Posted: November 7, 2008, 12:37 p.m., EST

California Gov. Arnold Schwarzenegger announced a plan Thursday that would  raise the state's sales tax rate and  apply it to veterinary services, among other services, to help fix the state’s $11.2 billion  budget shortfall.

“We have drastic problems that require drastic and immediate action—we must stop the bleeding right now,” Schwarzenegger said in a statement.

The state's sales tax rate is 7.25 percent. Many counties add to that basic rate. Under the proposal, Los Angeles County's sales tax rate would be 10.25 percent.

Hawaii, New Mexico and South Dakota are the only states that  currently tax veterinary medical services, including routine exams and vaccinations, according to the American Veterinary Medical Assn.’s state tax summary report.

While California does not tax ancillary veterinary services, such as grooming and boarding, or prescription medications, it does tax non-prescription products, as do 33 other states.

Only eight states charge no taxes of any kind on animal products or services.

“The regulations and exemptions on sales tax vary greatly from state to state,” said David Kirkpatrick, AVMA media relations manager.

Members at the California Veterinary Medical Assn. are not thrilled with Schwarzenegger’s plan.

“We strongly believe that pets are members of the family,” said Valerie Fenstermaker, CVMA executive director. “Any tax on veterinary services may prevent people getting good medical care for their pets. We believe that veterinary care, along with human care, should not be taxed.”

Fenstermaker said CVMA  is exploring its options to see what it could do to prevent this from happening.

In addition to the tax increases, Schwarzenegger proposed spending cuts in education, health care and welfare payments.

The plan will now be negotiated among leaders of the state Legislature. <HOME>