GOP Assembly Members Urge State Tax Cuts

Assembly Republicans Thursday joined growing opposition to Gov. George Deukmejian’s plan to spend nearly $900 million in extra state revenues, proposing instead that $614 million of it go for tax cuts.

“It’s the position of Assembly Republicans that the state was able to operate without that money a week ago, and we can operate just fine without that money in the future,” Assembly GOP Leader Pat Nolan of Glendale said in presenting an alternative plan at a press conference.

The Nolan plan, which appeared to have little support elsewhere in the Capitol, proposed that about $300 million be used for an income tax cut--for an average savings of $40 to $50 per taxpayer--with the rest being spent to finance repeal of the state’s unitary tax system, which would benefit multinational corporations.

Difference of Opinion

Although Nolan carefully avoided direct criticism of Deukmejian, his proposal reflected the sharpest difference of opinion between the governor and Assembly Republicans since the tumultuous days of the 1983 fiscal crisis, when they fought a tax proposal backed by the Republican chief executive.

Nolan’s refusal to criticize the governor was not universal among Republicans, who appeared generally dissatisfied with the way the matter of the surplus revenues is being handled by Deukmejian.

The announcement of the nearly $900 million in extra revenues surfaced during Democratic questioning of Finance Director Jesse R. Huff at an Assembly subcommittee hearing last week and it clearly surprised Republicans, as it did Democrats.

Key GOP lawmakers said that none of their priorities was reflected in the plan the governor had proposed for spending the extra revenue.

The governor, through letters issued by the Department of Finance, earmarked $264 million of the surplus to finance unexpected workload and caseload increases in current programs. Most of the additional $614 million was budgeted to clear up “moral and legal obligations” to local government agencies, such as paying off $216 million in claims arising from school desegregation programs and replenishing a special fund maintained to help finance the 911 emergency telephone system.

An additional $1 billion of the surplus would be maintained as a reserve.

None of the legislative leaders is arguing with the governor’s expenditure of $264 million to pay for workload increases.

In budgeting the additional $614 million, however, Deukmejian ignored legislative recommendations for either a tax cut or spending on special needs, such as proposals to finance an expected deficit in the state highway trust fund.

Privately, one key GOP legislative source said: “Republicans are not too delighted about the governor’s plan. But what they are especially not delighted about is not being involved, not being part of that plan.”

Tells of Displeasure

In the upper house, Senate Republican Leader James W. Nielsen of Woodland said he is so angry about the way the announcement of the surplus revenues came out that he angrily communicated his displeasure to “the appropriate parties” in the governor’s office.

The issue came up during a meeting between the governor and Republican leaders in the Senate on Wednesday.

Nielsen said Senate Republicans also discussed the governor’s plan during a closed-door caucus Thursday. He said that there is general agreement that $60 million of the surplus revenues should be used to increase the community colleges’ budget and that a major share should be earmarked for road, highway and related transportation projects.

“Our caucus is very united behind using a portion of that money for transportation, and a strong majority would like to see more money for community colleges,” he said.

Indicating that Nolan’s tax cut proposal may not fly in the Legislature, Nielsen said, “We will consider talking about a tax cut, but it is not the highest priority in our caucus.”

Turning Thumbs Down

Meanwhile, Democrats in both the Senate and Assembly were also turning thumbs down on elements of the governor’s plan.

An alternative budget proposal is being put together by the Assembly Ways and Means Committee. A preliminary draft would cut the governor’s proposal by $348 million and channel that money into expanded support of child care, toxic cleanup and community colleges, among other programs.

Senate President Pro Tem David A. Roberti (D-Los Angeles) said Democrats in the Senate discussed various proposals during a meeting Thursday. Among them were suggestions that part of the money be channeled into child care, housing and transit programs, but no concrete plan was adopted.

Deukmejian’s deputy press secretary, Bob Taylor, played down differences between the governor and GOP legislators.

“The governor knows that the Legislature has a role and that they probably see things from a different perspective than he does,” he said. “He understands that. The governor simply feels that we have a legal and moral obligation to finish paying off some of our old obligations.”