Angelides Disputes GOP Ads on Tax Proposals

SACRAMENTO — Phil Angelides wants to raise taxes. Of that there is no doubt.

But Angelides, the Democratic nominee for governor, said a new advertising blitz launched Friday by the California Republican Party contains a “complete fabrication”: that he is planning a “$10-billion tax increase” and a “tax on darn near everybody.”

Gov. Arnold Schwarzenegger used the same number in his own TV advertising campaign, which ended Thursday. But Angelides insists the figure is actually less than $5 billion, a more modest sum that would be extracted only from the wealthy or corporations.

A look at his proposals shows Angelides is closer to the truth. But his plan remains clouded by a lack of detail that has dogged him for months and shifted focus from his claim that Schwarzenegger has failed as governor.

“What it’s driven by is what do you need to balance the budget, fully fund schools, pay for the programs I have proposed, which is insuring kids, rolling back college fees and tuition,” Angelides said in an interview. “When you add it all up, it’s less than $5 billion.”

In a table-turning move, the GOP advertising campaign uses quotes from Angelides’ opponent in the Democratic primary, Steve Westly, to make its point. Westly was the first to use the $10-billion figure, in his primary ads.

With black-and-white images of Angelides walking backward, the GOP ad includes numerous Westly comments about Angelides’ tax plan, and ends with this one: “This is a recipe for disaster.”

“It’s not just a partisan approach; we’re trying to say that this is a serious issue being raised by people in both parties,” said Duf Sundheim, chairman of the California Republican Party. “It’s totally out of step with the mainstream, the people of California, and, second, the math just doesn’t add up.”

The ad campaign is expected to run statewide in every major TV market, at an estimated cost of $3 million. It includes a positive spot that says Schwarzenegger has “pulled the state back from the brink of bankruptcy.” The same team that created the Schwarzenegger ads is producing the GOP spots, Sundheim said.

For months, Angelides has declined to provide details of his tax plan, giving his opponents more room to define it themselves. He hasn’t said which corporate tax loopholes he would close to increase state revenues. Angelides has promised a full accounting — as soon as Schwarzenegger and the Legislature finalize the state budget. That is likely to occur within weeks.

“The numbers have shifted a little bit,” Angelides acknowledged, “but once we have a budget we will line-by-line it for you, so people can see in black and white what the numbers are.”

The Schwarzenegger campaign isn’t buying it. Matt David, a campaign spokesman, said California taxpayers should be concerned that Angelides hasn’t offered a detailed accounting of his plan, even as he continues to tout spending programs he would like to see.

“It’s clear Phil Angelides doesn’t understand kitchen-table accounting,” David said. “His numbers don’t add up, and California taxpayers are going to pay for it.”

The Schwarzenegger campaign keeps a spreadsheet of Angelides’ promises, which it says include $11.1 billion to close the deficit, increase school spending, provide universal preschool and expand various college and school programs. “Angelides promised at least $10 billion in higher taxes,” David said.

Angelides is running a campaign similar to that of Bill Clinton in 1992, when he was running for president. In fact, Angelides’ language virtually mirrors Clinton’s campaign book, “Putting People First,” which promised to reduce corporate tax loopholes, cut the federal deficit and require “the very wealthy to pay their fair share of taxes.”

But Angelides has struggled to counter the $10-billion claim in part because he is simultaneously proposing numerous government programs. That leads to an assumption that taxes must be increased to pay for them, which is not always the case. Some of his plans — such as increasing the number of school counselors — could be handled in the regular state budget, Angelides said.

The $10-billion figure also appears to be inflated because it includes one expensive item that no longer applies. Angelides supported Proposition 82, the proposed $2-billion tax increase on the wealthy to fund preschool programs, and it is included in the $10-billion calculations. But voters rejected the initiative in the June 6 primary, and Angelides now is distancing himself from a similar tax hike in the future.

Other things make Angelides’ tax-raising plan smaller. First, he would borrow $1.2 billion from the state budget reserve. Schwarzenegger wants to save about $2.2 billion for a rainy day, but Angelides would save less. And Angelides would pay schools an extra $3.2 billion over two years, instead of one. Both budget maneuvers would raise taxes by less than what his opponents claim.

In total, Angelides would spend about $5.7 billion in his first year to close the state deficit, increase school spending, roll back college fee increases and expand college grants and health insurance for children. But Angelides says he would reduce the need for tax increases to about $4 billion by taking from the reserve, levying more penalties against tax cheats and streamlining government.

Bill Carrick, campaign strategist for Angelides, said the Schwarzenegger and GOP advertising blitz in the middle of summer is unlikely to have any impact by the time voters make their decision in November.

By focusing on the $10-billion figure and claiming that Schwarzenegger has gotten the state’s fiscal house in order, Carrick said, the GOP campaign shows it is “very, very desperate to change the subject from Arnold’s failed record. They see themselves in a heap of trouble, and they want to create a smokescreen.”