Spending Cap Repeal, Gas Tax Hike to Go on June Ballot

Gov. George Deukmejian announced Thursday that he and legislative leaders have agreed to put a gasoline tax increase and spending limit repeal measure on the ballot next June, rather than risk a special election in November.

The decision to put the questions on the June primary ballot represents a victory for Democrats, who for months have been fighting a November special election on the grounds that conservative voters--the most likely opponents of the gasoline tax increase proposal--generally turn out in greater numbers during such elections.

In a related budget development, the Assembly approved its version of the plan to implement Proposition 98, the landmark school funding measure approved by voters in November, on 56-13 vote.

Deukmejian met for an hour with Assembly and Senate leaders of both parties before making the announcement on the June election.

Suggesting that he had come around to the Democrats’ point of view, the Republican governor said recent surveys of potential voters indicated “that the June ballot would provide a better opportunity” than in November for passage of the gas tax proposal.

The proposed 9-cent-a-gallon tax increase is the cornerstone of a 10-year, $18.5-billion transportation improvement program worked out over several months. At the same time they are asked to raise the gasoline tax, voters will be asked to relax the state spending limit so that the governor and Legislature can spend the money raised by the proposed tax increase.

In addition to those two complex and politically charged issues, Deukmejian and legislative leaders are considering a proposed constitutional amendment that would ask voters to repeal provisions of Proposition 98, which now guarantees schools 40% of state revenues, as well as the lion’s share of future budget surpluses.

Deukmejian said it is uncertain whether more than one ballot measure will be needed to address all of the issues.

“I think it can be done in one, (but) if it needs two, then it will be two,” the governor told reporters.

The Republican chief executive conceded that getting voter approval of the proposals will be a tough sell because of the complexity of the issues involved.

Deukmejian said voters will have to be convinced that if they agree to lift the spending limit to provide more money for transportation programs, they are not “going to invite further general tax increases in the future.”

Fiscal Year

To complicate things further, talks on long-term solutions to transportation funding problems, the spending limit and Proposition 98 have been linked to the more immediate problem of getting a budget passed by next Friday, the end of the state fiscal year.

Lawmakers are working under the threat of not being free to spend the bulk of a surprise, $2.5-billion tax windfall. Unless current law is changed, schools will get $1.9 billion of the estimated $2.5 billion windfall because of provisions of Proposition 98 and the spending limit.

Deukmejian and legislative leaders reported after Thursday’s meeting in the governor’s office that they are making “good progress” in working out an overall budget agreement.

“Everybody’s getting a little bit, and everybody’s giving an awful lot,” Senate President Pro Tem David A. Roberti (D-Los Angeles) said after the meeting.

One of the provisions of the Proposition 98 implementation bill approved by the Assembly on Thursday offers a one-shot solution to the spending limit problem by adjusting the way state aid to schools is legally counted.

Financial Aid

Basically, the bill would allow the Legislature to count financial aid to schools as local rather than state expenditures in a way that would allow lawmakers to spend an additional $900 million on health, welfare and other programs.

Debate on the Proposition 98 bill centered largely on a feud between big-city school districts, such as Los Angeles Unified, and smaller rural and suburban districts over how the financial pie will be split.

Assemblyman Pat Nolan (R-Glendale) accused the Los Angeles district of taking more than its share of state funds for years under the guise of helping the poor and disadvantaged, only to turn over a disproportionate share of the money to schools in West Los Angeles.

“The money they have been pilfering from our schools in the name of the poor isn’t going to the poor; it is going to the wealthy schools,” said Nolan, who helped negotiate the school funding package with the aid of other Republicans and suburban and rural-district Democrats.

Assemblyman Terry Friedman (D-Los Angeles) protested, maintaining that the new spending formulas are unfair because they grant some of the so-called “categorical funds,” which have historically been distributed on the basis of need, to all California districts without regard for the number of students in the special programs.

The 13 votes against the bill were cast by 12 Los Angeles Democrats and one Democrat from Oakland.

The Senate’s Proposition 98 implementation bill was whisked through two Assembly committees Thursday so that it can be heard on the Assembly floor Monday. The bill, by Sen. Gary K. Hart (D-Santa Barbara), is expected to be approved by the Assembly and sent to a conference committee where differences between the Senate and Assembly versions will be negotiated.

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