Let Taxpayers Rule on Rebate, Governor Says

Gov. George Deukmejian, seeking to win approval of his controversial tax rebate plan, proposed Saturday that individual taxpayers be allowed to choose whether to pocket the money or give it back to the state.

“After calculating his or her rebate, each taxpayer can decide to keep it or to voluntarily donate it to government,” Deukmejian said in his weekly radio address.

Rejecting a proposal that the state spend $700 million in unexpected revenue on public schools, Deukmejian has insisted that the windfall be returned to the taxpayers. He has called for a 10% income tax rebate, with a maximum of $95 for individuals and $190 for couples.

Now, under the Republican governor’s latest plan, taxpayers who decide to give their refund back to the state could designate that it go toward such programs as education, AIDS research, roads, toxic cleanup or law enforcement, said Kevin Brett, Deukmejian’s press secretary.

Attacked by Roberti

The governor’s plan was immediately criticized by Senate President Pro Tem David A. Roberti (D-Los Angeles), who charged it was a “pernicious” proposal that would ultimately erode California’s system of funding public education. Such a plan, he said, could lead to reducing the educational tax burden for parents who have children in private schools, or for taxpayers who have no children at all.

“Funding the public school system is everybody’s business because it’s to society’s benefit,” Roberti said in a telephone interview. “Why not tomorrow say that those who have their kids in private schools don’t have to pay?”

And state schools Supt. Bill Honig charged that the governor’s plan was “a smoke screen” to avoid giving badly needed funds to the schools.

“It’s a clever, shrewd tactic to avoid the issue,” Honig said. “If the schools are important enough to this society, then we should pay what is necessary.”

Under Deukmejian’s proposal, Californians would designate where their refund would go either through a check-off system on their income tax returns or by returning a form they would receive in the mail. Brett said the Legislature would decide which method to use.

Decision for Taxpayers

Although the $700 million in surplus revenue was collected through a variety of taxes, only those who pay state income taxes would decide how the windfall would be distributed, under the governor’s plan.

“I believe this is a reasonable proposal that should be acceptable to all sides,” Deukmejian said. “Taxpayers who want the rebate that is legally owed them will get it. Taxpayers who wish to give their money to government may do so.”

In the speech, Deukmejian said he hoped his proposal would end an impasse over the proposed $41.1-billion state budget for the fiscal year beginning July 1.

The budget became entangled in the refund issue when Republican lawmakers in both the Senate and the Assembly sided with Deukmejian and blocked passage of the spending plan, saying they would not vote for it unless the rebate wins approval.

The Democratic majority in both houses, however, agreeing with Honig that schools need more money, passed legislation to spend the $700 million on education.

Response From Governor

Deukmejian, in turn, vetoed the measure, saying it would be unconstitutional.

“In the interest of breaking the budget deadlock,” Deukmejian said in his broadcast, “I am in favor of letting the taxpayers decide how they want to spend their rebate.”

Democratic leaders, including Roberti, have called for an election next year to let the voters decide whether the $700 million should be spent on the schools or returned to the taxpayers.

The governor, who said in his radio talk, “let’s show some faith in the people,” has opposed holding such an election. He has maintained that a statewide vote on the rebate question would violate the Constitution by seeking to raise the state spending limit after the fiscal year had ended.

Roberti, however, likened Deukmejian’s voluntary donation system to an election in which only a portion of the electorate would get to vote: those who have paid state income taxes.

A Vote for Everyone

“In our proposal everybody gets to vote,” Roberti said. “In his proposal, the electorate is skewed to upper-income people who are more likely to be Republicans. It’s the kind of election a Republican governor would love.”

Roberti also charged that Deukmejian’s proposal is a deliberate attempt to open the door to a system in which wealthier taxpayers can reduce their contributions to public education.

“He wants to look like a compromiser today so tomorrow he can undermine the funding system for the public school system,” Roberti charged. “I think the governor’s suggestion is terribly pernicious and I think he knows it.”

In recent weeks, the governor has argued that Proposition 4, approved by the voters in 1979, requires the state to return the $700 million to the taxpayers because it exceeds the state spending limit established by the constitutional amendment.

However, a variety of legal and budget experts disagree with the governor’s interpretation of the law, including the business-supported California Taxpayers Assn., Atty. Gen. John Van de Kamp, nonpartisan Legislative Analyst Elizabeth Hill and Legislative Counsel Bion Gregory. They have all issued opinions or reports concluding that Proposition 4 gives the state several alternatives, including transfering the money to schools and other local governments.

‘Intent of the People’

In his radio talk, Deukmejian appeared to back away from his claim that the rebate is required by the Constitution, saying instead that it was “the intent of the people” that the money be refunded.

“Many of your elected representatives and other government officials do not like Proposition 4,” he said. “They are scurrying around, almost desperately, trying to find any possible means to spend that extra money instead of returning it to you.”

And Deukmejian asserted: “It is their effort to circumvent this law that is now holding up passage of California’s new state budget.”