Panel OKs Tax, Auto Fee Hikes, Program Shift to Counties

Legislative budget writers Monday quickly approved a major part of Gov. Pete Wilson’s tax plan--raising $2.4 billion from higher sales taxes and automobile fees to finance a massive shift of costly health and welfare programs from the state to county governments.

The action by a special Assembly-Senate conference committee, which is charged with helping to find a way out of the state’s budget crisis, represented the first major vote in the Legislature to increase taxes along the lines the Republican governor proposed.

However, Wilson and the lawmakers must surmount many steeper political barriers before the July 1 start of the new bookkeeping year.

The committee of Republicans and Democrats, which last week endorsed the concept of shifting certain state health and welfare services to the counties, agreed without dissent to approve Wilson’s newly revised state and local government “realignment” proposal. The governor announced the plan Thursday.

The transfer is a cornerstone of Wilson’s tax-and-cut strategy to overcome a staggering $12.6-billion projected shortfall over the next 14 months. It is also a major component of his proposal to increase the statewide sales tax by 1 1/4 cents. Of that amount, 3/4 cent would remain with the state and 1/2 cent would go to counties for health and welfare services.

That 1/2 cent would raise $1.6 billion a year. The increased motor vehicle license fees would produce $769 million annually by reducing automobile depreciation rates on which license fees are based.

While the committee approved a major chunk of the governor’s budget-balancing program, it farmed out to proposed legislative task forces the details of shifting to counties such services as care of the medically indigent, community-based programs for the mentally disabled, in-home support services for the aged, and major medical care for gravely ill children.

The task forces will try to fashion remedies that meet county demands that the services be fully financed but without strings attached by the Legislature and governor on how the money must be spent. Some Democrats and recipients of health services fear, that without strings, or at least state-set “minimal standards,” counties may abandon programs and spend the money elsewhere.

Even in setting minimal standards, the state may be viewed as dictating terms to counties. If, as in the past, the state imposes such a mandate but fails to pay for it, the state can open itself up to lawsuits. This is a prospect Wilson and the Legislature want to avoid.

At the hearing, Wilson’s top fiscal adviser, state Finance Director Thomas W. Hayes, stressed the governor’s insistence on “structural reforms” in his bailout program, including elimination of automatic cost-of-living increases for those receiving state assistance.

While he fell short of declaring that Wilson’s reform plans were non-negotiable, Hayes told the lawmakers that “it is not the intention of the governor to sign a budget without structural reforms.”