PROPOSITIONS : Renters Credit and Other Tax Breaks at Issue

Of all the tax-related and bond-related ballot measures involving billions and millions that face voters Tuesday, the most intense pocketbook issue is the one that means a difference, at most, of $120 a year per family.

As part of a political deal reached in the Capitol, Proposition 175 asks voters to decide whether a renters tax credit should be made part of the state Constitution, meaning that legislators could not willy-nilly suspend the credit.

To reach a compromise last summer on the state budget, then-Senate President Pro Tem David A. Roberti (D-Van Nuys) agreed to a proposal to suspend the renters credit for two years, provided that voters would have the chance to reinstate it permanently thereafter.

The result is Tuesday’s ballot measure, which sets the credit at $60 for single renters and $120 for married couples and single heads of households. The Legislature could still adjust the amount or decide at what income level a renter would qualify for the credit.

But Proposition 175 is no shoo-in. In a recent Los Angeles Times poll, the renters credit was failing by a 48%-41% margin among likely voters.

John Brennan, director of the poll, said the more downscale voters--having an income of less than $20,000--are in favor of the measure, by a 48%-35% margin, while those earning more than $60,000 are against it by a wide margin, 61% to 30%.

Backers say the proposal holds great importance for the 4.5 million California households occupied by renters. They cite the homeowners deduction and argue that there should be a corresponding benefit for renters. Supporters also say Proposition 175 would fulfill the pledge of rent relief promised in 1978 by the backers of Proposition 13, which cut property taxes.

Opponents say that Proposition 13 did benefit renters because landlords would charge more if they were forced to pay higher property taxes.

Even if Proposition 175 fails, the credit will be reinstated in 1995, although, without constitutional protection, it would again be at the mercy of the Legislature.

Three other measures on Tuesday’s ballot would amend the Constitution to provide marginal tax relief or, in the case of Proposition 176, head off a possible tax.

That measure would specifically forbid cities and counties to levy business license taxes or fees based on the income or gross receipts of nonprofit organizations.

No city or county in California imposes such a levy, officials say, but supporters say that some cities could do so if they wished.

Churches and other nonprofit organizations long have been exempt from federal and state income taxes because they typically provide a charitable, educational, scientific or other service deemed valuable to the public.

Opponent Gary B. Wesley, a San Jose attorney, contends that not all “nonprofits are as charitable” as supporters would have voters believe.

“The mere fact that no ‘profit’ is left over for any shareholders or other owners does not make an organization charitable or worthy of outright exemption of local business license fees,” Wesley said.

With Propositions 177 and 178, voters will decide, respectively, whether to grant a property tax break for businesses that alter premises to assist disabled people and for farmers who install water conservation systems.

If approved, Propositions 177 and 178 would exempt properties from being automatically reassessed at higher rates as a result of making those kinds of improvements.

Proposition 177 backers note that private businesses would have an incentive to better serve people with disabilities, including installation of wider doorways, reconfigured restrooms and ramps.

Opponents call the measure a piecemeal approach to fixing the flaws in Proposition 13 and say that what is needed instead is a comprehensive overhaul of the 1978 law.

Supporters of Proposition 178 argue the measure would provide an incentive for farmers to replace outdated irrigation methods with new conservation techniques, including drip irrigation--an improvement that would cut water use in drought-prone California.

Opponents contend that farmers already get a major price break on water purchases at the expense of city dwellers. They argue that farmers will install the conservation equipment anyway to reduce water bills.

The state legislative analyst estimates that loss of property tax revenues caused by the measures would be relatively minor at first, but could reach about $10 million annually as more farmers and businesses qualified for the exemption.