A proposal in California to tax veterinary services to help close state budget gaps appears to have been dropped in lawmaker negotiations.

“We’re feeling pretty hopeful that it is not in this phase” of the budget negotiations, says Valerie Fenstermaker, executive director of the California Veterinary Medical Association (CVMA). “But we have to keep working at it.”

In November, Gov. Arnold Schwarzenegger proposed implementing a 10-percent sales tax on veterinary services, including routine exams and vaccinations, as a way to ease an estimated $40-billion state revenue shortfall. The state has not passed a budget since 2007, and the governor’s office is threatening to lay off 10,000 workers if a spending plan is not hammered out soon.

Whether the veterinary services tax proposal truly has been rejected is not entirely clear at press time.

The latest negotiated plan between the governor and the top four state legislators was revealed to the public on Tuesday, in very broad terms. Nobody apart from the leaders has seen the actual language. But, during the announcement, at least some of the plan’s specific measures for raising revenue were discussed, and the veterinary service tax was not among them.

What is clear, however, is a plan to raise personal income taxes across the board, increase California's vehicle license fee and increase gasoline taxes by 12 cents per gallon as well as the current sales tax by 1 cent on the dollar.

Alicia Trost, a spokeswoman for Senate President pro Tem Darrell Steinberg, says lawmakers are not revealing details of the plan at present because it is scheduled to go to the floor of the Legislature’s two chambers on Friday, where a vote could take place.

But she says newspaper reports about the plan are accurate and notes that none of the reports mention the veterinary services tax.

“So, good news for you,” she says.

The change comes just days after California’s Legislative Analyst’s Office advised against the idea, predicting that such a tax would create “inequities in the tax structure” because it suggests taking away the sales tax exemption from some services but not all. Opponents of the sales tax also warned that it could increase the cost of affected veterinary services by as much as 10 percent, which could significantly decrease demand.

CVMA has lobbied heavily to block the tax proposal, leading a letter-writing drive that implores veterinarians to contact their individual legislators and the governor’s office.

Fenstermaker says the grassroots effort has been successful, spurring what she estimates to be "thousands and thousands" of letters, e-mails and phone calls.

The initiative could be resurrected as state budget discussions continue. However, Fenstermaker is optimistic, stating that the tax proposal came from the governor and probably does not have much support outside of that office.

“We talked with a lot of legislators who did not think it was a good idea,” she says.