Wilson Expected to Agree to Extend Sales Tax Hike

In a major concession to Democratic legislators, Gov. Pete Wilson is expected to abandon his long-held opposition today to extending a temporary half-cent sales tax beyond its scheduled expiration June 30, The Times has learned.

Wilson apparently will propose extending the sales tax through the end of 1993 and shifting most if not all of the revenue it raises from state use to local government, Capitol sources said Wednesday.

The Republican chief executive, as a condition for changing his position, is likely to insist that the $700 million in extra tax receipts be dedicated to the support of law enforcement.

Wilson has scheduled a news conference in Los Angeles today to make what his aides described as a major announcement concerning law enforcement and public safety.

Two sources in the Legislature said they understood that Wilson would retreat from his opposition to extending the sales tax, which was enacted with Wilson’s support in 1991 as a short-term measure to carry the state government through bad economic times.

Until now, Wilson has been adamant that the tax expire on schedule. He said that doing otherwise would break faith with voters and send the wrong message to the state’s business community.

He also has said the state tax should expire so that county governments can ask voters to reimpose the half-cent levy as a local revenue-raiser. That would help local governments replace $2.6 billion in property tax revenue that Wilson wants to shift to the schools so he can keep a commitment to fund public education without further depleting state resources.

Wilson called a statewide special election for Nov. 2 to make it easier for county governments to put the issue before voters.

County officials oppose the property tax transfer. But they also note that even if they followed Wilson’s advice, they would lose revenue from July 1, when the fiscal year begins, until at least Nov. 2, when voters might reimpose the sales tax on a county basis.

Waves of local law enforcement officials, including sheriffs, police officials, firefighters and prosecutors, have been meeting with Wilson frequently over the last 10 days. Traditional allies of the law-and-order oriented governor, these public officials made it clear that they thought Wilson’s budget, if unchanged, would do great damage to public safety.

“We’ve been talking to the law enforcement people almost every day,” said an Administration source who asked not to be identified. “What they need is a way to make it from now through November. We’ve been talking to them about several options that would help them accomplish their funding requirements.”

Wilson’s concession is likely to give state budget deliberations a major boost. The money raised by the sales tax, because it would go to local governments, would not directly reduce the state’s budget shortfall. But it would make the governor’s proposed property tax transfer easier for legislators to swallow.

Although most Democrats have proposed continuing the sales tax for one year or more, Assembly Speaker Willie Brown of San Francisco said Wednesday that he would be satisfied with a shorter extension.

In other budget action, a bipartisan state fiscal commission said Wilson’s proposed budget relies on overly optimistic revenue projections and would lead to a $1.8-billion deficit at the end of the 1994-1995 fiscal year.

Brad Williams, executive director of the Commission on State Finance, said his economic forecast was in line with Wilson’s but he said he believes the economy will produce less revenue than Wilson is relying on.

“We don’t expect things to get a lot better soon,” Williams said. “Difficult times remain ahead, both for the economy and state finances.”

Stan Stancell, Wilson’s deputy finance director, said the Administration believes income tax collections will grow by 0.1% in 1993-94 and 7.9% in 1994-95.