Governor’s Tax Plan Seen Hurting GOP Candidates in Fall

Ed Rollins, director of President Reagan’s 1984 reelection campaign, has advised Republican Assembly leaders that GOP candidates--especially Vice President George Bush--could be hurt in California in November by Gov. George Deukmejian’s tax increase plan.

Rollins, in an interview Tuesday, confirmed that he counseled the Republican lawmakers at a private meeting last Friday that Deukmejian’s plan “takes away one of Bush’s better issues” against Massachusetts Gov. Michael S. Dukakis, the probable Democratic presidential nominee.

Deukmejian, in order to resolve an unexpected $2.3-billion shortfall in state revenues this year and next, has proposed an $800-million tax increase and $450 million in budget cuts. Rollins, repeating what he said had been his advice to Assembly GOP leaders, told The Times that “the Bush people want to run against Mike Dukakis as someone who raised taxes,” and the governor’s plan “gives Dukakis tremendous cover. I think it hurts the Republi can cause everywhere.”

Rollins, who was White House political director during Reagan’s first term and is now a Washington-based political consultant, added that “Republicans, who have fought every tax increase, don’t want a tax increase. I think Republicans weaken their hand and I think George Deukmejian weakens his hand” by pushing the plan.

However, Republican Assembly members contacted by The Times discounted the impact of the governor’s plan on their reelection efforts. For example, Assemblyman Wayne Grisham (R-Norwalk), who is expected to face a tough reelection fight in November, said: “I don’t think it (the governor’s proposal) is going to hurt or help anybody” politically.

Rollins, who was chairman of New York Rep. Jack Kemp’s aborted presidential campaign, has volunteered his services as a consultant for legislative contests this fall and plans to meet with the GOP Assembly leadership once or twice a month, he said.

‘Serious Concerns’

Assembly Republican Leader Pat Nolan of Glendale declined to discuss Rollins’ advice about Deukmejian’s tax plan, but acknowledged that among some GOP lawmakers there are “real serious concerns” about the consequences of the proposal. However, he expressed optimism that the Assembly will eventually side with the governor.

Assembly Democratic floor leader Thomas Hannigan of Fairfield made it clear in an interview that the majority party will not take the lead in passing the governor’s proposed tax increase. He said Democrats will be looking to Republicans to “author whatever legislation is necessary to raise taxes.”

Also on Monday, Democratic state Controller Gray Davis estimated that California taxpayers will pay an additional $6 billion over the next decade if Deukmejian’s plan to freeze indexing of personal income tax brackets is enacted. Current tax law allows inflation adjustments in tax rates, which prevent some taxpayers from being pushed into a higher tax bracket. He contended that the governor’s description of his proposal is “deceptive and misleading.”

Kevin Brett, Deukmejian’s press secretary, accused Davis of “attacking the governor’s balanced approach while failing to propose his own solution.”

Earlier in the day, Deukmejian told reporters after the annual governor’s prayer breakfast that it is “unfair” to label his plan a tax increase.

“What we’re saying, in effect, is that when the (1987 tax conformity) legislation was enacted everyone believed it” would not affect revenues, Deukmejian said, adding that it now requires a “temporary adjustment.”