Assembly Democrats Vote to Divert Governor’s Tax Rebates to Schools

Assembly Democrats on Wednesday pushed through a bill to provide $700 million in state surplus funds to schools instead of returning the money to the taxpayers as proposed by Republican Gov. George Deukmejian.

On a 44-29 vote, with most Republicans voting no, the measure was sent back to the Senate for expected concurrence in Assembly amendments.

The governor, however, is expected to veto the legislation.

Deukmejian, talking to reporters Wednesday night, said the Assembly’s vote was “rather insincere” because, under provisions of a state spending limit, the $700 million must be rebated to taxpayers--a position disputed by most Democrats. “They’re playing some political games with this bill, mostly for show,” the governor contended.

Assembly Speaker Willie Brown (D-San Francisco) said it is “good policy and good politics” to vote for the increased school aid.

Speaker’s Viewpoint

Brown said California has the dubious distinction of being among the top five states in overcrowded classrooms and school dropouts. Without more money, he said, “We will slip even further behind.”

The bill, sponsored by Sen. Bill Lockyer (D-Hayward), would give an additional $550 million to K-12 school districts and $150 million more to community colleges.

Assemblyman Bill Leonard (R-Redlands) complained that “a vote for this bill means a vote against the governor’s tax rebate plan. We can’t spend the money two ways.” Leonard also argued that the extra money would not guarantee any “reform” in the running of schools “so we get absolutely nothing for it.” Assemblyman Bill Baker (R-Danville) called the bill a “proverbial red flag in front of a bull” rather than a “serious attempt” to give more money to the schools. Baker also predicted the governor would veto it.

Deukmejian proposed the tax rebate because state expenditures have surpassed the limit set by Proposition 4, a ballot measure overwhelmingly approved by voters in 1979.

Revision Plan Approved

While the Assembly debated what to do with the excess tax revenues, the Senate Revenue and Taxation Committee approved legislation that would revise the spending lid to allow for higher expenditures by state and local governments. Democrats voted for the proposal while Republicans opposed it.

Later, Deukmejian also said he opposes that measure.

“People voted for this (spending limit) and elected officials ought to try their best to make it work,” he said.

The $700 million was found last month when it was disclosed that soaring state tax revenues will generate an extra $2.7 billion over the next 14 months. Deukmejian’s proposal to give the $700 million back to the taxpayers was immediately opposed by state schools Supt. Bill Honig and Democratic legislators, who wanted it spent on schools.

Deukmejian estimates that taxpayers would receive a 10% state income tax refund with a maximum of $95 per person under his proposal. He also has proposed using part of the $2.7 billion to increase state spending on education, toxics control and AIDS research.

Assemblywoman Teresa Hughes (D-Los Angeles), chairwoman of the education committee, said during the floor debate that the governor’s tax rebate plan would amount to only about $1 per week. “What can anyone buy for $1 a week?” Hughes asked. “We can buy a lot of things for children in our schools. This is a good investment.”

‘Let the People Decide’

Assemblyman Nolan Frizelle (R-Huntington Beach) replied: “I suggest we let the people who will get the tax rebate answer that and decide for themselves.”

Proposition 4, sponsored by anti-tax crusader Paul Gann, placed a limit on how much money the state, cities, counties and school districts can spend, based on population increase and inflation.

State tax revenues exceeding the limit must be returned to the taxpayers, although the law also allows the money to be diverted to cities, counties and school districts.

The Senate Revenue and Taxation Committee approved on a 5-3 vote a proposed constitutional amendment that would ease restrictions imposed by the Gann limit and sent it to the Constitutional Amendments Committee.

The action represents the first time this year that legislation to modify the limit has cleared any legislative committee. It would appear on next year’s ballot.

Position of Critics

Critics have maintained that the limits on government appropriations are too inflexible and prohibit the delivery of needed services at a time when state government is awash in money.

Sen. Gary K. Hart (D-Santa Barbara) estimated his proposal, while retaining expenditure limits, would enable state and local governments to increase their appropriations by 20% over current levels.

He argued that since enactment of the Gann initiative nearly a decade ago, issues then unforeseen have emerged, such as AIDS and toxic wastes, but the limit has stifled the ability of government to deal with them.

The Gann initiative places a limit on spending tied to population growth and the national rate of inflation. The Hart measure would substitute personal income in California for the rate of inflation as a measurement.

Supporters maintain that personal income is a more accurate indicator of economic growth. As a result, state and local governments would be able to spend more before reaching their limit.