Panel Says Revenue Could Trigger a 2nd Tax Rebate

California taxpayers, already in line to receive a $1.1-billion tax rebate this year, could receive another $428 million next year because of higher than expected tax revenues, a state fiscal advisory commission said Monday.

The Commission on State Finance, in its quarterly report on tax revenues and expenditures, said tax revenues are currently running $473 million higher than previously expected by the Deukmejian Administration for the budget year ending in June, 1988.

The rebate would result because the state is now just $45 million below the spending limit approved by voters in 1979. The difference between the higher revenues and the amount of spending allowed under the limit constitutes the potential rebate.

At the end of any given budget year, according to the voter-approved initiative, state revenues that are above the legal limit must be rebated to taxpayers.

But the governor and Legislature can change the formula by shifting some of the state’s revenues to local governments, meaning a portion of the potential rebate would go to cities, counties and school districts, instead of individual taxpayers.

Commission officials said they expected the governor and Legislature to change the various funding formulas.

“Our higher revenue projections could trigger another rebate, but we believe it is more likely that the governor and Legislature will adjust the limit,” said Brad Williams, director of revenue forecasting for the commission.

This year, the commission’s revenue forecasts have been better than those made by the Deukmejian Administration.

Williams said the state was seeing “increases in all the major tax sources, caused mainly by a strong economy. Business activity and employment are both up.”

An Administration budget official said it would not release its own revised revenue and expenditure reports until November.

“There is no way we can refute the report at this point because we haven’t looked at our own numbers yet,” said Stan Stancell, assistant director of the Department of Finance.

Deukmejian, a strong supporter of the spending limit, reiterated to reporters Monday that he might consider changes in the law that would give the state more maneuvering room.

“We are going to be looking at the (spending limit) internally and also discussing it with legislators instead of reporters,” Deukmejian told reporters after a speech to members of the California Senior Legislature.

Mentioning that the author of the 1979 initiative, Paul Gann, is trying to get a measure on the ballot in 1988 that would amend the original initiative, Deukmejian said, “We want to sit down now and take a look at it and determine whether or not it needs any kind of modification.”