State Tax Returns Appear to Boost Revenue Estimate

State revenues could be $810 million to $910 million higher than Gov. George Deukmejian anticipated in January when he proposed a $33.6-billion budget for 1985-86 with a surplus of $1.04 billion, Deukmejian’s budget chief said Wednesday night.

Jesse Huff told an Assembly Ways and Means subcommittee that his Finance Department’s latest forecast, still unseen by the governor, was an anomaly reflecting conflicting trends that left him baffled.

The revised figures are certain to fan speculation that the Republican governor might seek a politically popular tax break that could coincide with his campaign next year for a second term.

Huff said he will brief Deukmejian today on the revisions, which are based partly upon personal income tax returns that are averaging $50 higher than anticipated.

“I’m still uncomfortable with the number personally,” said Huff, who said he is baffled by the high income tax returns. “This is an unusual phenomenon. It causes us some concern.”

Subpoenaed by Waters

Huff made the disclosure when subpoenaed by the subcommittee’s chairwoman, Maxine Waters (D-Los Angeles), in a highly unusual move to uncover the Administration’s latest economic data before its scheduled release later this week.

Huff, who revealed the figures after extensive prodding by Waters, said still-unfinished estimates indicate that revenues may be from $550 million to $650 million higher than previous forecasts--even after subtracting $260 million in newly budgeted state expenses.

“Wow!” responded Waters. “And I bet that’s conservative.”

“I’m really completely blown away,” said Assembly Majority Leader Mike Roos (D-Los Angeles).

“It’s time for a tax give-back,” Assemblyman William Baker (R-Danville) said. Baker later said that he was joking and that it is too early to consider returning the money to taxpayers.

Huff said the income tax returns do “not square with prior experience” and wage and employment trends, and he acknowledged that they may reflect more care shown by taxpayers in reaction to the state’s newly announced crackdown on tax cheaters after an amnesty period earlier this year.

Huff said that sales tax revenues will remain about the same as in previous estimates, that revenues from business taxes will rise somewhat, that the inflation estimate will drop and that car sales and housing starts will be up slightly.