Wilson Considering an Increase in Sales Tax : Budget: Aides say final decisions have not been made. Others see a consensus for a larger levy.

As the state’s revenue picture turns even darker, Gov. Pete Wilson is strongly considering a sales tax increase to help balance the state budget, The Times learned Tuesday.

Wilson advisers only would confirm that the governor will unveil a revised budget plan Thursday that contains additional tax increases and program cuts beyond what he proposed in the $55.7-billion budget he sent the Legislature in January.

Since then, the state’s projected revenue shortfall for the current and next fiscal years--a period ending June 30, 1992--has nearly doubled from $7 billion to $12.6 billion at last count, and seemingly is climbing every day.

Although the governor’s office was tight-lipped about Wilson’s new budget plan--insisting final decisions had not been made--other sources who asked not to be identified said a consensus is building within his inner circle for a combination of permanent and temporary sales tax hikes.

In one scenario that the governor is considering, the sales tax would be increased temporarily, perhaps by a half-cent on the dollar. A half-cent raises about $1.6 billion. The higher levy would stay in effect until the state’s red ink is erased.

Now, the minimum sales tax in California is 6%, split between the state, counties and cities. But most Californians pay more because sales taxes have been raised locally for specific purposes, such as transportation. In Los Angeles County, consumers pay 7%. State government’s share of the sales tax is 4.75%.

Because a modest sales tax increase would fall far short of generating enough revenue to close a constantly widening budget deficit, Wilson also is considering extending the levy permanently to items not presently taxed, the sources said. For instance, they said, he is leaning toward extending the sales tax on automobile repairs to include the cost of labor as well as parts.

Sources said the governor is aiming for sales tax hikes that would bring in new revenue in the range of $3 billion.

But Wilson reportedly is reluctant to impose a new tax on services--legal, accounting, plumbing and the like--as advocated by Assembly Speaker Willie Brown (D-San Francisco). Although the governor recently indicated that a services tax might be worth considering, he apparently has decided to pass on it for now.

“It’s political dynamite,” said one source. “I’ll be surprised if he goes with a services tax. It doesn’t go down well with people. Look what happened to (former Florida Gov.) Bob Martinez. He was thrown out of office.”

Martinez, a Republican, helped push through his Legislature a tax on services and later admitted: “I made a mistake that cost me the confidence of the people of Florida.” He was defeated last year in a reelection bid.

Wilson presumably still advocates the $1.8 billion in tax increases he proposed in January. They include extending the sales tax to newspapers, magazines, candy and snack foods, as well as higher liquor taxes and motor vehicle license fees.

The governor wants to erase most of the state’s red ink with a variety of spending rollbacks, including salary freezes, employee layoffs, welfare cuts and suspending Proposition 98, the law that guarantees public schools roughly 40% of the state’s general fund.

Wilson also reportedly is seriously thinking about greatly expanding his previous proposal to shift state programs to counties. In his January budget, the governor advocated shifting about $900 million in health programs to the counties, along with revenue from the higher vehicle fees to pay for these added responsibilities.

Now, according to the sources, Wilson is considering a state-to-county shift of about $2 billion in programs. In Sacramento jargon, this is called “realignment.”

If Wilson did this, his plan would be in line with the thinking of some key legislators. Democratic leaders in the Senate and Assembly have proposed a “realignment” of $2.3 billion. Senate Republican Leader Ken Maddy of Fresno has taken the idea a step further and proposed a shift of $2.8 billion in programs.

It is not clear which programs would be shifted, but the proposals earlier outlined by legislative leaders contemplated giving counties responsibility for community mental health programs, health services for the working poor who do not qualify for Medi-Cal, and county health services financed by the state.

Meanwhile, Wilson received more bad news Tuesday from the state Franchise Tax Board, which collects the income tax.

The board, after depositing the last big batch of checks sent in by the April 15 income tax filing deadline, reported that personal income and corporation tax collections were at least $500 million below what Wilson had projected in his January budget. That still was a rough estimate and did not include all the money refunded to taxpayers.

Assemblyman Johan Klehs (D-Castro Valley), chairman of the Assembly Revenue and Taxation Committee, said: “Wilson in March announced that we were another $1.6 billion short (of January budget estimates). Now we’ve dropped another $500 million below that. We’d all been hoping that the tax payment checks would be larger.”

“The revenue picture continues to slump,” acknowledged a Wilson adviser, who requested anonymity.

The adviser cautioned that before Wilson unveils his new budget plan Thursday, “things could happen that would change everything. All we know for sure is that it’s going to be a comprehensive package that includes a whole range of things.”