Democratic leaders said Tuesday they will press to eliminate some of the state's tax breaks for corporations and individuals before they will agree to make cuts to state services.

A handful of lawmakers, joined by Democratic state Treasurer Phil Angelides, said they plan to make the issue a key point in budget negotiations with Republican Gov. Arnold Schwarzenegger this year.

"As this budget debate gets going in earnest, we intend to fight very hard to close the unjustified corporate tax loopholes that have riddled our tax code and are now costing us billions of dollars," Angelides said.

Democrats say newly approved tax incentives and breaks have contributed to the state's recent budget problems. Republicans say eliminating the tax cuts would amount to a tax increase on businesses, residents and farmers.

Angelides and others said the tax breaks become a permanent part of the budget that does not face yearly review, unlike state programs and other spending.

The group Tuesday announced a trio of bills that would end eight "tax loopholes," worth $386 million, immediately including a law that lets California residents avoid use taxes on property such as yachts purchased and stored for 90 days out of state. They also want to do away with a package of sales tax exemptions for farmers agreed upon to help win Republican votes for a 2001 budget deal.

The legislation also would require that other tax breaks be identified in the governor's budget each year and be reviewed regularly, and require a review of tax breaks for corporations that operate offshore.

"Our questions are quite basic: Do these tax expenditures really create jobs, and if so, where are these jobs and what kind of jobs are they?" said Assemblyman Mark Ridley-Thomas, D-Los Angeles.

Some Republicans and taxpayer advocates criticized the legislation, saying it will harm the state's business climate and fails to cut spending in other areas.

"The idea of raising taxes by eliminating incentives is misguided and a distraction from what the public wants, and that is for the Legislature and government to control the state's unbridled spending," Larry McCarthy, president of the California Taxpayers' Association, said in a statement.

H.D. Palmer, a spokesman for Schwarzenegger's Department of Finance, said he did not know if the governor would support any legislation to eliminate tax breaks, but Schwarzenegger has campaigned on a pledge to make the state more business-friendly.