A ‘Stand-by’ Tax Would Bolster Wilson’s Useful First Steps : Economy: His emphasis on prevention makes sense, but doesn’t justify cutting holes in the safety net.

The opportunity for agreement has emerged in Sacramento with Gov. Wilson’s tough budget, which reflects both the economic recession and the escalating demand for services. We have a governor who is willing to place an constructive agenda before a Legislature ready to work with him.

We are embroiled in a fiscal mess resulting from the state’s collective desire for quality governmental services, as long as they are paid for by someone else--or not at all. The 1980s were a decade of taxpayer relief. Before 1978 California was classified as a “high tax” state with a high level of services. Now we are classified as a “medium tax” state attempting to maintain a high level of services. It is curious that we cut taxes when times are good and cut programs when times are bad.

Against this backdrop are major demographic and social changes that have deepened the state’s fiscal crisis.

Elementary and higher education enrollment is growing twice as fast as the state’s population, and as the diversity of its students and their needs grow.

The rate of new immigrants moving into the state (2,000 per day) and the lack of affordable housing strain our social-service safety net.

California’s “get tough” approach to crime has resulted in a dramatic increase in the state prison population, costing more than $2.1 billion this year.

Another backdrop on the budgetary stage is the ever-changing relationship between the state and local governments. Following the passage of Proposition 13, the state began to provide fiscal relief to local governments and schools, which will cost the state $12 billion this year. Before 1978 the state’s share of local school budgets was 30%. Today, the state’s contribution has grown to more than 60%.

Gov. Wilson’s heightened emphasis on prevention makes good fiscal and policy sense. He has expressed a willingness to discuss new approaches to basic problems. His proposals to increase funding for prenatal and well-baby care, for treatment of substance-abusing mothers, for preschool and for mental-health counseling in our schools indicate that resources will be expended for these new initiatives.

The time has come to match the responsibility for services, whether at the state or local level, with the financial capacity to deliver these services. The governor has proposed a few important steps that deserve careful consideration, but here are some ways to improve upon those efforts.

--A “stand-by” tax may be needed to protect basic state health and education services from a major downturn in the economy. If our budget problems worsen, as the legislative analyst predicts, additional revenue must be found. We must not continue to resolve our growing fiscal problems by cutting health and education services. If there is a further shortfall, a “stand-by tax” should be activated to provide funding for essential governmental services.

--The safety net for low-income people must not be “reformed” by cutting new holes in the net. Establishing a true social-service safety net is another Administration goal. But its proposal to reduce basic grant levels for the poorest families and their children is contrary to this goal. Equally flawed and shortsighted is its proposal to eliminate the Homeless Assistance Program. Blanket program reductions and cuts of this kind ignore the reasons why people need assistance. The approach does nothing to help the poor find jobs or achieve independence from state assistance. Rather than cutting the renter’s tax credit, the Administration should consider closing tax loopholes that benefit large corporations.

--The return of administrative and fiscal responsibility for mental health and public health programs to local government must consider the state’s policy interest in these services. The Administration proposed to change the vehicle license fee and increase the tax on alcoholic beverages and give this new money--about $900 million--to counties. These funds can be used for any local services and are not earmarked for mental-health and public-health services. Subsidies for those services will end. Does the state have an interest in the level and quality of health care or mental health services? That question must be answered.

--Making infrastructure/housing finance and growth management a combined priority. The governor has proposed that local communities shoulder a larger share of school construction funding. We also should take a comprehensive look at our state and local long-term public facility and housing needs, and develop financing plans to meet them. This might include a state public-works financing authority that, along with the California Housing Finance Agency, would provide infrastructure and housing financing consistent with the state’s growth-management strategy.

The history of our state has shown again and again how progress is achieved. Bipartisanship and leadership are essential.