NEWS ANALYSIS : Van de Kamp Borrows a Budget Plan

Democratic gubernatorial candidate John K. Van de Kamp’s plan to make up for a $3.6-billion state revenue shortfall borrows heavily from proposals tried before by other officeholders with varying degrees of success.

Van de Kamp, in announcing the proposal Sunday after his debate with Dianne Feinstein, maintained it would work without cutting into money for welfare recipients and the aged, blind and disabled. He also said it would not affect the 40% of the budget now going to public schools or inflict “unfair taxes on the general public.”

Under Van de Kamp’s plan, two-thirds of the shortfall, $2.3 billion, would be made up by raising taxes or taking other steps to bring in more money, such as accelerating the collection of sales and corporate income taxes.

During the state’s severe fiscal crisis in 1983, Republican Gov. George Deukmejian and the Democratic-controlled Legislature adopted a series of tax-collection and other revenue generating measures that helped them dig out from under a $1.5-billion shortfall.

But Republicans consistently have blocked efforts to raise the state income tax or other special taxes.

Van de Kamp’s plan calls for boosting the top income tax rate from 9.3% to 11% for individuals earning more than $100,000 a year ($200,000 for couples), which would raise $1 billion; raising another $365 million through new taxes on alcoholic beverages; generating $270 million by reducing tax write-offs allowed to businesses for entertainment expenses, and generating $216 million by imposing a new tax on oil companies.

On the spending side, Van de Kamp suggested cuts totaling $1.3 billion.

One of the suggestions was that 5% be cut from state operations, for a budget savings of $300 million. Both Deukmejian and his predecessor, ex-Gov. Edmund G. Brown Jr., used similar across-the-board budget cuts to get out of budget problems and made them work.

Van de Kamp also said he would generate $160 million in savings by continuing a crackdown on fraud in the Medi-Cal program that provides health services to the poor. Feinstein and others have questioned this savings, but legislative sources say it is not out of line.

John Rodriguez, director of the Medi-Cal program, said he expects that the Medi-Cal crackdown will save the state at least $60 million in the new budget year.

Marjorie Schwartz, a staff member of the Assembly Ways and Means Committee, said $100 million was not out of line. Most of the cheating has been going on in the area of incontinence supplies provided fraudulently to nursing homes.

One element of the plan likely to draw opposition in the Legislature is Van de Kamp’s suggestion that the state go into the new budget year, which begins July 1, with a reserve of $650 million, rather than the $1.3 billion proposed by Deukmejian.

The current budget year began with a reserve of $1 billion. But the reserve has dwindled steadily as new expenses developed and tax collections dropped off. The Department of Finance now figures that the state will finish the current budget year June 30 only $86 million in the black.

But a precedent for a reduced reserve was set two years ago when the governor and legislators agreed to a reserve in the range of $600 million.

Another not-so-new proposal is the suggestion by Van de Kamp that $40 million be raised for the University of California by raising tuition on out-of-state students. Feinstein has proposed an even higher increase in fees on out-of-state students, one in the range of $200 million.

But the Legislature has already beaten the two would-be governors to the punch, raising fees on non-Californians 32% over the last three years. “We consider the fees at a pretty high level as a result of the earlier increases,” said UC spokesman Ron Kolb.

UC officials fear that if tuition--already substantially higher than comparable fees charged in other states--is raised much higher, students will be discouraged from attending. Fees and tuition charged out-of-state UC students now averages $7,433 a year. Van de Kamp’s proposal would raise their tuition by more than $2,200 a year.