roughly $8 billion in revenue over 19 months and cutting $8 billion in state-funded services during the same period, says Central Coast Assemblyman John Laird, who chairs the Assembly Budget Committee. State leaders are discussing increasing the state’s vehicle license fee (from .65 percent of the value of the car to 2 percent) – one of the issues that led to Gray Davis’ recall and Schwarzenegger’s election – and adjusting individual income tax brackets. In exchange, lawmakers would agree to $4 billion in program cuts this budget year and next – and a strict spending cap on the 2010 ballot.

“There’s only one sticking point,” says Laird, a Democrat. “Will the Republicans support taxes? I don’t know. It’s still unclear if the governor has done any work behind the scenes.

“We’re willing to put the spending cap on the November 2010 ballot. We’re willing to do some deep cuts. But without new revenues, the state goes over the cliff. The question is: Are there enough Republicans who realize this?”

Despite Democrats’ majorities in both houses, a two-thirds vote is required to pass the state budget. This means at least two Republicans in the Senate and six in the Assembly must agree to the tax hikes (until the new legislative session begins Dec. 1).

This new plan replaces an earlier Schwarzenegger proposal including a 1.5-cent sales tax increase and deeper cuts to welfare and state grants to the elderly and disabled.

“At this point, there’s no sales tax increase,” Laird says, “and we removed some of the more draconian cuts to social services. But there are still the across-the-board cuts to education.”

The governor wants to cut about $2.2 billion from K-12 education (about 4 percent of their total budget), and about $300 million from community colleges (about 5 percent).

“These are cuts that I don’t support, but unless we have taxes and federal revenue to cover the entire deficit, there’s no way we couldn’t cut education,” Laird says. “Higher education and K-12 is 50 percent of the state budget.”

Monterey County Superintendent of Schools Nancy Kotowski says the loss of state money would equal approximately $19.2 million in mid-year cuts for the 2008-09 year – on top of a potential $17 million in cuts from the county.

Hartnell College President Phoebe Helm says a 5 percent reduction in state money represents a $1.5 million hit – cuts the college would have to make before the end of the 2008-09 school year.

“It would be absolutely devastating,” she says. “There’s no way to get to that point by cutting supplies or cutting travel – we’ve done that already. So we’d have to make determinations about those difficult choices and recommendations we’d make to the board of trustees.”

Cutting classes isn’t an option for Hartnell, Helm says. But it may be for Monterey Peninsula College, says Joe Bissell, MPC vice president for administrative services and business. If the state mandates a 5 percent cut, MPC would have to trim a little over $2.1 million between now and the end of the academic year. In addition to general “belt tightening,” like putting off travel and deferring computer upgrades, this could mean cutting classes for the spring semester.

“We certainly hope that lawmakers will determine other, more acceptable ways to balance the budget,” Bissell says. “Community colleges are one of the best bangs for the buck in educating people to better prepare them for jobs and produce a stronger workforce.”