RIOT AFTERMATH: GETTING BACK TO BUSINESS : Tax Hike to Rebuild Gets Cool Greeting

A Los Angeles legislator proposed Monday that Californians pay a temporary sales tax increase of a quarter of a cent for the emergency rebuilding of riot devastated areas, but it received a cool reception from Gov. Pete Wilson and other lawmakers.

Leaders of both the Assembly and Senate nevertheless called on Wilson to add the Los Angeles destruction to the Legislature’s agenda of special session issues, a move that could help hasten delivery of extra state aid to the stricken area.

Democratic Sen. Art Torres, who has represented parts of Los Angeles for nearly two decades, proposed the quarter-cent sales tax increase for one year as a way of quickly infusing extra state revenue into the massive rebuilding effort that threatens to outstrip local financial resources.

The sales tax, which currently runs at 8 1/4 cents on the dollar in Los Angeles County and as high as 8 1/2 cents in San Francisco, was temporarily increased statewide in the wake of the devastating Loma Prieta earthquake in the Bay Area in 1990.

Torres proposed that the estimated $800 million to be raised by the tax increase be channeled in large measure to rehabilitate uninsured or underinsured private businesses in minority neighborhoods heavily hit by rioters.

Reminded that in the past such extraordinary state measures were in response to natural disasters such as earthquakes and floods, Torres told a press conference that “whether a riot is caused by God or man, (it) makes no difference to a homeowner or store owner who is looking at the charred ruins in front of him.”

On Sunday, Wilson indicated to Korean-American merchants in Los Angeles that the state would do all it could to help them rebuild, but that the recession-battered state budget is so strapped that they could expect no major new relief programs.

“It’s premature to talk about any tax assessment,” gubernatorial press secretary Bill Livingstone told reporters Monday, “until you have a clear assessment of the total damage.”

In the reelection-conscious Legislature, Assembly Republican leader Bill Jones of Fresno, said flatly, “We would not be in favor of any kind of tax increase.” Likewise, Senate leader David R. Roberti (D-Los Angeles) said he feared that “new taxes will stifle rather than stimulate the economy.”

Assembly Speaker Willie Brown (D-San Francisco) said the proposed sales tax increase must be an issue on the Legislature’s agenda for consideration and that at this point “I would be favorably disposed” to support it. But he emphasized that such a plan must be examined against all the needs for state support arising from the riots.

Brown and Roberti separately called on Wilson to add the Los Angeles destruction to the Legislature’s current agenda of five special session issues, ranging from the budget crisis to the major earthquake in Humboldt County last month.

The advantage of a special session is that some forms of state aid can be enacted and implemented more quickly than if the Legislature proceeded at its normal pace. But as a rule, many special session issues never budge.

In addition to the sales tax increase, Torres proposed a statewide $1-billion bond issue for the November ballot to help finance infrastructure improvements for central cities, including roads, sewers and communications. He said the tax burden on businesses to help finance such projects would be eased if the general taxpayers throughout the state financed the improvements.

Speaker Brown said other legislation may include making temporary “bridge” loans to certain businesses that would be in place until federal loans arrived, speeding up processsing of insurance claims and encouraging the federal government to provide funds for replacement of goods and equipment destroyed by the rioters.