Sacramento - California Governor Arnold Schwarzenegger on Thursday proposed several stringent measures to curb spending and increase taxes in order to deal with a budget shortfall, this office said.

The proposals include a steep increase in state sales tax, a five cent tax on every alcoholic drink sold and an estimated 4.5 billion dollars in welfare and other budget cuts.

The moves are meant to close a projected budget shortfall of 24 billion dollars by the middle of 2010.

Schwarzenegger's Republican colleagues in the legislature fiercely opposed previous attempts to raise taxes, forcing a record delay in passing the state budget last month.

The sales tax hike of 1.5 cents per dollar will raise statewide sales tax 7.25 per cent and could bring in more than 10 billion dollars by fiscal 2009-2010.

Schwarzenegger also proposed extending the sales tax to new categories such as vehicle repair, veterinarian services, amusement parks and sporting events. Plus a separate 9.9 per cent tax on the extraction of oil in California and a 12 dollar increase in annual vehicle registration fees.

The governor called for 2.5 billion dollars in cuts from schools and community colleges and for lowering health and welfare subsidies to the aged, blind and disabled.

The governor said "drastic measures" were needed because the state has lost so much money in tax revenue since the legislature passed the state budget in September.

"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 said after opening an emergency session of the legislature to deal with the budget shortfall.

"We are living in a different world now," the governor said. (dpa)