CALIFORNIA COMMENTARY : ‘Earmarking’ Budget into Concrete : An onslaught of initiatives would tax for special interests at the expense of the general fund.

The tax-cutting revolution began in California in 1978 with an initiative, Proposition 13, that has held down property tax rates for most of the state’s homeowners. But this year’s state ballot initiatives will test a tax-raising concept that could undermine the gains of the tax revolt.

On Tuesday, voters will face three initiatives (Propositions 129, 133 and 134) that represent a major effort to impose new taxes using a technique known as “earmarking.” These ballot measures require that each new tax be designated for a specific purpose.

By dedicating these taxes to worthy causes such as fighting crime and drugs or funding medical trauma centers, the tax-raisers believe they have found a way to persuade voters to boost government revenues. A further inducement is that in most cases only part of the population will be subject to the tax because only certain products, services or groups are targeted.

Therefore, voters are told they will be funding a worthy cause by raising someone else’s taxes. A recent Los Angeles Times Poll found that self-described non-drinkers, about half of the electorate, solidly favored the earmarked alcohol tax, Proposition 134, while self-described drinkers opposed it.

The initiatives are sponsored by politicians who use them as platforms to run for office, and by people with an interest in the services provided by the new funds. The tax on alcohol, for instance, would be earmarked for rehabilitation and trauma centers. Not surprisingly, the largest donors to the campaign for this measure are the emergency room doctors who would directly benefit from the tax.

A second measure, Proposition 129, written by Atty. Gen. John Van de Kamp during his unsuccessful campaign for governor, would dedicate revenue raised by closing so-called corporate tax loopholes to the war against crime and drugs. However, these “loopholes” were closed by the Legislature in July to balance the state budget. If the initiative passes and rededicates the revenue, a hole will be created in the state budget that can be filled only by new tax revenue, adding to the state’s predicted budget deficit. A legislative budget committee also notes that Proposition 134, mandates more spending that it pays for, adding to the deficit problem.

Finally, there is a sales tax, Proposition 133, also designated to fight the drug war and sponsored by Lt. Gov. Leo McCarthy, who is running for reelection. This tax is supposedly “temporary,” established for only four years under the unlikely assumption the drug war will last about as long as World War II. The reality is that after four years many drug enforcement officers will have been hired and new programs set in motion. Certainly, the voters will be asked to continue this tax increase.

Proponents of earmarked taxation argue it makes the taxing process more accountable to the people. But is this accountability? Once revenue is designated for a certain service the money will flow to that service whether it is too much to do the job or too little, and without regard to whether the job is being done well. The California general fund budget is already tied into knots by earmarking.

While the people should have a say on how much more of their money goes to government, our representatives are elected to manage the funds and prioritize the spending.