Governor Backs Tax Break for State’s Farmers

Gov. George Deukmejian, pushing his “rural renaissance” program to aid the state’s hard-pressed farm and timber regions, pledged Tuesday to support a major tax break for agriculture.

The governor, speaking to reporters during a tour of Sacramento Valley’s rice-growing areas, ruled out a general tax cut for individual state taxpayers during the 1986 election year.

“We have taken recognition of the fact that agriculture in California has been sustaining some major losses,” Deukmejian said of his support for a farmers’ tax break.

“In the very beginning, when other farmers were being hit, California didn’t feel it. But now it has become very apparent that there have been a number of (farm) bankruptcies and foreclosures.”

Asked whether he would extend tax breaks to the general population, Deukmejian said: “No, we don’t have any intention of proposing that.”

The Republican governor, elected to office on a pledge to limit taxes, is in the midst of completing his fiscal 1986-87 budget for presentation to the Legislature early in January.

The farming tax break, to be included in that budget proposal, would allow growers who have been hit with economic losses to deduct those losses in future years as a means of reducing their taxes. Under present law, losses must be deducted in the tax year in which they are incurred.

A bill introduced this year that would authorize that tax change was endorsed by a long list of lawmakers from farming areas but is stalled in the state Senate. A spokesman for the governor said the Administration will work with the measure’s author so that the proposal can be enacted next year.

Democrats in the Legislature, and some Republicans, have suggested the possibility of a general election year tax cut or rebate, particularly if the state’s budget surplus grows. Deukmejian, however, has vowed to maintain a $1-billion reserve for emergencies and has vetoed measures that would let it go below that level.

As of last July, the surplus was estimated at $1.04 billion. It has dropped to $778 million because of expenses of the summer fire season and a costly emergency prison construction program. Deukmejian said Tuesday that he does not expect the surplus to grow much in the coming year.

Economic Development

The tax proposal to help beleaguered farmers is an adjunct to Deukmejian’s “rural renaissance” plan, which he proposed in September to bolster the economy of rural California, which he claims was largely ignored by former Democratic Gov. Edmund G. Brown Jr.

Included in the plan is a $30-million economic development fund to finance an array of public works projects and other programs intended to attract major business to rural areas.

To dramatize the problems faced by farmers, Deukmejian toured a rice processing plant Tuesday and spent about 45 minutes in a closed-door session with rice growers.

State Food and Agriculture Director Clare Berryhill, who accompanied the governor, said after the meeting that Deukmejian made no promises to the growers, who have been hit particularly hard by foreign competition and the dollar’s strength overseas. He said the tax break supported by the governor would be a great help to the industry.

Later, in a speech to about 500 Rotarians in Chico, Deukmejian said, “As long as I’m governor, the years of neglect and indifference to rural California are over.”

Deukmejian ended Tuesday’s tour with a reception for local Republican candidates in Marysville.