Panel Favors Move to Accelerate Tax Revenues

The Senate Appropriations Committee gave bipartisan approval Wednesday to legislation that will increase tax revenue by $560 million to restore education, prison and county programs that were cut from the proposed $44.2-billion state budget.

Two Republicans, including Senate GOP Leader Ken Maddy of Fresno, voted for the tax package, which was approved 7 to 3, setting the stage for a floor vote today.

Maddy called the measure a “reasonable solution” to an expected $2-billion drop in tax revenues over the next 12 months. State officials blame the decline in receipts on changes in state and federal tax laws in 1986 and 1987.

Earlier Payments

The bill would bring in extra revenue during the new budget year by speeding up the payment of taxes already owed the state.

Gov. George Deukmejian has vowed to veto any tax increase legislation, or any bill that even sounds like it might be a tax increase.

But the legislative counsel’s office has decided that the bill, because it only accelerates the collection of taxes, technically cannot be called a tax increase. The distinction is important because it means the bill needs only a majority vote in the Assembly and Senate to pass, rather than the two-thirds majorities required of tax increases.

Assemblyman Phillip Isenberg (D-Sacramento) agreed with the opinion, saying his bill “absolutely does not raise taxes.”

Governor Hesitant

Deukmejian’s office indicated that the governor is opposed to the measure. Deukmejian Press Secretary Kevin Brett said: “There is no enthusiasm in the governor’s office for the bill. Despite claims to the contrary, we could very easily see that bill being labeled a tax increase.”

Deukmejian did support a similar package of tax speed-ups in 1983, insisting then that they were not tax increases.

The bill would raise $560 million by requiring certain individuals and corporations to pay taxes earlier, so tax receipts that normally would not be due until 1989 could be used in the 1988-89 budget year that will begin Friday, rather than the 1989-90 fiscal year that will begin a year from now. Budget years run from July 1 to June 30.

Under the bill, taxpayers who make quarterly payments of their estimated taxes would have to pay 90% of their expected taxes, rather than 80%, as is now required. Corporations with worldwide operations would have to pay 90% of their estimated taxes, rather than the 70% now required. Corporate estimated tax payments now due in July, 1989, would be due in June, 1989. Companies would also be required to turn over sales tax receipts to the state faster than they do now.