Bush to Propose Budget Seeking Pollution Fees : Environment: The plan would raise $1 billion a year from chemical manufacturers. It is seen as helping in fight on ozone depletion and acid rain.

The Bush Administration, as part of the fiscal 1991 budget it will unveil in January, plans to propose that the federal government require chemical companies to pay for the right to produce certain air and water pollutants, Administration officials said Friday.

The plan is expected to apply to some toxic pesticides, a handful of chemicals that deplete the ozone layer and perhaps the key pollutant that contributes to acid rain, officials said. It would raise more than $1 billion a year from chemical manufacturers.

The Administration proposed last year to auction rights to produce limited quantities of ozone-damaging gases, primarily chemicals known as chlorofluorocarbons that are used in refrigeration. Congress instead adopted a tax on the manufacture of such gases.

“We’d like to extend the ozone tax idea to a number of different pollutants,” one Administration aide said, “but we’re not sure yet how far you can go.”

Several top White House officials, such as Michael J. Boskin, chairman of the Council of Economic Advisers, and Richard G. Darman, budget director, have long favored market-oriented pollution fees as a more efficient way to clean up the environment than rigid government-imposed regulations.

Administration officials contend that such revenue-raising measures do not violate Bush’s pledge against new taxes.

Together with other tax proposals, including some that were rejected by Congress this year, the White House is expected to recommend boosting 1991 revenues at least $8 billion above what they would be under current law, congressional sources said.

Included within that total will be Bush’s controversial proposal to cut capital gains taxes, which would generate additional revenue in its early years by stimulating more sales of stocks, bonds and other assets.

The budget for fiscal 1991, which begins next Oct. 1, will be the first prepared exclusively by Bush and his aides. The President is expected to decide soon whether to accept his budget office’s recommendations, and to deliver his budget to Congress on Jan. 22.

Darman said in a television interview last weekend that the Administration needs to find about $35 billion in savings to produce a budget that does not exceed the $64-billion deficit target for fiscal 1991 called for by the Gramm-Rudman balanced-budget law.

Darman said that the Pentagon, which has begun to examine ways of sharply scaling back its military operations, will contribute at most $10 billion toward reducing next year’s deficit.

To keep the deficit under $64 billion, Bush’s budget office is recommending about $8 billion in savings from the Medicare health care program for the elderly and disabled.

About $2.5 billion would come from higher Medicare tax revenues, officials said. Most of this would result from levying Medicare’s share of the Social Security payroll tax on state and local government workers for the first time. (State and local government employees are eligible for Medicare even though they do not pay the tax. They get state and local governmental pensions instead of Social Security.)

Spending cuts would account for the other $5.5 billion in savings, although increasing health care costs and numbers of Medicare beneficiaries would still drive spending up by more than $10 billion over this year. The Administration wants to limit payments to hospitals and trim doctors’ fees, and it would boost fees on health care providers that seek Medicare certification.

Congress, however, has repeatedly rejected efforts to impose the Medicare tax on state and local government employees, and it has almost always scaled back proposals to limit hospital payments in response to widespread complaints that such measures would unduly harm medical services and impose harsh cutbacks on hospitals serving rural areas and inner cities.

And this year, Health and Human Services Secretary Louis W. Sullivan has written to Darman to protest some of the proposed cuts. He also told Darman that the budget office is standing in the way of expanding AIDS research, the Head Start program for low-income preschoolers and the Social Security Administration.

The budget office is also expected to propose about $1 billion in new user fees and to recycle a number of other revenue measures not accepted this year by Congress, an aide confirmed.

The plan to boost user fees by another $1 billion was first reported Friday in the Wall Street Journal, which obtained a written summary of White House budget office decisions.

The Administration plans to recommend a number of new fees that would help pay for the cost of food safety inspections, nuclear power plant regulation, better review of generic drugs and a number of other programs.

Staff writer Rudy Abramson contributed to this story.

NEXT STEP After returning from his summit meeting with Soviet President Mikhail S. Gorbachev, President Bush will make the final decisions on the shape of his proposed budget for fiscal 1991. Bush will be guided by the recommendations of his budget office, but his Cabinet secretaries will have one last chance to appeal for more money before Bush submits his budget to Congress on Jan. 22. The Democratic Congress can be expected to make wholesale changes in Bush’s budget priorities.