Senate Panel Backs Boost in Sales Tax to Pay Quake Costs

A Senate committee Monday narrowly approved legislation that would temporarily increase the state tax on consumer purchases to help meet costs of recovery from the Northridge earthquake.

Gov. Pete Wilson strongly opposes such a tax to finance the state’s $1.9-billion quake repair obligation. Instead, he favors a $1.05-billion bond issue that would go to the voters June 6.

The governor’s representative, Deputy Finance Director Steve Olsen, testified that the tax bills face “a certain risk” of veto.

However, the Senate Appropriations Committee sent the tax increase bill to the full Senate along with a second bill that would temporarily add 2 cents to the state tax on gasoline to finance highway earthquake safety projects statewide.

The votes came amid an indication that the Republican governor and Democrats may try to reach an agreement on how best to pay the state’s share of the recovery costs. The federal government committed $9.5 billion in repair funds shortly after the Jan. 17 quake.

Assembly Speaker Willie Brown (D-San Francisco), author of the bill to increase the sales tax, told the committee that Wilson has invited leaders of the Legislature to meet with him Wednesday to discuss earthquake relief.

Sen. David A. Roberti (D-Van Nuys), who is carrying the governor’s bond issue bill, suggested that the Legislature and Wilson place both the bond issue and the sales tax increase on the ballot. The one with the biggest vote would prevail, he said.

Aside from a quick briefing session with Wilson last month, no formal session has been held with legislative leaders to fashion a quake relief compromise.

In the past, so-called Big Five meetings of the governor and the four Republican and Democratic legislative leaders have been crucial in resolving state budget deadlocks. Wilson issued the invitation as Democratic momentum built in the Legislature for approval of higher taxes as a pay-as-you-go way of financing the recovery.

Wilson’s own bond issue bill is pending in the Assembly, but contains an amendment inserted by Democrats that would automatically impose Brown’s sale tax increase if the voters rejected the bond program.

Neither side can impose its will over the other because both the governor’s bond issue and the tax bills require the vote of two-thirds of the Legislature. Democrats are the majority party, but must have the support of Republicans to reach two-thirds.

The Brown sales tax bill cleared the Appropriations Committee on a party-line, 7-1 vote. Republicans left the hearing before the vote, with the exception of Sen. David G. Kelley of Idyllwild, who cast the only no vote.

The bill would increase the sales tax by one-quarter cent on the dollar for two years starting July 1 and would raise about $1.4 billion. A similar increase was enacted for 13 months after the 1989 Loma Prieta earthquake in Northern California.

Brown amended his bill to enable the sales tax increase to take effect as a “standby” financing tool only if Wilson’s bond measure goes down to defeat June 6. He said public opinion polls favor a temporary tax increase over long-term bonds, whose interest would take 20 to 30 years to pay off.

Committee Democrats, this time joined by Kelley, voted 8-0 approval of a gasoline tax increase bill by Sen. Quentin Kopp (I-San Francisco). It would raise $1 billion over 3 1/2 years, with the revenue earmarked for replacing or retrofitting bridges and highways to make them earthquake safe.