Gov. George Deukmejian and legislative leaders agreed on a plan Monday to increase the state sales tax by one-fourth of a cent for 13 months to raise $800 million for Northern California earthquake repairs and relief.
Deukmejian called the Legislature into special session beginning Thursday to consider the proposal, which appeared to be greased for quick passage.
The sales tax increase would take effect Dec. 1 and expire automatically on New Year's Eve, 1990.
All California consumers will pay the higher tax, even though the funds will largely benefit only the earthquake-stricken San Francisco Bay Area and adjacent Santa Cruz-Hollister regions. But Senate President Pro Tem David A. Roberti (D-Los Angeles) noted that the entire state helped pay for earthquake relief in Whittier and the San Fernando Valley after those areas were rocked by temblors in 1987 and 1971, respectively.
"This is the kind of hazard, catastrophe that can strike any part of the state," Roberti said. "It was just by the grace, or the act--whatever the word is--of God that the north was hit and not the south."
The devastating Oct. 17 earthquake in Northern California killed at least 63 people and caused several billion dollars in damage. It is estimated in Sacramento that the federal and state governments may have to spend between $4.5 billion and $5 billion repairing roadways and public buildings and providing relief for victims.
Last week, Congress passed and President Bush signed a record $3.45-billion relief package, most of which will go to California. Some of the money could go to victims of Hurricane Hugo in South Carolina.
Deukmejian initially said after Monday's two-hour meeting with legislative leaders that his Administration's "best estimate" is that the state's share of repair and relief costs will be $800 million. But later, he acknowledged that this probably will not cover all costs and said the state undoubtedly will have to dip into its emergency reserve, now estimated to be between $674 million and $1.1 billion, depending on whose figures are accepted.
Whatever the state's total cost, it will exceed by many times any other disaster-relief package ever provided by Sacramento. The relief package for the 1987 Whittier earthquake, for example, was roughly $91 million.
The governor and legislative leaders clearly adopted the revenue-raising plan that is most acceptable to voters. A statewide survey by the Los Angeles Times Poll last weekend showed that most Californians are willing to pay a higher sales tax temporarily to raise money for earthquake relief, but they strongly oppose another option--increasing the gasoline tax. In the poll, people on the average said they would be willing to have the sales tax hiked by about 1 1/2 cents for a period of roughly two years.
Deukmejian said a gasoline tax increase was rejected primarily because it would not raise as much money as a sales tax. Also, with a sales tax increase, "the burden is shared by everybody, not just carried by motorists."
Beyond that, the governor conceded, there was a political reason for not proposing a temporary gasoline tax increase: He and legislative leaders already face a tough enough task trying to persuade voters to approve a permanent 9-cent-a-gallon gasoline tax increase next June to finance highway construction, without first antagonizing motorists with a temporary gas tax hike.
But now there could be a potential problem for officials in Orange and San Bernardino counties who are pushing half-cent sales tax increases on next Tuesday's municipal ballots to raise money for road and transit projects. The governor dismissed this, however, contending that a relatively small quarter-cent state sales tax increase should not affect local voters.
The current sales tax ranges from 6 to 7 cents on each dollar of sales throughout the state, depending on local levies.
Agreeing with Deukmejian on the plan, besides Roberti, were Assembly Speaker Willie Brown (D-San Francisco), Senate Minority Leader Ken Maddy (R-Fresno) and Assembly Minority Leader Ross Johnson (R-La Habra).
The governor and legislative leaders are counting on a quick legislative session--only two days, it is hoped but more likely extending into the weekend.
The package of bills will require a two-thirds vote of each house, but none of the legislative leaders forecast strong opposition, even among conservative Assembly Republicans who abhor any notion of a tax increase.
"Any reasonable person would support a tax increase if they believed it necessary," GOP leader Johnson said.
Later Johnson added, "There was some relief that (only a quarter-cent) over a 13-month period would probably meet the need. . . . What's the old line from the Johnny Cash song, 'I don't like it but I guess things happen that way.' You have to do it."
Deukmejian and the legislative leaders agreed that the relief portion of the package would be comparable to urgency bills passed after the Whittier quake, although much larger in scope.
Two years ago, the Legislature passed a bill providing families and individuals who suffered uninsured losses with cash grants of up to $10,000 for clothing and other personal items. Lawmakers also passed legislation setting up a fund to provide low-interest loans to rebuild housing, and homeowners were given a break on property taxes. All victims of the 1987 earthquake were eligible to deduct their losses from income taxes over a five-year period.
The governor said similar financial aid bills would be proposed for victims of the Oct. 17 quake.
Additionally, Deukmejian said he and the legislative leaders hope to agree on a special "compensation fund" for victims "who might be filing claims against the state for deaths or injuries alleging that the state was responsible." He was vague on the details but said the goal is to "allow people to get their lives back in order more quickly and without a lot of further expense . . . aggravation and anguish."
Deukmejian also indicated that political leaders in Sacramento believe that they can finesse their way around the state spending limit by, among other things, stretching the tax increase over two budget years and by giving local governments a substantial portion of the earthquake relief. Money appropriated by the state for local governments does not count against the state's limit.
Meanwhile, state Supt. of Public Instruction Bill Honig estimated earthquake damage to schools at between $50 million and $100 million.